Michael Hudson is the best economist in the world. Indeed, I could almost say that he is the only economist in the world.

Almost all of the rest are neoliberals, who are not economists but shills for financial interests.

If you have not heard of Michael Hudson it merely shows the power of the Matrix. Hudson should have won several Nobel prizes in economics, but he will never get one.

Hudson did not intend to be an economist. At the University of Chicago, which had a leading economics faculty, Hudson studied music and cultural history. He went to New York City to work in publishing.

He thought he could set out on his own when he was assigned rights to the writings and archives of George Lukacs and Leon Trotsky, but publishing houses were not interested in the work of two Jewish Marxists who had a significant impact on the 20th century.

Friendships connected Hudson to a former economist for General Electric who taught him the flow of funds through the economic system and explained how crises develop when debt outgrows the economy. Hooked, Hudson enrolled in the economics graduate program at NYU and took a job in the financial sector calculating how savings were recycled into new mortgage loans.

But Hudson really learnt his economics on Wall Street

Hudson learned more economics from his work experience than from his Ph.D. courses. On Wall Street he learned how bank lending inflates land prices and, thereby, interest payments to the financial sector.

The more banks lend, the higher real estate prices rise, thus encouraging more bank lending. As mortgage debt service rises, more of household income and more of the rental value of real estate are paid to the financial sector. When the imbalance becomes too large, the bubble bursts. Despite its importance, the analysis of land rent and property valuation was not part of his Ph.D. studies in economics.

Hudson’s next job was with Chase Manhattan, where he used the export earnings of South American countries to calculate how much debt service the countries could afford to pay to US banks.

Hudson learned that just as mortgage lenders regard the rental income from property as a flow of money that can be diverted to interest payments, international banks regard the export earnings of foreign countries as revenues that can be used to pay interest on foreign loans. Hudson learned that the goal of creditors is to capture the entire economic surplus of a country into payments of debt service.

Soon the American creditors and the IMF were lending indebted countries money with which to pay interest. This caused the countries’ foreign debts to rise at compound interest. Hudson predicted that the indebted countries would not be able to pay their debts, an unwelcome prediction that was confirmed when Mexico announced it could not pay.

This crisis was resolved with ‘Brady bonds’ named after the US Treasury Secretary, but when the 2008 US mortgage crisis hit, just as Hudson predicted, nothing was done for the American homeowners. If you are not a mega-bank, your problems are not a focus of US economic policy.

Tax havens: indispensable for tax dodgers, organised crime, and the federal government

Chase Manhattan next had Hudson develop an accounting format to analyze the US oil industry balance of payments. Here Hudson learned another lesson about the difference between official statistics and reality. Using ‘transfer pricing’, oil companies managed to avoid paying taxes by creating the illusion of zero profits.

Oil company affiliates in tax avoidance locations buy oil at low prices from producers. From these flags of convenience locations, which have no tax on profits, the oil was then sold to Western refineries at prices marked up to eliminate profits. The profits were recorded by the oil companies’ affiliates in non-tax jurisdictions. (Tax authorities have cracked down to some extent on the use of transfer pricing to escape taxation.)

Hudson’s next task was to estimate the amount of money from crime going into Switzerland’s secret banking system. In this investigation, his last for Chase, Hudson discovered that under US State Department direction Chase and other large banks had established banks in the Caribbean for the purpose of attracting money into dollar holdings from drug dealers in order to support the dollar (by raising the demand for dollars by criminals) in order to balance or offset Washington’s foreign military outflows of dollars.

If dollars flowed out of the US, but demand did not rise to absorb the larger supply of dollars, the dollar’s exchange rate would fall, thus threatenting the basis of US power. By providing offshore banks in which criminals could deposit illicit dollars, the US government supported the dollar’s exchange value.

Hudson discovered that the US balance of payments deficit, a source of pressure on the value of the US dollar, was entirely military in character. The US Treasury and State Department supported the Caribbean safe haven for illegal profits in order to offset the negative impact on the US balance of payments of US military operations abroad. In other words, if criminality can be used in support of the US dollar, the US government is all for criminality.

When it came to the economics of the situation, economic theory had not a clue. Neither trade flows nor direct investments were important in determining exchange rates. What was important was ‘errors and omissions’, which Hudson discovered was an euphemism for the hot, liquid money of drug dealers and government officials embezzling the export earnings of their countries.

The financial system is a mechanism for looting the real economy

The problem for Americans is that both political parties regard the needs of the American people as a liability and as an obstacle to the profits of the military / security complex, Wall Street and the mega-banks, and Washington’s world hegemony.

The government in Washington represents powerful interest groups, not American citizens. This is why the 21st century consists of an attack on the constitutional protections of citizens so that citizens can be moved out of the way of the needs of the Empire and its beneficiaries.

Hudson learned that economic theory is really a device for ripping off the untermenschen. International trade theory concludes that countries can service huge debts simply by lowering domestic wages in order to pay creditors.

This is the policy currently being applied to Greece today, and it has been the basis of the IMF’s structural adjustment or austerity programs imposed on debtor countries, essentially a form of looting that turns over national resources to foreign lenders.

Hudson learned that monetary theory concerns itself only with wages and consumer prices, not with the inflation of asset prices such as real estate and stocks. He saw that economic theory serves as a cover for the polarization of the world economy between rich and poor. The promises of globalism are a myth.

Debt slavery

Even left-wing and Marxist economists think of exploitation in terms of wages and are unaware that the main instrument of exploitation is the financial system’s extraction of value into interest payments.

Economic theory’s neglect of debt as an instrument of exploitation caused Hudson to look into the history of how earlier civilizations handled the build up of debt. His research was so ground-breaking that Harvard University appointed him Research Fellow in Babylonian economic history in the Peabody Museum.

Meanwhile he continued to be sought after by financial firms. He was hired to calculate the number of years that Argentina, Brazil, and Mexico would be able to pay the extremely high interest rates on their bonds. On the basis of Hudson’s work, the Scudder Fund achieved the second highest rate of return in the world in 1990.

Hudson’s investigations into the problems of our time took him through the history of economic thought. He discovered that 18th and 19th century economists understood the disabling power of debt far better than today’s neoliberal economists who essentially neglect it in order to better cater to the interest of the financial sector.

Hudson shows that Western economies have been financialized in a predatory way that sacrifices the public interest to the interests of the financial sector. That is why the economy no longer works for ordinary people. Finance is no longer productive. It has become a parasite on the economy. Hudson tells this story in his recent book, Killing the Host (2015).

Western economies – financialized to death

Readers often ask me how they can learn economics. My answer is to spend many hours with Hudson’s book. First, read the book through once or twice in order to get an idea of what is covered. Then study it closely section by section. When you understand the book, you will understand economics better than any Nobel prize-winning economist.

Treat this column as an introduction to the book. I will be writing more about it as current events and time permit. As far as I am concerned, many current events cannot be understood independently of Hudson’s explanation of the financialized Western economy.

Indeed, as most Russian and Chinese economists are themselves trained in neoliberal economics, these two countries might follow the same downward path as the West.

If you put Hudson’s analysis of financialization together with my analysis of the adverse impact of jobs offshoring, you will understand that the present economic path of the Western world is the road to destruction.

The book: ‘Killing the Host‘ is written by Michael Hudson and published by Nation Books (2015).

Dr. Paul Craig Roberts was Assistant Secretary of the Treasury for Economic Policy and associate editor of the Wall Street Journal. He was columnist for Business Week, Scripps Howard News Service, and Creators Syndicate. He has had many university appointments. His internet columns have attracted a worldwide following. Roberts’ latest books are The Failure of Laissez Faire Capitalism and Economic Dissolution of the West, How America Was Lost, and The Neoconservative Threat to World Order.

This article was originally published on Paul Craig Roberts’s website.

Michael Hudson is the best economist in the world. Indeed, I could almost say that he is the only economist in the world.

Almost all of the rest are neoliberals, who are not economists but shills for financial interests.

If you have not heard of Michael Hudson it merely shows the power of the Matrix. Hudson should have won several Nobel prizes in economics, but he will never get one.

Hudson did not intend to be an economist. At the University of Chicago, which had a leading economics faculty, Hudson studied music and cultural history. He went to New York City to work in publishing.

He thought he could set out on his own when he was assigned rights to the writings and archives of George Lukacs and Leon Trotsky, but publishing houses were not interested in the work of two Jewish Marxists who had a significant impact on the 20th century.

Friendships connected Hudson to a former economist for General Electric who taught him the flow of funds through the economic system and explained how crises develop when debt outgrows the economy. Hooked, Hudson enrolled in the economics graduate program at NYU and took a job in the financial sector calculating how savings were recycled into new mortgage loans.

But Hudson really learnt his economics on Wall Street

Hudson learned more economics from his work experience than from his Ph.D. courses. On Wall Street he learned how bank lending inflates land prices and, thereby, interest payments to the financial sector.

The more banks lend, the higher real estate prices rise, thus encouraging more bank lending. As mortgage debt service rises, more of household income and more of the rental value of real estate are paid to the financial sector. When the imbalance becomes too large, the bubble bursts. Despite its importance, the analysis of land rent and property valuation was not part of his Ph.D. studies in economics.

Hudson’s next job was with Chase Manhattan, where he used the export earnings of South American countries to calculate how much debt service the countries could afford to pay to US banks.

Hudson learned that just as mortgage lenders regard the rental income from property as a flow of money that can be diverted to interest payments, international banks regard the export earnings of foreign countries as revenues that can be used to pay interest on foreign loans. Hudson learned that the goal of creditors is to capture the entire economic surplus of a country into payments of debt service.

Soon the American creditors and the IMF were lending indebted countries money with which to pay interest. This caused the countries’ foreign debts to rise at compound interest. Hudson predicted that the indebted countries would not be able to pay their debts, an unwelcome prediction that was confirmed when Mexico announced it could not pay.

This crisis was resolved with ‘Brady bonds’ named after the US Treasury Secretary, but when the 2008 US mortgage crisis hit, just as Hudson predicted, nothing was done for the American homeowners. If you are not a mega-bank, your problems are not a focus of US economic policy.

Tax havens: indispensable for tax dodgers, organised crime, and the federal government

Chase Manhattan next had Hudson develop an accounting format to analyze the US oil industry balance of payments. Here Hudson learned another lesson about the difference between official statistics and reality. Using ‘transfer pricing’, oil companies managed to avoid paying taxes by creating the illusion of zero profits.

Oil company affiliates in tax avoidance locations buy oil at low prices from producers. From these flags of convenience locations, which have no tax on profits, the oil was then sold to Western refineries at prices marked up to eliminate profits. The profits were recorded by the oil companies’ affiliates in non-tax jurisdictions. (Tax authorities have cracked down to some extent on the use of transfer pricing to escape taxation.)

Hudson’s next task was to estimate the amount of money from crime going into Switzerland’s secret banking system. In this investigation, his last for Chase, Hudson discovered that under US State Department direction Chase and other large banks had established banks in the Caribbean for the purpose of attracting money into dollar holdings from drug dealers in order to support the dollar (by raising the demand for dollars by criminals) in order to balance or offset Washington’s foreign military outflows of dollars.

If dollars flowed out of the US, but demand did not rise to absorb the larger supply of dollars, the dollar’s exchange rate would fall, thus threatenting the basis of US power. By providing offshore banks in which criminals could deposit illicit dollars, the US government supported the dollar’s exchange value.

Hudson discovered that the US balance of payments deficit, a source of pressure on the value of the US dollar, was entirely military in character. The US Treasury and State Department supported the Caribbean safe haven for illegal profits in order to offset the negative impact on the US balance of payments of US military operations abroad. In other words, if criminality can be used in support of the US dollar, the US government is all for criminality.

When it came to the economics of the situation, economic theory had not a clue. Neither trade flows nor direct investments were important in determining exchange rates. What was important was ‘errors and omissions’, which Hudson discovered was an euphemism for the hot, liquid money of drug dealers and government officials embezzling the export earnings of their countries.

The financial system is a mechanism for looting the real economy

The problem for Americans is that both political parties regard the needs of the American people as a liability and as an obstacle to the profits of the military / security complex, Wall Street and the mega-banks, and Washington’s world hegemony.

The government in Washington represents powerful interest groups, not American citizens. This is why the 21st century consists of an attack on the constitutional protections of citizens so that citizens can be moved out of the way of the needs of the Empire and its beneficiaries.

Hudson learned that economic theory is really a device for ripping off the untermenschen. International trade theory concludes that countries can service huge debts simply by lowering domestic wages in order to pay creditors.

This is the policy currently being applied to Greece today, and it has been the basis of the IMF’s structural adjustment or austerity programs imposed on debtor countries, essentially a form of looting that turns over national resources to foreign lenders.

Hudson learned that monetary theory concerns itself only with wages and consumer prices, not with the inflation of asset prices such as real estate and stocks. He saw that economic theory serves as a cover for the polarization of the world economy between rich and poor. The promises of globalism are a myth.

Debt slavery

Even left-wing and Marxist economists think of exploitation in terms of wages and are unaware that the main instrument of exploitation is the financial system’s extraction of value into interest payments.

Economic theory’s neglect of debt as an instrument of exploitation caused Hudson to look into the history of how earlier civilizations handled the build up of debt. His research was so ground-breaking that Harvard University appointed him Research Fellow in Babylonian economic history in the Peabody Museum.

Meanwhile he continued to be sought after by financial firms. He was hired to calculate the number of years that Argentina, Brazil, and Mexico would be able to pay the extremely high interest rates on their bonds. On the basis of Hudson’s work, the Scudder Fund achieved the second highest rate of return in the world in 1990.

Hudson’s investigations into the problems of our time took him through the history of economic thought. He discovered that 18th and 19th century economists understood the disabling power of debt far better than today’s neoliberal economists who essentially neglect it in order to better cater to the interest of the financial sector.

Hudson shows that Western economies have been financialized in a predatory way that sacrifices the public interest to the interests of the financial sector. That is why the economy no longer works for ordinary people. Finance is no longer productive. It has become a parasite on the economy. Hudson tells this story in his recent book, Killing the Host (2015).

Western economies – financialized to death

Readers often ask me how they can learn economics. My answer is to spend many hours with Hudson’s book. First, read the book through once or twice in order to get an idea of what is covered. Then study it closely section by section. When you understand the book, you will understand economics better than any Nobel prize-winning economist.

Treat this column as an introduction to the book. I will be writing more about it as current events and time permit. As far as I am concerned, many current events cannot be understood independently of Hudson’s explanation of the financialized Western economy.

Indeed, as most Russian and Chinese economists are themselves trained in neoliberal economics, these two countries might follow the same downward path as the West.

If you put Hudson’s analysis of financialization together with my analysis of the adverse impact of jobs offshoring, you will understand that the present economic path of the Western world is the road to destruction.

The book: ‘Killing the Host‘ is written by Michael Hudson and published by Nation Books (2015).

Dr. Paul Craig Roberts was Assistant Secretary of the Treasury for Economic Policy and associate editor of the Wall Street Journal. He was columnist for Business Week, Scripps Howard News Service, and Creators Syndicate. He has had many university appointments. His internet columns have attracted a worldwide following. Roberts’ latest books are The Failure of Laissez Faire Capitalism and Economic Dissolution of the West, How America Was Lost, and The Neoconservative Threat to World Order.

This article was originally published on Paul Craig Roberts’s website.

Michael Hudson is the best economist in the world. Indeed, I could almost say that he is the only economist in the world.

Almost all of the rest are neoliberals, who are not economists but shills for financial interests.

If you have not heard of Michael Hudson it merely shows the power of the Matrix. Hudson should have won several Nobel prizes in economics, but he will never get one.

Hudson did not intend to be an economist. At the University of Chicago, which had a leading economics faculty, Hudson studied music and cultural history. He went to New York City to work in publishing.

He thought he could set out on his own when he was assigned rights to the writings and archives of George Lukacs and Leon Trotsky, but publishing houses were not interested in the work of two Jewish Marxists who had a significant impact on the 20th century.

Friendships connected Hudson to a former economist for General Electric who taught him the flow of funds through the economic system and explained how crises develop when debt outgrows the economy. Hooked, Hudson enrolled in the economics graduate program at NYU and took a job in the financial sector calculating how savings were recycled into new mortgage loans.

But Hudson really learnt his economics on Wall Street

Hudson learned more economics from his work experience than from his Ph.D. courses. On Wall Street he learned how bank lending inflates land prices and, thereby, interest payments to the financial sector.

The more banks lend, the higher real estate prices rise, thus encouraging more bank lending. As mortgage debt service rises, more of household income and more of the rental value of real estate are paid to the financial sector. When the imbalance becomes too large, the bubble bursts. Despite its importance, the analysis of land rent and property valuation was not part of his Ph.D. studies in economics.

Hudson’s next job was with Chase Manhattan, where he used the export earnings of South American countries to calculate how much debt service the countries could afford to pay to US banks.

Hudson learned that just as mortgage lenders regard the rental income from property as a flow of money that can be diverted to interest payments, international banks regard the export earnings of foreign countries as revenues that can be used to pay interest on foreign loans. Hudson learned that the goal of creditors is to capture the entire economic surplus of a country into payments of debt service.

Soon the American creditors and the IMF were lending indebted countries money with which to pay interest. This caused the countries’ foreign debts to rise at compound interest. Hudson predicted that the indebted countries would not be able to pay their debts, an unwelcome prediction that was confirmed when Mexico announced it could not pay.

This crisis was resolved with ‘Brady bonds’ named after the US Treasury Secretary, but when the 2008 US mortgage crisis hit, just as Hudson predicted, nothing was done for the American homeowners. If you are not a mega-bank, your problems are not a focus of US economic policy.

Tax havens: indispensable for tax dodgers, organised crime, and the federal government

Chase Manhattan next had Hudson develop an accounting format to analyze the US oil industry balance of payments. Here Hudson learned another lesson about the difference between official statistics and reality. Using ‘transfer pricing’, oil companies managed to avoid paying taxes by creating the illusion of zero profits.

Oil company affiliates in tax avoidance locations buy oil at low prices from producers. From these flags of convenience locations, which have no tax on profits, the oil was then sold to Western refineries at prices marked up to eliminate profits. The profits were recorded by the oil companies’ affiliates in non-tax jurisdictions. (Tax authorities have cracked down to some extent on the use of transfer pricing to escape taxation.)

Hudson’s next task was to estimate the amount of money from crime going into Switzerland’s secret banking system. In this investigation, his last for Chase, Hudson discovered that under US State Department direction Chase and other large banks had established banks in the Caribbean for the purpose of attracting money into dollar holdings from drug dealers in order to support the dollar (by raising the demand for dollars by criminals) in order to balance or offset Washington’s foreign military outflows of dollars.

If dollars flowed out of the US, but demand did not rise to absorb the larger supply of dollars, the dollar’s exchange rate would fall, thus threatenting the basis of US power. By providing offshore banks in which criminals could deposit illicit dollars, the US government supported the dollar’s exchange value.

Hudson discovered that the US balance of payments deficit, a source of pressure on the value of the US dollar, was entirely military in character. The US Treasury and State Department supported the Caribbean safe haven for illegal profits in order to offset the negative impact on the US balance of payments of US military operations abroad. In other words, if criminality can be used in support of the US dollar, the US government is all for criminality.

When it came to the economics of the situation, economic theory had not a clue. Neither trade flows nor direct investments were important in determining exchange rates. What was important was ‘errors and omissions’, which Hudson discovered was an euphemism for the hot, liquid money of drug dealers and government officials embezzling the export earnings of their countries.

The financial system is a mechanism for looting the real economy

The problem for Americans is that both political parties regard the needs of the American people as a liability and as an obstacle to the profits of the military / security complex, Wall Street and the mega-banks, and Washington’s world hegemony.

The government in Washington represents powerful interest groups, not American citizens. This is why the 21st century consists of an attack on the constitutional protections of citizens so that citizens can be moved out of the way of the needs of the Empire and its beneficiaries.

Hudson learned that economic theory is really a device for ripping off the untermenschen. International trade theory concludes that countries can service huge debts simply by lowering domestic wages in order to pay creditors.

This is the policy currently being applied to Greece today, and it has been the basis of the IMF’s structural adjustment or austerity programs imposed on debtor countries, essentially a form of looting that turns over national resources to foreign lenders.

Hudson learned that monetary theory concerns itself only with wages and consumer prices, not with the inflation of asset prices such as real estate and stocks. He saw that economic theory serves as a cover for the polarization of the world economy between rich and poor. The promises of globalism are a myth.

Debt slavery

Even left-wing and Marxist economists think of exploitation in terms of wages and are unaware that the main instrument of exploitation is the financial system’s extraction of value into interest payments.

Economic theory’s neglect of debt as an instrument of exploitation caused Hudson to look into the history of how earlier civilizations handled the build up of debt. His research was so ground-breaking that Harvard University appointed him Research Fellow in Babylonian economic history in the Peabody Museum.

Meanwhile he continued to be sought after by financial firms. He was hired to calculate the number of years that Argentina, Brazil, and Mexico would be able to pay the extremely high interest rates on their bonds. On the basis of Hudson’s work, the Scudder Fund achieved the second highest rate of return in the world in 1990.

Hudson’s investigations into the problems of our time took him through the history of economic thought. He discovered that 18th and 19th century economists understood the disabling power of debt far better than today’s neoliberal economists who essentially neglect it in order to better cater to the interest of the financial sector.

Hudson shows that Western economies have been financialized in a predatory way that sacrifices the public interest to the interests of the financial sector. That is why the economy no longer works for ordinary people. Finance is no longer productive. It has become a parasite on the economy. Hudson tells this story in his recent book, Killing the Host (2015).

Western economies – financialized to death

Readers often ask me how they can learn economics. My answer is to spend many hours with Hudson’s book. First, read the book through once or twice in order to get an idea of what is covered. Then study it closely section by section. When you understand the book, you will understand economics better than any Nobel prize-winning economist.

Treat this column as an introduction to the book. I will be writing more about it as current events and time permit. As far as I am concerned, many current events cannot be understood independently of Hudson’s explanation of the financialized Western economy.

Indeed, as most Russian and Chinese economists are themselves trained in neoliberal economics, these two countries might follow the same downward path as the West.

If you put Hudson’s analysis of financialization together with my analysis of the adverse impact of jobs offshoring, you will understand that the present economic path of the Western world is the road to destruction.

The book: ‘Killing the Host‘ is written by Michael Hudson and published by Nation Books (2015).

Dr. Paul Craig Roberts was Assistant Secretary of the Treasury for Economic Policy and associate editor of the Wall Street Journal. He was columnist for Business Week, Scripps Howard News Service, and Creators Syndicate. He has had many university appointments. His internet columns have attracted a worldwide following. Roberts’ latest books are The Failure of Laissez Faire Capitalism and Economic Dissolution of the West, How America Was Lost, and The Neoconservative Threat to World Order.

This article was originally published on Paul Craig Roberts’s website.

Michael Hudson is the best economist in the world. Indeed, I could almost say that he is the only economist in the world.

Almost all of the rest are neoliberals, who are not economists but shills for financial interests.

If you have not heard of Michael Hudson it merely shows the power of the Matrix. Hudson should have won several Nobel prizes in economics, but he will never get one.

Hudson did not intend to be an economist. At the University of Chicago, which had a leading economics faculty, Hudson studied music and cultural history. He went to New York City to work in publishing.

He thought he could set out on his own when he was assigned rights to the writings and archives of George Lukacs and Leon Trotsky, but publishing houses were not interested in the work of two Jewish Marxists who had a significant impact on the 20th century.

Friendships connected Hudson to a former economist for General Electric who taught him the flow of funds through the economic system and explained how crises develop when debt outgrows the economy. Hooked, Hudson enrolled in the economics graduate program at NYU and took a job in the financial sector calculating how savings were recycled into new mortgage loans.

But Hudson really learnt his economics on Wall Street

Hudson learned more economics from his work experience than from his Ph.D. courses. On Wall Street he learned how bank lending inflates land prices and, thereby, interest payments to the financial sector.

The more banks lend, the higher real estate prices rise, thus encouraging more bank lending. As mortgage debt service rises, more of household income and more of the rental value of real estate are paid to the financial sector. When the imbalance becomes too large, the bubble bursts. Despite its importance, the analysis of land rent and property valuation was not part of his Ph.D. studies in economics.

Hudson’s next job was with Chase Manhattan, where he used the export earnings of South American countries to calculate how much debt service the countries could afford to pay to US banks.

Hudson learned that just as mortgage lenders regard the rental income from property as a flow of money that can be diverted to interest payments, international banks regard the export earnings of foreign countries as revenues that can be used to pay interest on foreign loans. Hudson learned that the goal of creditors is to capture the entire economic surplus of a country into payments of debt service.

Soon the American creditors and the IMF were lending indebted countries money with which to pay interest. This caused the countries’ foreign debts to rise at compound interest. Hudson predicted that the indebted countries would not be able to pay their debts, an unwelcome prediction that was confirmed when Mexico announced it could not pay.

This crisis was resolved with ‘Brady bonds’ named after the US Treasury Secretary, but when the 2008 US mortgage crisis hit, just as Hudson predicted, nothing was done for the American homeowners. If you are not a mega-bank, your problems are not a focus of US economic policy.

Tax havens: indispensable for tax dodgers, organised crime, and the federal government

Chase Manhattan next had Hudson develop an accounting format to analyze the US oil industry balance of payments. Here Hudson learned another lesson about the difference between official statistics and reality. Using ‘transfer pricing’, oil companies managed to avoid paying taxes by creating the illusion of zero profits.

Oil company affiliates in tax avoidance locations buy oil at low prices from producers. From these flags of convenience locations, which have no tax on profits, the oil was then sold to Western refineries at prices marked up to eliminate profits. The profits were recorded by the oil companies’ affiliates in non-tax jurisdictions. (Tax authorities have cracked down to some extent on the use of transfer pricing to escape taxation.)

Hudson’s next task was to estimate the amount of money from crime going into Switzerland’s secret banking system. In this investigation, his last for Chase, Hudson discovered that under US State Department direction Chase and other large banks had established banks in the Caribbean for the purpose of attracting money into dollar holdings from drug dealers in order to support the dollar (by raising the demand for dollars by criminals) in order to balance or offset Washington’s foreign military outflows of dollars.

If dollars flowed out of the US, but demand did not rise to absorb the larger supply of dollars, the dollar’s exchange rate would fall, thus threatenting the basis of US power. By providing offshore banks in which criminals could deposit illicit dollars, the US government supported the dollar’s exchange value.

Hudson discovered that the US balance of payments deficit, a source of pressure on the value of the US dollar, was entirely military in character. The US Treasury and State Department supported the Caribbean safe haven for illegal profits in order to offset the negative impact on the US balance of payments of US military operations abroad. In other words, if criminality can be used in support of the US dollar, the US government is all for criminality.

When it came to the economics of the situation, economic theory had not a clue. Neither trade flows nor direct investments were important in determining exchange rates. What was important was ‘errors and omissions’, which Hudson discovered was an euphemism for the hot, liquid money of drug dealers and government officials embezzling the export earnings of their countries.

The financial system is a mechanism for looting the real economy

The problem for Americans is that both political parties regard the needs of the American people as a liability and as an obstacle to the profits of the military / security complex, Wall Street and the mega-banks, and Washington’s world hegemony.

The government in Washington represents powerful interest groups, not American citizens. This is why the 21st century consists of an attack on the constitutional protections of citizens so that citizens can be moved out of the way of the needs of the Empire and its beneficiaries.

Hudson learned that economic theory is really a device for ripping off the untermenschen. International trade theory concludes that countries can service huge debts simply by lowering domestic wages in order to pay creditors.

This is the policy currently being applied to Greece today, and it has been the basis of the IMF’s structural adjustment or austerity programs imposed on debtor countries, essentially a form of looting that turns over national resources to foreign lenders.

Hudson learned that monetary theory concerns itself only with wages and consumer prices, not with the inflation of asset prices such as real estate and stocks. He saw that economic theory serves as a cover for the polarization of the world economy between rich and poor. The promises of globalism are a myth.

Debt slavery

Even left-wing and Marxist economists think of exploitation in terms of wages and are unaware that the main instrument of exploitation is the financial system’s extraction of value into interest payments.

Economic theory’s neglect of debt as an instrument of exploitation caused Hudson to look into the history of how earlier civilizations handled the build up of debt. His research was so ground-breaking that Harvard University appointed him Research Fellow in Babylonian economic history in the Peabody Museum.

Meanwhile he continued to be sought after by financial firms. He was hired to calculate the number of years that Argentina, Brazil, and Mexico would be able to pay the extremely high interest rates on their bonds. On the basis of Hudson’s work, the Scudder Fund achieved the second highest rate of return in the world in 1990.

Hudson’s investigations into the problems of our time took him through the history of economic thought. He discovered that 18th and 19th century economists understood the disabling power of debt far better than today’s neoliberal economists who essentially neglect it in order to better cater to the interest of the financial sector.

Hudson shows that Western economies have been financialized in a predatory way that sacrifices the public interest to the interests of the financial sector. That is why the economy no longer works for ordinary people. Finance is no longer productive. It has become a parasite on the economy. Hudson tells this story in his recent book, Killing the Host (2015).

Western economies – financialized to death

Readers often ask me how they can learn economics. My answer is to spend many hours with Hudson’s book. First, read the book through once or twice in order to get an idea of what is covered. Then study it closely section by section. When you understand the book, you will understand economics better than any Nobel prize-winning economist.

Treat this column as an introduction to the book. I will be writing more about it as current events and time permit. As far as I am concerned, many current events cannot be understood independently of Hudson’s explanation of the financialized Western economy.

Indeed, as most Russian and Chinese economists are themselves trained in neoliberal economics, these two countries might follow the same downward path as the West.

If you put Hudson’s analysis of financialization together with my analysis of the adverse impact of jobs offshoring, you will understand that the present economic path of the Western world is the road to destruction.

The book: ‘Killing the Host‘ is written by Michael Hudson and published by Nation Books (2015).

Dr. Paul Craig Roberts was Assistant Secretary of the Treasury for Economic Policy and associate editor of the Wall Street Journal. He was columnist for Business Week, Scripps Howard News Service, and Creators Syndicate. He has had many university appointments. His internet columns have attracted a worldwide following. Roberts’ latest books are The Failure of Laissez Faire Capitalism and Economic Dissolution of the West, How America Was Lost, and The Neoconservative Threat to World Order.

This article was originally published on Paul Craig Roberts’s website.

Michael Hudson is the best economist in the world. Indeed, I could almost say that he is the only economist in the world.

Almost all of the rest are neoliberals, who are not economists but shills for financial interests.

If you have not heard of Michael Hudson it merely shows the power of the Matrix. Hudson should have won several Nobel prizes in economics, but he will never get one.

Hudson did not intend to be an economist. At the University of Chicago, which had a leading economics faculty, Hudson studied music and cultural history. He went to New York City to work in publishing.

He thought he could set out on his own when he was assigned rights to the writings and archives of George Lukacs and Leon Trotsky, but publishing houses were not interested in the work of two Jewish Marxists who had a significant impact on the 20th century.

Friendships connected Hudson to a former economist for General Electric who taught him the flow of funds through the economic system and explained how crises develop when debt outgrows the economy. Hooked, Hudson enrolled in the economics graduate program at NYU and took a job in the financial sector calculating how savings were recycled into new mortgage loans.

But Hudson really learnt his economics on Wall Street

Hudson learned more economics from his work experience than from his Ph.D. courses. On Wall Street he learned how bank lending inflates land prices and, thereby, interest payments to the financial sector.

The more banks lend, the higher real estate prices rise, thus encouraging more bank lending. As mortgage debt service rises, more of household income and more of the rental value of real estate are paid to the financial sector. When the imbalance becomes too large, the bubble bursts. Despite its importance, the analysis of land rent and property valuation was not part of his Ph.D. studies in economics.

Hudson’s next job was with Chase Manhattan, where he used the export earnings of South American countries to calculate how much debt service the countries could afford to pay to US banks.

Hudson learned that just as mortgage lenders regard the rental income from property as a flow of money that can be diverted to interest payments, international banks regard the export earnings of foreign countries as revenues that can be used to pay interest on foreign loans. Hudson learned that the goal of creditors is to capture the entire economic surplus of a country into payments of debt service.

Soon the American creditors and the IMF were lending indebted countries money with which to pay interest. This caused the countries’ foreign debts to rise at compound interest. Hudson predicted that the indebted countries would not be able to pay their debts, an unwelcome prediction that was confirmed when Mexico announced it could not pay.

This crisis was resolved with ‘Brady bonds’ named after the US Treasury Secretary, but when the 2008 US mortgage crisis hit, just as Hudson predicted, nothing was done for the American homeowners. If you are not a mega-bank, your problems are not a focus of US economic policy.

Tax havens: indispensable for tax dodgers, organised crime, and the federal government

Chase Manhattan next had Hudson develop an accounting format to analyze the US oil industry balance of payments. Here Hudson learned another lesson about the difference between official statistics and reality. Using ‘transfer pricing’, oil companies managed to avoid paying taxes by creating the illusion of zero profits.

Oil company affiliates in tax avoidance locations buy oil at low prices from producers. From these flags of convenience locations, which have no tax on profits, the oil was then sold to Western refineries at prices marked up to eliminate profits. The profits were recorded by the oil companies’ affiliates in non-tax jurisdictions. (Tax authorities have cracked down to some extent on the use of transfer pricing to escape taxation.)

Hudson’s next task was to estimate the amount of money from crime going into Switzerland’s secret banking system. In this investigation, his last for Chase, Hudson discovered that under US State Department direction Chase and other large banks had established banks in the Caribbean for the purpose of attracting money into dollar holdings from drug dealers in order to support the dollar (by raising the demand for dollars by criminals) in order to balance or offset Washington’s foreign military outflows of dollars.

If dollars flowed out of the US, but demand did not rise to absorb the larger supply of dollars, the dollar’s exchange rate would fall, thus threatenting the basis of US power. By providing offshore banks in which criminals could deposit illicit dollars, the US government supported the dollar’s exchange value.

Hudson discovered that the US balance of payments deficit, a source of pressure on the value of the US dollar, was entirely military in character. The US Treasury and State Department supported the Caribbean safe haven for illegal profits in order to offset the negative impact on the US balance of payments of US military operations abroad. In other words, if criminality can be used in support of the US dollar, the US government is all for criminality.

When it came to the economics of the situation, economic theory had not a clue. Neither trade flows nor direct investments were important in determining exchange rates. What was important was ‘errors and omissions’, which Hudson discovered was an euphemism for the hot, liquid money of drug dealers and government officials embezzling the export earnings of their countries.

The financial system is a mechanism for looting the real economy

The problem for Americans is that both political parties regard the needs of the American people as a liability and as an obstacle to the profits of the military / security complex, Wall Street and the mega-banks, and Washington’s world hegemony.

The government in Washington represents powerful interest groups, not American citizens. This is why the 21st century consists of an attack on the constitutional protections of citizens so that citizens can be moved out of the way of the needs of the Empire and its beneficiaries.

Hudson learned that economic theory is really a device for ripping off the untermenschen. International trade theory concludes that countries can service huge debts simply by lowering domestic wages in order to pay creditors.

This is the policy currently being applied to Greece today, and it has been the basis of the IMF’s structural adjustment or austerity programs imposed on debtor countries, essentially a form of looting that turns over national resources to foreign lenders.

Hudson learned that monetary theory concerns itself only with wages and consumer prices, not with the inflation of asset prices such as real estate and stocks. He saw that economic theory serves as a cover for the polarization of the world economy between rich and poor. The promises of globalism are a myth.

Debt slavery

Even left-wing and Marxist economists think of exploitation in terms of wages and are unaware that the main instrument of exploitation is the financial system’s extraction of value into interest payments.

Economic theory’s neglect of debt as an instrument of exploitation caused Hudson to look into the history of how earlier civilizations handled the build up of debt. His research was so ground-breaking that Harvard University appointed him Research Fellow in Babylonian economic history in the Peabody Museum.

Meanwhile he continued to be sought after by financial firms. He was hired to calculate the number of years that Argentina, Brazil, and Mexico would be able to pay the extremely high interest rates on their bonds. On the basis of Hudson’s work, the Scudder Fund achieved the second highest rate of return in the world in 1990.

Hudson’s investigations into the problems of our time took him through the history of economic thought. He discovered that 18th and 19th century economists understood the disabling power of debt far better than today’s neoliberal economists who essentially neglect it in order to better cater to the interest of the financial sector.

Hudson shows that Western economies have been financialized in a predatory way that sacrifices the public interest to the interests of the financial sector. That is why the economy no longer works for ordinary people. Finance is no longer productive. It has become a parasite on the economy. Hudson tells this story in his recent book, Killing the Host (2015).

Western economies – financialized to death

Readers often ask me how they can learn economics. My answer is to spend many hours with Hudson’s book. First, read the book through once or twice in order to get an idea of what is covered. Then study it closely section by section. When you understand the book, you will understand economics better than any Nobel prize-winning economist.

Treat this column as an introduction to the book. I will be writing more about it as current events and time permit. As far as I am concerned, many current events cannot be understood independently of Hudson’s explanation of the financialized Western economy.

Indeed, as most Russian and Chinese economists are themselves trained in neoliberal economics, these two countries might follow the same downward path as the West.

If you put Hudson’s analysis of financialization together with my analysis of the adverse impact of jobs offshoring, you will understand that the present economic path of the Western world is the road to destruction.

The book: ‘Killing the Host‘ is written by Michael Hudson and published by Nation Books (2015).

Dr. Paul Craig Roberts was Assistant Secretary of the Treasury for Economic Policy and associate editor of the Wall Street Journal. He was columnist for Business Week, Scripps Howard News Service, and Creators Syndicate. He has had many university appointments. His internet columns have attracted a worldwide following. Roberts’ latest books are The Failure of Laissez Faire Capitalism and Economic Dissolution of the West, How America Was Lost, and The Neoconservative Threat to World Order.

This article was originally published on Paul Craig Roberts’s website.

Michael Hudson is the best economist in the world. Indeed, I could almost say that he is the only economist in the world.

Almost all of the rest are neoliberals, who are not economists but shills for financial interests.

If you have not heard of Michael Hudson it merely shows the power of the Matrix. Hudson should have won several Nobel prizes in economics, but he will never get one.

Hudson did not intend to be an economist. At the University of Chicago, which had a leading economics faculty, Hudson studied music and cultural history. He went to New York City to work in publishing.

He thought he could set out on his own when he was assigned rights to the writings and archives of George Lukacs and Leon Trotsky, but publishing houses were not interested in the work of two Jewish Marxists who had a significant impact on the 20th century.

Friendships connected Hudson to a former economist for General Electric who taught him the flow of funds through the economic system and explained how crises develop when debt outgrows the economy. Hooked, Hudson enrolled in the economics graduate program at NYU and took a job in the financial sector calculating how savings were recycled into new mortgage loans.

But Hudson really learnt his economics on Wall Street

Hudson learned more economics from his work experience than from his Ph.D. courses. On Wall Street he learned how bank lending inflates land prices and, thereby, interest payments to the financial sector.

The more banks lend, the higher real estate prices rise, thus encouraging more bank lending. As mortgage debt service rises, more of household income and more of the rental value of real estate are paid to the financial sector. When the imbalance becomes too large, the bubble bursts. Despite its importance, the analysis of land rent and property valuation was not part of his Ph.D. studies in economics.

Hudson’s next job was with Chase Manhattan, where he used the export earnings of South American countries to calculate how much debt service the countries could afford to pay to US banks.

Hudson learned that just as mortgage lenders regard the rental income from property as a flow of money that can be diverted to interest payments, international banks regard the export earnings of foreign countries as revenues that can be used to pay interest on foreign loans. Hudson learned that the goal of creditors is to capture the entire economic surplus of a country into payments of debt service.

Soon the American creditors and the IMF were lending indebted countries money with which to pay interest. This caused the countries’ foreign debts to rise at compound interest. Hudson predicted that the indebted countries would not be able to pay their debts, an unwelcome prediction that was confirmed when Mexico announced it could not pay.

This crisis was resolved with ‘Brady bonds’ named after the US Treasury Secretary, but when the 2008 US mortgage crisis hit, just as Hudson predicted, nothing was done for the American homeowners. If you are not a mega-bank, your problems are not a focus of US economic policy.

Tax havens: indispensable for tax dodgers, organised crime, and the federal government

Chase Manhattan next had Hudson develop an accounting format to analyze the US oil industry balance of payments. Here Hudson learned another lesson about the difference between official statistics and reality. Using ‘transfer pricing’, oil companies managed to avoid paying taxes by creating the illusion of zero profits.

Oil company affiliates in tax avoidance locations buy oil at low prices from producers. From these flags of convenience locations, which have no tax on profits, the oil was then sold to Western refineries at prices marked up to eliminate profits. The profits were recorded by the oil companies’ affiliates in non-tax jurisdictions. (Tax authorities have cracked down to some extent on the use of transfer pricing to escape taxation.)

Hudson’s next task was to estimate the amount of money from crime going into Switzerland’s secret banking system. In this investigation, his last for Chase, Hudson discovered that under US State Department direction Chase and other large banks had established banks in the Caribbean for the purpose of attracting money into dollar holdings from drug dealers in order to support the dollar (by raising the demand for dollars by criminals) in order to balance or offset Washington’s foreign military outflows of dollars.

If dollars flowed out of the US, but demand did not rise to absorb the larger supply of dollars, the dollar’s exchange rate would fall, thus threatenting the basis of US power. By providing offshore banks in which criminals could deposit illicit dollars, the US government supported the dollar’s exchange value.

Hudson discovered that the US balance of payments deficit, a source of pressure on the value of the US dollar, was entirely military in character. The US Treasury and State Department supported the Caribbean safe haven for illegal profits in order to offset the negative impact on the US balance of payments of US military operations abroad. In other words, if criminality can be used in support of the US dollar, the US government is all for criminality.

When it came to the economics of the situation, economic theory had not a clue. Neither trade flows nor direct investments were important in determining exchange rates. What was important was ‘errors and omissions’, which Hudson discovered was an euphemism for the hot, liquid money of drug dealers and government officials embezzling the export earnings of their countries.

The financial system is a mechanism for looting the real economy

The problem for Americans is that both political parties regard the needs of the American people as a liability and as an obstacle to the profits of the military / security complex, Wall Street and the mega-banks, and Washington’s world hegemony.

The government in Washington represents powerful interest groups, not American citizens. This is why the 21st century consists of an attack on the constitutional protections of citizens so that citizens can be moved out of the way of the needs of the Empire and its beneficiaries.

Hudson learned that economic theory is really a device for ripping off the untermenschen. International trade theory concludes that countries can service huge debts simply by lowering domestic wages in order to pay creditors.

This is the policy currently being applied to Greece today, and it has been the basis of the IMF’s structural adjustment or austerity programs imposed on debtor countries, essentially a form of looting that turns over national resources to foreign lenders.

Hudson learned that monetary theory concerns itself only with wages and consumer prices, not with the inflation of asset prices such as real estate and stocks. He saw that economic theory serves as a cover for the polarization of the world economy between rich and poor. The promises of globalism are a myth.

Debt slavery

Even left-wing and Marxist economists think of exploitation in terms of wages and are unaware that the main instrument of exploitation is the financial system’s extraction of value into interest payments.

Economic theory’s neglect of debt as an instrument of exploitation caused Hudson to look into the history of how earlier civilizations handled the build up of debt. His research was so ground-breaking that Harvard University appointed him Research Fellow in Babylonian economic history in the Peabody Museum.

Meanwhile he continued to be sought after by financial firms. He was hired to calculate the number of years that Argentina, Brazil, and Mexico would be able to pay the extremely high interest rates on their bonds. On the basis of Hudson’s work, the Scudder Fund achieved the second highest rate of return in the world in 1990.

Hudson’s investigations into the problems of our time took him through the history of economic thought. He discovered that 18th and 19th century economists understood the disabling power of debt far better than today’s neoliberal economists who essentially neglect it in order to better cater to the interest of the financial sector.

Hudson shows that Western economies have been financialized in a predatory way that sacrifices the public interest to the interests of the financial sector. That is why the economy no longer works for ordinary people. Finance is no longer productive. It has become a parasite on the economy. Hudson tells this story in his recent book, Killing the Host (2015).

Western economies – financialized to death

Readers often ask me how they can learn economics. My answer is to spend many hours with Hudson’s book. First, read the book through once or twice in order to get an idea of what is covered. Then study it closely section by section. When you understand the book, you will understand economics better than any Nobel prize-winning economist.

Treat this column as an introduction to the book. I will be writing more about it as current events and time permit. As far as I am concerned, many current events cannot be understood independently of Hudson’s explanation of the financialized Western economy.

Indeed, as most Russian and Chinese economists are themselves trained in neoliberal economics, these two countries might follow the same downward path as the West.

If you put Hudson’s analysis of financialization together with my analysis of the adverse impact of jobs offshoring, you will understand that the present economic path of the Western world is the road to destruction.

The book: ‘Killing the Host‘ is written by Michael Hudson and published by Nation Books (2015).

Dr. Paul Craig Roberts was Assistant Secretary of the Treasury for Economic Policy and associate editor of the Wall Street Journal. He was columnist for Business Week, Scripps Howard News Service, and Creators Syndicate. He has had many university appointments. His internet columns have attracted a worldwide following. Roberts’ latest books are The Failure of Laissez Faire Capitalism and Economic Dissolution of the West, How America Was Lost, and The Neoconservative Threat to World Order.

This article was originally published on Paul Craig Roberts’s website.

Technological improvements mean that the phones, tablets, computers and other electric devices we find so essential are cheaper and more powerful than ever.

But this means we upgrade them sooner and they quickly become unwanted or obsolete, and are thrown away.

The huge amounts of waste electrical and electronic equipment – WEEE, or e-waste – that results is quickly becoming a major worldwide environmental, economic and health problem.

A recent report by the European Union-funded Countering WEEE Illegal Trade project found that only just over a third of Europe’s e-waste ended up in official collection and recycling programs.

The rest, amounting to over 6m tonnes a year, was either exported (1.5m tonnes), recycled in ways that fell outside the law (3.15m tonnes), scavenged (750,000 tonnes), or simply thrown in the bin (750,000 tonnes).

Considering the vast quantities of e-waste produced worldwide, where this waste ends up is a serious concern. Considering the energy and materials-intensive process of manufacturing it in the first place, so is the impact on the world’s natural resources and environment.

E-waste is bad for the environment

But not all e-waste is the same. Different equipment can contain hundreds or even thousands of different substances, some of which are potentially highly toxic, while others are extremely valuable.

This has led to theft: in 2012 the EU estimated that theft of valuable components and materials from e-waste was worth between €800m and €1.7 billion. Much of electronic waste is made of metals: gold, lead, nickel, silver, tin and zinc, alongside valuable reusable plastics. Hazardous elements include materials such as asbestos, batteries, printed circuit boards, and printer toner cartridges.

Throwing away high-value materials represents a huge waste. However, the economics of extracting them don’t always work in the West. Instead, e-waste exported to developing countries ends up in informal recycling schemes run by individuals, and sometimes criminal gangs.

In some countries this has dominated the e-waste recycling chain, with equipment burnt in open fires or processed with hazardous acids in order to recover valuable metals.

Properly organised recycling schemes have emerged in developed countries, with the EU leading the way in adopting the ‘producer pays principle‘, which requires manufacturers and sometimes importers and distributors to fund the collection and recycling of their products – and to ensure they’re disposed of using environmentally sound methods.

In the European Union, this first appeared as the 2006 WEEE Directive, which included rising national e-waste recycling targets, and a further directive in 2012 that broadened what counted as e-waste and introduced tougher restrictions on illegal waste export.

Each year around 9.5m tonnes of e-waste are disposed of in the EU. It is also estimated that of the 1.3m tonnes of undocumented electronic waste exported, 70% was functioning equipment – which could potentially have continued to be used.

E-waste is bad for your health, and your wallet

Electronic waste was at first just dumped in landfill sites. But the danger of the highly-toxic elements in e-waste escaping landfill sites – into the water table, for example – meant that tighter controls were needed.

Problems related to e-waste disposal in developing countries are worse, and already cause significant environmental and health problems. The open burning of plastics, widespread general dumping, and other malpractices associated with improper dismantling and treatment of e-waste as observed in countries such as China, India and Nigeria can result in serious health consequences.

Places such as Guiyu in China and Agbogbloshie in Ghana have become notorious for their unregulated, heavily polluted, sweatshop-dominated, digital dumps. Metals do not degrade in the environment and so can accumulate, contaminating the soil and groundwater, bioaccumulating in the creatures living in them.

Beyond the cost to the environment and health is the economic cost. The loss of precious, useful and often rare materials from unprocessed e-waste is very significant. Materials found in modern electrical and electronic products include metals classified as critical raw materials which are in short supply.

Ethical concerns linked with e-waste include reports of child labour in its treatment and handling, especially in some parts of Asia and Africa. Illegal shipment of e-waste from affluent countries to poorer developing countries that lack the facilities to properly treat such wastes is widespread.

The evidence points to a close link between ethical malpractice in e-waste handling and environmental damage and health problems. Preventing illegal e-waste shipments could alleviate – if not necessarily eradicate – these effects.

With the world’s population expected to grow to nine billion by 2050, and a corresponding leap in the amount of waste electronics that we consume and discard, we urgently need to get a grip on this problem – and introduce proper laws, regulations and procedures that will ensure that electronic waste is safely dealt with.

The report: ‘Countering WEEE Illegal Trade Summary Report‘ (Summary).

Ian Williams is Professor of Engineering and the Enviroment , University of Southampton.

This article was originally published on The Conversation. Read the original article.

In 2013, India’s former Agriculture Minister Sharad Pawar accused US companies of derailing the nation’s oilseeds production programme.

Similar claims had been made before. For instance, we could revisit the 1998 mustard oil tragedy.

At the time, Rajasthan Oil Industries Association claimed that a “conspiracy” was being hatched to undermine the mustard oil trade and charged that the “invisible hands of the multinationals” were involved (see the article ‘Monsanto and the Mustard Seed‘).

India was almost self-sufficient in edible oils by the mid-1990s. Its farmers met 97% of domestic need. However, its edible oil import bill has increased dramatically since then.

By 2013, India was the world’s second biggest importer of edible oils. Food and trade policy analyst Devinder Sharma notes that between 2006-07 and 2011-12 alone edible oil imports rose by 380%.

Sharma asserts self-sufficiency was not palatable to international financial institutions, and that, under pressure from the World Bank, India began to reduce the import tariffs on edible oils and imports then began to increase.

The impact has been felt by millions of farmers. Instead of paying Indonesian, Malaysian, American and Brazilian farmers from where India imports edible oils, he argues the effort should be to support domestic farmers.

More than half of India’s cooking oil is now imported

India meets more than half its cooking oil requirements through imports, with palm oil shipped from Indonesia and Malaysia and soybean oil from the US, Brazil and Argentina. Notwithstanding the environmental damage resulting from industrial-size mono-crop plantations (see this on palm oil in Indonesia and this on soy in Brazil), soybean imports are expected to grow even more and further threaten domestic cultivation.

In an editorial piece for Kisan Ki Awaaz (National Voice of the Farmers) in November 2015, Kishan Bir Chaudhary highlights the trend to undermine indigenous production by noting the move to completely wipe out India’s soybean cultivation.

The large-scale import of soybean meal is being contemplated at cheap prices from South America, China and USA, which would flood the Indian market. This is despite there being a more than adequate quantity of soybean meal available from locally produced soybean.

Currently, the import of soybean meal is freely permitted, with a low customs duty. Soybean prices in the exporting countries are between 30% to 40% lower because of huge subsidies. This could leave few outlets for indigenous production.

Although current laws do not permit the import of any GMO-based food or feed item into India, the fear is importers may ship in GMO soybean and soybean meal at cheap rates, which will get cleared at ports without testing for the presence of GMOs.

Chaudhary notes India’s soybean farmers are under pressure due to: the import of GM cheap soybean meal; a clamour for the import of soybean itself; the discouragement of soy cultivation by political leaders; and the active involvement of foreign seed and pesticide companies in promoting GM Soy cultivation.

He calls for an immediate ban on soybean imports as well as for customs officers to uphold the law of the land with regard to prohibiting the import of GMOs by carrying out proper checks in government laboratories.

The high-level push for GM mustard to be grown in India

With risks of GM entering India via imports clear, we are also currently witnessing the push to get GM mustard (and other crops) commercialised and grown in Indian fields. The justification being put forward for this if that GM mustard is a high-yielding crop, but, more importantly, it would diminish the reliance on edible oil imports.

These arguments are little more than smokescreens to divert attention from 1) the actual reality of increased import costs and the associated running down of indigenous agriculture, which stem from trade policies driven by the vested interests of global agribusiness, and 2) myths about the efficacy of GM. Such Trojan horse logic is being used to ease the entry of GMOs into India.

And such entry is at risk of being done by by-passing proper processes and procedures in what Aruna Rodrigues calls a case of “unremitting fraud” and by side-lining four high-level reports advising against the adoption of these crops in India:

• the ‘Jairam Ramesh Report’ of February 2010, imposing an indefinite moratorium on Bt Brinjal;
• the ‘Sopory Committee Report’ [August 2012];
• the ‘Parliamentary Standing Committee’ [PSC] Report on GM crops [August 2012];
• and the ‘Technical Expert Committee [TEC] Final Report’ [June-July 2013]).

As far as the claim GM producing better yields, Devinder Sharma points out that in the US, crop yields of GM soy have been found 4% to 20% less than non-GM varieties. Whether it concerns soy, mustard or just about any other GM crop, the claims that GM produces increased yields is a myth. As the report GMO Myths and Truths, which provides evidence in support of Sharma’s claims, puts it:

“If GM cannot increase yields even in the US, where high-input, irrigated, heavily subsidized commodity farming is the norm, it is irresponsible to assume that it would improve yields in the Global South, where farmers may literally bet their farms and livelihoods on a crop.”

And farmers have indeed ‘bet their farms and livelihoods’ on a crop – and have lost (see this report from India’s The Statesman newspaper) or are being taken for a ride (see this on GM cotton, illegal royalties and financial distress)? Where is the logic in promoting GM varieties which produce less than existing improved varieties that are not genetically modified?

Support indigenous production and local farmers!

Improving production should not be based on a supposed GM techno quick-fix, which the pro-GMO lobby would like us to believe in. The answer lies in adopting appropriate trade policies that favour indigenous production and local farmers and which, as Devinder Sharma notes, provides assured procurement and assured prices to farmers.

The fact that GM is not wanted or required, leads us to question why GMOs are being forced into the country (and are in fact already being consumed in terms of cotton seed oil). But it doesn’t take a genius as to why this might be.

Rajesh Krishnan, Convenor of Coalition for a GM-Free India argues that GM mustard is a backdoor entry for various other GM crops in the regulatory pipeline. He adds:

“GM mustard hybrid has been created mainly to facilitate the seed production work of seed manufacturers whereas farmers already have a choice of non-GM mustard hybrids in the market, in addition to high yielding non hybrid mustard varieties.

“There are non-GM agro-ecological options like System of Mustard Intensification yielding far higher production than the claimed yields of this GM mustard … This is clearly one more GMO that is unwanted and unneeded and is being thrust on citizens in violation of our right to choices, as farmers and consumers.”

Little wonder then that most state governments have been unwilling to take up field trials.

From research institutes, regulatory agencies and decision-making bodies riddled with conflicts of interests to strings-attached trade deals and nuclear agreements and pressure from the World Bank, the answer to why India is trying to pursue the global agribusiness-backed GM route is plain to see.

Colin Todhunter is an extensively published independent writer and former social policy researcher, based in the UK and India. You can support his work here.

Also on The Ecologist:

• ‘India’s top GMO regulator’s ‘Contempt of Court’ over GM mustard trials‘
• ‘Rice, wheat, mustard … India drives forward first GMO crops under veil of secrecy‘.

This article was originally published on Colin’s website.

The World Health Organization view that the microcephaly outbreak in Brazil’s impoverished northeast is caused by the Zika virus has, so far, received few challenges.

Brazil’s Health Minister, Marcelo Castro, has gone so far as to say that he has “100% certainty” that there is a link between Zika and microcephaly, a birth defect in which babies are born with small heads.

The view is widely supported in the medical community worldwide, including by the US’s influential Center for Disease Control. But there is no hard evidence of the link, rather a mixture of epidemiological indications and circumstantial evidence.

One of the key scientific papers, by A S Oliveira Melo et al in the journal Ultrasound in Obstetrics & Gynecology, found Zika virus in the amniotic fluids and other tissues of the affected babies and their mothers. But only two women were examined, far too small a number to establish a statistically significant link.

The New York Times also reported on 3rd February on the outcome of analyses by Brazil’s Health Ministry: “Of the cases examined so far, 404 have been confirmed as having microcephaly. Only 17 of them tested positive for the Zika virus. But the government and many researchers say that number may be largely irrelevant, because their tests would find the presence of the virus in only a tiny percentage of cases.”

And last weekend, the most powerful indicator yet that the microcephaly may have another cause altogether was announced by Colombia’s president, Juan Manuel Santos, as reported by the Washington Post. Colombian public health officials, stated Santos, have so far diagnosed 3,177 pregnant women with the Zika virus- but in no case had microcephaly been observed in the foetus.

Argentine doctors: it’s the insecticide

Now a new report has been published by the Argentine doctors’ organisation, Physicians in the Crop-Sprayed Towns (PCST), [1] which not only challenges the theory that the Zika virus epidemic in Brazil is the cause of the increase in microcephaly among newborns, but proposes an alternative explanation.

According to PCST, the Ministry failed to recognise that in the area where most sick people live, a chemical larvicide that produces malformations in mosquitoes was introduced into the drinking water supply in 2014.

This pesticide, Pyriproxyfen, is used in a state-controlled programme aimed at eradicating disease-carrying mosquitos. The Physicians added that the Pyriproxyfen is manufactured by Sumitomo Chemical, a Japanese ‘strategic partner‘ of Monsanto. – a company they have learned to distrust due to the vast volume of the company’s pesticides sprayed onto Argentina’s cropland.

Pyriproxyfen is a growth inhibitor of mosquito larvae, which alters the development process from larva to pupa to adult, thus generating malformations in developing mosquitoes and killing or disabling them. It acts as an insect juvenile hormone or juvenoid, and has the effect of inhibiting the development of adult insect characteristics (for example, wings and mature external genitalia) and reproductive development.

The chemical has a relatively low risk profile as shown by its WHO listing, with low acute toxicity. Tests carried out in a variety of animals by Sumitomo found that it was not a teratogen (did not cause birth defects) in the mammals it was tested on. However this cannot be taken as a completely reliable indicator of its effects in humans – especially in the face of opposing evidence.

The PCST commented: “Malformations detected in thousands of children from pregnant women living in areas where the Brazilian state added Pyriproxyfen to drinking water are not a coincidence, even though the Ministry of Health places a direct blame on the Zika virus for this damage.”

They also noted that Zika has traditionally been held to be a relatively benign disease that has never before been associated with birth defects, even in areas where it infects 75% of the population.

Brazilian doctors also suspect pyriproxyfen

Pyriproxyfen is a relatively new introduction to the Brazilian environment; the microcephaly increase is a relatively new phenomenon. So the larvicide seems a plausible causative factor in microcephaly – far more so than GM mosquitos, which some have blamed for the Zika epidemic and thus for the birth defects.

The PCST report, which also addresses the Dengue fever epidemic in Brazil, concurs with the findings of a separate report on the Zika outbreak by the Brazilian doctors’ and public health researchers’ organisation, Abrasco. [2]

Abrasco also names Pyriproxyfen as a possible cause of the microcephaly. It condemns the strategy of chemical control of Zika-carrying mosquitoes, which it says is contaminating the environment as well as people and is not decreasing the numbers of mosquitoes.

Instead Abrasco suggests that this strategy is in fact driven by the commercial interests of the chemical industry, which it says is deeply integrated into the Latin American ministries of health, as well as the World Health Organization and the Pan American Health Organisation.

Abrasco names the British GM insect company Oxitec as part of the corporate lobby that is distorting the facts about Zika to suit its own profit-making agenda. Oxitec sells GM mosquitoes engineered for sterility and markets them as a disease-combatting product – a strategy condemned by the Argentine Physicians as “a total failure, except for the company supplying mosquitoes.”

Both the Brazilian and Argentine doctors’ and researchers’ associations agree that poverty is a key neglected factor in the Zika epidemic. Abrasco condemned the Brazilian government for its “deliberate concealment” of economic and social causes: “In Argentina and across America the poorest populations with the least access to sanitation and safe water suffer most from the outbreak.” PCST agrees, stating, “The basis of the progress of the disease lies in inequality and poverty.”

Abrasco adds that the disease is closely linked to environmental degradation: floods caused by logging and the massive use of herbicides on (GM) herbicide-tolerant soy crops – in short, “the impacts of extractive industries.”

The notion that environmental degradation may a factor in the spread of Zika finds backing in the view of Dino Martins, PhD, a Kenyan entomologist. Martins said that “the explosion of mosquitoes in urban areas, which is driving the Zika crisis” is caused by “a lack of natural diversity that would otherwise keep mosquito populations under control, and the proliferation of waste and lack of disposal in some areas which provide artificial habitat for breeding mosquitoes.”

Community-based actions

The Argentine Physicians believe that the best defence against Zika is “community-based actions”. An example of such actions is featured in a BBC News report on the Dengue virus in El Salvador.

A favourite breeding place for disease-carrying mosquitoes is storage containers of standing water. El Salvadorians have started keeping fish in the water containers, and the fish eat the mosquito larvae. Dengue has vanished along with the mosquitoes that transmit the disease. And so far, the locals don’t have any Zika cases either.

Simple yet effective programmes like this are in danger of being neglected in Brazil in favour of the corporate-backed programmes of pesticide spraying and releasing GM mosquitoes. The latter is completely unproven and the former may be causing far more serious harm than the mosquitoes that are being targeted.

Claire Robinson is an editor at GMWatch.

This article was originally published by GMWatch. This version includes additional reporting by The Ecologist.

Notes

1. ‘Report from Physicians in the Crop-Sprayed Towns regarding Dengue-Zika, microcephaly, and mass-spraying with chemical poisons‘. 2016. Physicians in the Crop-Sprayed Towns.

2. ‘Nota técnica e carta aberta à população: Microcefalia e doenças vetoriais relacionadas ao Aedes aegypti: os perigos das abordagens com larvicidas e nebulização química – fumacê‘. January 2016. GT Salud y Ambiente. Asociación Brasileña de Salud Colectiva. ABRASCO.

A new study by the University of East Anglia (UEA) indicates that agricultural policies which governments, international donors and organisations such as the International Monetary Fund claim to be economically successful and alleviating poverty are not working.

In fact they are having large negative impacts on the poorest and most vulnerable people in rural Africa.

At the forefront of these policies has been the much vaunted New Alliance for Food Security and Nutrition which is made up of governments, a range of international agencies, the Gates Foundation and other large donors, and multinational companies such as Monsanto.

They have been vigorously pushing to increase and ‘modernise’ agricultural production in Africa through seeds and cultivation techniques that are highly dependent on chemical inputs and ‘innovative technologies’, including genetic engineering.

Policies benefit the wealthy and harm the poor

This new research reveals that these policies are adversely impacting on the lives of “tens, even hundreds of millions of smallholder farmers”.

It shows that only a relatively wealthy minority have benefited from what has essentially become ‘enforced modernisation’ The poorest farmers cannot afford the risk of taking out credit for the necessary inputs of seeds, fertilisers and pesticides and they live in fear of government agencies seizing and reallocating their land.

The research looked in-depth at the impact of agricultural policies on Rwanda but the findings tie in with recent concerns about strategies to feed the world in the face of growing populations, debates about the effectiveness of small versus large farms and struggles to maintain local control over land and food production.

Enforced modernisation leads to landlessness and inequality

Up to 90 per cent of people in some African countries are smallholder farmers reliant on agriculture. Dr Neil Dawson, the study’s lead author said: “Agricultural development certainly has the potential to help these people, but instead these policies appear to be exacerbating landlessness and inequality for poorer rural inhabitants.

“Many of these policies have been hailed as transformative development successes, yet that success is often claimed on the basis of weak evidence through inadequate impact assessments.

“Such policies may increase aggregate production of exportable crops, yet for many of the poorest smallholders they strip them of their main productive resource, land.

“This study details how these imposed changes disrupt subsistence practices, exacerbate poverty, impair local systems of trade and knowledge, and threaten land ownership. It is startling that the impacts of policies with such far-reaching impacts for such poor people are, in general, so inadequately assessed.”

More evidence supporting traditional farming

Farmers in Rwanda traditionally cultivate up to 60 different types of crops, planting and harvesting in overlapping cycles to prevent shortages and hunger. Now they have been forced them to ‘modernise’ with new seed varieties, chemical fertilisers and to specialise in single crops which increases their risk and vulnerability.

The UEA researchers recommend that these ‘development’ policies be subject to much broader and more rigorous impact assessments, and that mitigation for poverty-exacerbating impacts should be specifically incorporated into such policies. In Rwanda, that means encouraging land access for the poorest and supporting traditional practices during a gradual and voluntary modernisation.

This study gives further weight and credence to the conclusions of the 2008 International Assessment of Agriculture Science and Technology (IAASTD) which highlighted that agro-ecological approaches were the most appropriate technologies to tackle food security and hunger.

It beggars belief that IAASTD is still being largely ignored by governments and sidelined by UN agencies

Lawrence Woodward O.B.E. is the Co-ordinator for Citizens Concerned About GM (GM Education), the Director of Beyond GM and the Principal Policy Advisor for the Organic Research Centre.

This article was originally published by GM Education.