The Disastrous Consequences of Raiding Public Pensions

Dismantling the Social Contract
by DARWIN BOND-GRAHAM

Detroit’s bankruptcy and a high profile lawsuit in San Jose highlight a national effort led by fiscal conservatives to undo the basic promise embodied in public employee pensions – a guaranteed, defined retirement benefit. If they succeed in unraveling public pensions as has been done to retirement benefits offered by the private sector they might also be erasing one of the most robust counter-cyclical infusions of cash into the economy keeping us from the brink of another crisis.

In Detroit emergency manager Kevin Orr is attempting to cut the pension obligations the city has promised to pay thousands of retirees. He is arguing that a pension is equivalent to bonded indebtedness, and that retirees should take a haircut so that banks can recoup higher interest on their bonds. In San Jose workers are battling the city’s Mayor in court over a ballot measure approved last fall that, if upheld, would circumvent collective bargaining and require public employees to make larger contributions to their retirement fund. Known as Measure B, the law would impose other unilateral changes to San Jose’s retirement plan, ultimately lowering the compensation of employees.

[pullquote] The erasing of pensions—like the dismantling of other safety net income provisions—is typical of the socially stupid “short-term” thinking favored by the corporate rich and their hirelings. [/pullquote]

In numerous other states and cities both liberal and conservative politicians and corporate-backed lobbies are attempting to roll back public pensions either by cutting existing obligations, as is the case in Detroit and San Jose, or by reducing future benefits for new hires.

This anti-defined benefit pension campaign, if successful, could have devastating long-term impacts on the economy. Here’s why.

One of the main causes of the Financial Crisis of 2008 was over-burdensome debt used to finance consumer spending. For decades most Americans have seen the real value of their wages drop. But as consumers became poorer they didn’t cut back on buying cars, houses, electronics, and other goodies. This is partly because the financial system proliferated complicated and risky securitized bonds and credit derivatives to expand the possible debt load on the bottom half of income earners. All of the alphabet soup of securitized debt, CDOs, CMOs etc., freed up hundreds of billions of dollars for the creation of new mortgage, credit card, and other debt. Many of the loans extended through this laissez faire regime of credit creation were predatory, designed to exploit low-income borrowers, but so long as the housing bubble continued to inflate, serious harm was contained. With millions of Americans still in command of purchasing power the economy chugged along, but it was an illusion of prosperity. The incomes of most consumers continued to plummet.

In fact, the reduction of defined benefit pension coverage in the private sector is part of the overall decline in workers’ incomes over the past thirty years which has led to higher levels of consumer debt and less ability to sustain demand in the economy. According to the Bureau of Labor Statistics, in the early 1990s 35 percent of workers in the private sector were covered by a defined benefit pension system. This level was even higher in the 1970s. Today the number of workers in the private sector with a defined benefit pension has dropped to just 18 percent. This translates into billions less in income for workers after they retire, meaning billions that aren’t injected into the economy in the form of consumer purchases.

Massive levels of private debt and dwindling income to sustain this debt caught up with us in 2007. Combined with speculative gambles by the banks and insurance corporations the system crashed. Many Americans cut back their spending and the crisis worsened.

The so-called recovery that has been underway since about early 2012 has seen prices of everything from corporate stocks to residential homes bounce back, but incomes for many Americans are not rebounding. The underlying structural cause of the economic crash hasn’t been addressed. Workers are still being paid at levels far below the level of previous decades while much of the national income pie is being devoured by the top one percent. Pension payments in the private sector continue to fall as new workers are offered only defined contribution plans, or in many cases nothing at all.

In Keynesian language, there is no force to sustain aggregate demand. Without consumer demand for basic goods there won’t be industrial investment. Without investment there won’t be new jobs and increases in worker productivity, and the incomes of most Americans will continue to decline in real terms. The cycle spins downward without some sort of intervention to lift the majority into income security.

Consider what would happen now if the pension hawks were to get their way and dramatically scale back the retirement benefits that state and local governments have promised their employees. The crisis of declining incomes for the majority of Americans would dramatically worsen. Millions would endure real pay cuts and in turn reduce their household budgets, and the economic system would choke.

According to the US Census’s survey of pensions, there are about 19.4 million public employees who are members of a public employee retirement system. About 8.6 million of these individuals are currently drawing benefits from the 3,400 state and local pension funds of all fifty states, and thousands of counties and cities.

Each month these pension systems pump $60 billion into the US economy in the form of retirement checks cut to their former employees, and also in the form of early withdrawals. These millions of pensioners spend the majority of this cash on consumer goods, healthcare, housing, food, and travel. It’s a total economic stimulus of about $230 billion a year – almost a quarter trillion in income for the middle class to expend.

The geographic distribution of US public pension funds ensures that these dollars are circulated widely in every region of the nation. Retirees in California, New York, Texas, and Florida obviously expend enormous shares of the total flow of pension income. There are over a million retired California public employees collecting and spending their pensions today, but even tiny Wyoming counts 22,000 pensioners on its rolls. As labor scholar Katherine Sciacchitano has written, “far from just supporting retirees, defined-benefit pensions contribute to economic recovery by providing a long-term, stable source of counter-cyclical spending—spending that continues even during economic downturns.”

Public employee pensions are a key source of income for millions of middle class Americans who sustain a big slice of the US economy simply by spending their retirement checks each month. If pension hawks are successful in Detroit, San Jose, and elsewhere, if the attack on pensions translates into a successful dismantling of this part of the American social contract, then it’s likely that the share of income flowing to the bottom 90 percent of the nation would collapse even further. The result would be even more severe economic inequality. Over the long-term, and combined with other causes of income inequality, it would mean economic stagnation, and perhaps even lead to a deflationary spiral.

Darwin Bond-Graham, a contributing editor to CounterPunch, is a sociologist and author who lives and works in Oakland, CA. His essay on economic inequality in the “new” California economy appears in the July issue of CounterPunch magazine. He is a contributor to Hopeless: Barack Obama and the Politics of Illusion



The Age of Regression

How We are Impoverished, Gentrified and Silenced … and What to Do About It
by JOHN PILGER
gentrification_washington_dc

London.

I have known my postman for more than 20 years. Conscientious and good-humoured, he is the embodiment of public service at its best. The other day, I asked him, “Why are you standing in front of each door like a soldier on parade?”

“New system,” he replied, “I am no longer required simply to post the letters through the door. I have to approach every door in a certain way and put the letters through in a certain way.”

“Why?”

“Ask him.”

Across the street was a solemn young man, clipboard in hand, whose job was to stalk postmen and see they abided by the new rules, no doubt in preparation for privatisation.  I told the stalker my postman was admirable. His face remained flat, except for a momentary flicker of confusion.

In Brave New World Revisited, Aldous Huxley describes a new class conditioned to a normality that is not normal “because they are so well adjusted to our mode of existence, because their human voice has been silenced so early in their lives, that they do not even struggle or suffer or develop symptoms as the neurotic does”.

Surveillance is normal in the Age of Regression — as Edward Snowden revealed. Ubiquitous cameras are normal. Subverted freedoms are normal. Effective public dissent is now controlled by police, whose intimidation is normal.

Young people play football against a boarded-up pub in Gorton, Manchester. Absolute poverty among children rose by 300,000 in the last year. Photograph: Christopher Furlong/Getty Images

Young people play football against a boarded-up pub in Gorton, Manchester. Absolute poverty among children rose by 300,000 in the last year. Photograph: Christopher Furlong/Getty Images

The traducing of noble words like “democracy”, “reform”, “welfare” and “public service” is normal. Prime ministers who lie openly about lobbyists and war aims are normal. The export of £4bn worth of British arms, including crowd control ammunition, to the medieval state of Saudi Arabia, where apostasy is a capital crime, is normal.

The willful destruction of efficient, popular public institutions like the Royal Mail is normal. A postman is no longer a postman, going about his decent work; he is an automaton to be watched, a box to be ticked.  Huxley described this regression as insane and our “perfect adjustment to that abnormal society” a sign of the madness.

Are we “perfectly adjusted” to this? No, not yet. People defend hospitals from closure, UK Uncut forces bank branches to close and six brave women climb the highest building in Europe to show the havoc caused by the oil companies in the Arctic. There, the list begins to peter out.

At this year’s Manchester festival, Percy Bysshe Shelley’s epic Masque of Anarchy – all 91 verses written in rage at the massacre of Lancashire people protesting poverty in 1819 – is an acclaimed theatrical piece, and utterly divorced from the world outside. Last January, the Greater Manchester Poverty Commission disclosed that 600,000 Mancunians were living in “extreme poverty” and that 1.6 million, or nearly half the city’s population, were “sliding into deeper poverty”.

Poverty has been gentrified. The Parkhill Estate in Sheffield was once an edifice of public housing – unloved by many for its Le Corbusier brutalism, poor maintenance and lack of facilities. With its Heritage Grade II listing, it has been renovated and privatised. Two thirds of the old flats have been reborn as modern apartments selling to “professionals”, including designers, architects and a social historian. In the sales office you can buy designer mugs and cushions. This façade offers not a hint that, devastated by the government’s “austerity” cuts, Sheffield has a social housing waiting list of 60,000 people.

Parkhill is a symbol of the two thirds society that is Britain today. The gentrified third do well, some of them extremely well, a third struggle to get by on credit and the rest slide into poverty.

Although the majority of the British are working class – whether or not they see themselves that way —  a gentrified minority dominates parliament, senior management and the media.  David Cameron, Nick and Ed Milliband are their authentic representatives, with only minor technical difference between their parties. They fix the limits of political life and debate, aided by gentrified journalism and the “identity” industry. The greatest ever transfer of wealth upwards is a given. Social justice has been replaced by meaningless “fairness”.

While promoting this normality, the BBC rewards a senior functionary almost £1m. Although regarding itself as the media equivalent of the Church of England, the Corporation now has ethics comparable with those of the “security” companies G4S and Serco which, says the government, have “overcharged” on public services by tens of millions of pounds. In other countries, this is called corruption.

Like the fire sale of the power utilities, water and the railways, the sale of Royal Mail is to be achieved with bribery and the collaboration of the union leadership, regardless of its vocal outrage. Opening his 1983 documentary series Questions of Leadership, Ken Loach shows trade union leaders exhorting the masses. The same men are then shown, older and florid, adorned in the ermine of the House of Lords. In the recent Queen’s Birthday honours, the general secretary of the TUC, Brendan Barber, received his knighthood.

How long can the British watch the uprisings across the world and do little apart from mourn the long-dead Labour Party? The Edward Snowden revelations show the infrastructure of a police state emerging in Europe, especially Britain. Yet, people are more aware than ever before; and governments fear popular resistance – which is why truth-tellers are isolated, smeared and pursued.

Momentous change almost always begins with the courage of people taking back their own lives against the odds. There is no other way now. Direct action. Civil disobedience. Unerring. Read Percy Shelley – “Ye are many; they are few”. And do it.

John Pilger’s new film, Utopia, will be previewed at the National Film Theatre, London, in the autumn.

ADDENDUM

Extra million people in absolute poverty since coalition came to power

Department for Work and Pensions data shows median income is at lowest level for a decade due to pay freezes and austerity

Young people play football against a boarded-up pub in Gorton, Manchester. Absolute poverty among children rose by 300,000 in the last year. Photograph: Christopher Furlong/Getty Images

Britain has suffered a “lost decade” in living standards after a second year of sharp falls in inflation-adjusted pay pushed incomes back to levels last seen in the early 2000s, according to official figures released on Thursday.

Data from the Department for Work and Pensions showed that two successive years in which real incomes dropped by 3% per annum wiped out modest gains made in the previous eight years and pushed an extra 1 million people below the absolute poverty line.

The DWP’s annual report on households living below average income showed median income at £427 a week in 2011-12. When adjusted for inflation, this was slightly below the £429 in 2001-02 and well down on the £454 peak in median income in 2009-10.

Pay freezes and “economic restructuring” during the deep and the prolonged slump were the main causes of the fall in living standards, the DWP said.

The figures showed that absolute poverty among children rose by 300,000, with two-thirds of those living in households with one or more earners.

Alison Garnham, chief executive of Child Poverty Action Group, said: “Despite all the talk about ‘scroungers’ and generations of families never working, today’s poverty figures expose comprehensively the myth that the main cause of poverty is people choosing not to work.

“The truth is that for a growing number of families, work isn’t working. The promise that work would be a route out of poverty has not been kept as wages stagnate and spending cuts have hurt low-income working families.”

Falls in income affected those on high, low and middle pay, leaving income inequality unchanged between 2010-11 and 2011-12. Using the relative poverty yardstick, the number of children living in households with incomes of less than 60% of the national median remained unchanged at the lowest level since the mid-1980s.

Anita Tiessen, deputy executive director of Unicef UK, pointed out that the figures predate said: “The number of children living in poverty in the UK is likely to be even higher than the government’s statistics suggest. In the time period covered by today’s figures, major austerity measures – like council tax benefit cuts and the introduction of the bedroom tax – had not yet come into force, so this data does not reflect their probable harmful impact on children’s wellbeing.”

The IFS said the fall in real incomes would have been smaller had an alternative to the Retail Prices Index been used to make the inflation-adjusted comparisons. Even so, it added, real incomes in 2011-12 would have returned to 2004-05 levels.

More detailed analysis of the government’s figures by the Institute for Fiscal Studies reveals a stark generational divide in the way incomes have been affected since the onset of recession. Older people – those in their 60s and 70s – have fared best, and have actually seen their average incomes rise, by 2%-3%, between 2007-08 and 2011-12.

Those in their 20s have been the worst-affected age group, reflecting the fact that unemployment rates for younger workers have been relatively high. Their average income declined by as much as 12% between 2007-8 and 2011-12, after adjusting for inflation.

The IFS said this pattern continued a long-term trend in the run-up to the crisis. People in their 20s saw their incomes stagnate from 2001 onwards as wages flatlined, while rising spending on pensions helped to insulate the elderly.

The fresh evidence that younger people have been hit hardest by the crisis is likely to rekindle arguments about whether the elderly have got off lightly.

David Phillips, senior research economist at the IFS, said substantial changes in the welfare system had helped to reduce relative poverty rates among both pensioners and children over the past fifteen years. Once their lower housing costs are taken into account, pensioners are now at less risk of falling into relative poverty than working-age adults.

“This is in many ways a triumph of social policy. But these figures also confirm that it is young people who have suffered most as a result of the recent recession and who are now at risk of falling further behind. It is important that policymakers and politicians understand these profound changes to patterns of low incomes and respond accordingly.”



OpEds: The Egyptian coup and the tasks facing the working class

By Johannes Stern, wsws.org

It would be wise to pay close attention to the Egyptian process. Despite the cultural gulf between Egypt and the US, it has important lessons for those attempting social change in America and elsewhere. 

At Egypt's helm: Gen. Abdel Fatah al-Sisi. Part of the problem not the solution.

At Egypt’s helm: Gen. Abdel Fatah al-Sisi. Part of the problem not the solution.

The July 3 military coup in Egypt and the subsequent repression have starkly revealed the principal problem facing the working class internationally: the crisis of revolutionary leadership. More than two years after the upheavals that forced out longtime US-backed dictator Hosni Mubarak, the military—headed by its US-educated commander, General Abdel Fatah al-Sisi—is seeking to restore the political setup that existed prior to February 2011.

Following the ousting four weeks ago of Muslim Brotherhood (MB) President Mohamed Mursi, the military is moving ruthlessly to reestablish the apparatus of terror. Hundreds of Mursi supporters have been slaughtered in cold blood and thousands have been jailed.

As the Wall Street Journal noted in an article published Monday, “Egypt’s interim civilian government moved toward reviving the police state that characterized the widely hated regime of longtime former President Hosni Mubarak. On Sunday, the government granted soldiers the right to arrest civilians, reviving sections of an emergency law under Mr. Mubarak. A day earlier, Interior Minister Mohammed Ibrahim said he planned to reconstitute a secret police unit that was responsible for decades of oppression under Mr. Mubarak.”

[pullquote] The Egyptian revolution is not a one-off event. Like all great revolutions, especially those so profoundly rooted in complex national and international processes, it unfolds not only over weeks and months, but over years. A revolution is a field of battle in which successive political forces come to the fore and reveal the class interests they represent. [/pullquote]

While the immediate focus of the repression is the MB and its supporters, the ultimate target is the working class.

What is the significance of the counterrevolutionary coup, and where do we stand in the development of the Egyptian revolution?

The Egyptian revolution is not a one-off event. Like all great revolutions, especially those so profoundly rooted in complex national and international processes, it unfolds not only over weeks and months, but over years. A revolution is a field of battle in which successive political forces come to the fore and reveal the class interests they represent.

From this standpoint, the events of June-July 2013 represent not the end of the revolution, but only of its initial stages.

In the initial period of the revolution, diverse social and political forces rallied around the demand for the removal of Mubarak. Everyone claimed to be on the side of democracy and the masses—liberal-minded businessmen such as Google Middle East manager Wael Ghoneim; bourgeois politicians such as former UN official Mohamed El Baradei; members of the MB, the biggest but officially banned opposition group under Mubarak; representatives of the affluent middle class; and even the military itself.

The working class was not yet conscious of the vast class gulf that separated it from these forces. In the course of the revolution, however, the political factions of the Egyptian ruling elite have been weighed and tested.

First, the military junta that took power after Mubarak’s ouster was exposed as a counterrevolutionary force that wanted to preserve as much as possible of the old order. It quickly banned strikes, cracked down on protests, continued the torture tactics of the Mubarak era and sentenced thousands of civilians in military trials.

The exposure of the military was followed by the exposure of the MB, the main organized political opposition under the Mubarak regime. The MB sought to reshuffle the ruling personnel and called for modifying Egypt’s legal and political institutions to secure a greater share of political power for itself and those sections of the Egyptian bourgeoisie for which it spoke. However, it defended the same basic class interests as the military.

The MB government continued the anti-working class, pro-imperialist policies of the previous regimes. Soon after his election, Mursi entered into talks with the International Monetary Fund to further liberalize the Egyptian economy along free market lines and cut vital bread and fuel subsidies. Above all, he continued to defend the interests of US imperialism in the region, most prominently the US-led proxy war in Syria.

[pullquote] The working class was not yet conscious of the vast class gulf that separated it from these forces. In the course of the revolution, however, the political factions of the Egyptian ruling elite have been weighed and tested. [/pullquote]

Then came the mass struggles that exploded against Mursi and the Muslim Brotherhood, culminating in the protests involving millions of people on June 30 of this year. Petrified by the radicalization of the working class since 2011 and the specter of proletarian revolution, the military intervened directly. The coup was supported by the bourgeois and middle class groups that had sought to put themselves forward as the “the real revolutionaries” and a “democratic” alternative to the Mubarak and Mursi regimes.

Included in the new military-backed government are figures such as ElBaradei and the president of the US-backed Egyptian Federation of Independent Trade Unions, Kamal Abu Eita.

The most corrupt and rotten of the groups lining up behind the military is the Revolutionary Socialists (RS), which hailed the military coup as a “second revolution.” In each stage of the revolution, the RS, speaking on behalf of more privileged sections of the upper-middle class, sought to block an independent political movement of the working class by subordinating it to the Egyptian bourgeoisie—first the military, then the MB, then the military once again.

Underlying the political bankruptcy of all these forces is the fact that none could implement a program to solve the problems facing the Egyptian masses: the dominance of imperialism in the Middle East, mass poverty, and the absence of democracy. All the forces of the Egyptian bourgeoisie and privileged middle classes defend capitalist property relations and are tied to imperialism and international finance capital. They are organically hostile to the interests of the working class—the driving force behind the Egyptian revolution—and far prefer a military dictatorship to a social revolution of the working class.

The counterrevolutionary coup of June-July 2013 is no doubt a defeat for the masses. Yet, while the military, its imperialist backers, the liberals and the pseudo-left may hope the revolution is over, the working class will have its say on the matter.

From the beginning, the Egyptian Revolution has been driven by deep objective processes: first, the explosive contradictions in Egypt itself and throughout the Middle East. These contradictions are themselves inextricably tied to and intensified by the crisis of the world capitalist system.

The entire course of the revolution has confirmed the basic conceptions of Trotsky’s Theory of Permanent Revolution—that there is no faction of the capitalist class or its political representatives capable of playing a progressive role; that only the working class can implement a democratic program as part of a fight for socialism and workers’ power; and that the victory of the revolution in any single country is possible only on the basis of an international strategy to unite the world working class.

The fight for this program raises the central problem of political leadership. The new epoch of world socialist revolution that is anticipated by the convulsive events in Egypt requires new mass revolutionary parties of the working class.

Johannes Stern interprets political events for the wsws.org, information arm of the Social Equality Party. 



Blame misplaced in Spanish train tragedy

The News in its proper context:  As usual there’s much more here than meets the eye. For business reasons outlined in the article below the establishment is blaming the train driver, a 30-yr veteran with a clean record for the accident, but there’s also the fact that as governments and corporations everywhere “cut costs” to conform to the needs of the existing capitalist setup the infrastructure suffers. Just like the explosion in West, Texas, that levelled a town, and the freight train catastrophe in Quebec, with hundreds of deaths, these are accidents caused by the failure of business executives to properly protect the public interest in their quest for profit maximization. Garzón (the Spanish driver) may have been in the steering cabin, but it was capitalism that jumped the tracks and killed those people. Not to make a bad pun, but the conductor is being railroaded by the system.—PG

Spanish train crash driver accused of reckless homicide

By Alejandro López, wsws.org

Francisco José Garzón Amo, the 52-year-old driver of the train that crashed on Wednesday leaving 79 dead and over a 100 injured, has been accused of reckless homicide.

The judge in charge of the investigation has ordered the police to gather together documents, reports, videos and the black box from the train, and other evidence relating to the crash.

The high-speed train carrying 218 passengers derailed at Angrois, on the outskirts of Santiago de Compostela, the regional capital of Galicia in northwest Spain, on its way from Madrid to the coastal city of Ferrol. All 13 carriages came off the tracks as the train rounded a sharp double bend. Four carriages turned over, one split in half and another caught fire.

The media, government officials and the representatives of the train operator Renfe and the rail infrastructure company Adif have initiated a witch-hunt against Garzón, making him the person solely responsible for the tragedy. The accepted legal position that someone is innocent until proven guilty has been all but brushed aside.

Interior Minister Jorge Fernández Díaz declared that “he [Garzón] has been arrested by the police because there are reasonable grounds to believe that he may have been responsible for what has happened.”

Hours later Fernández, along with the president of the Galician regional government, Alberto Núñez Feijóo, and Infrastructure Minister Ana Pastor made a statement in the police station where Garzón had been sent.

“He has been discharged [from hospital] and is in this police station”, stated Fernández. “He is accused”, said Pastor, “for the alleged crime of reckless homicide.”

After his arrest on Friday, the driver, who had sustained head injuries, two broken ribs and a fracture that affects his lung, was interrogated by the police, who attempted to extract a preliminary statement. Garzón exercised his legal right not to answer the questions.

The media has bombarded the public with photographs of a speedometer that Garzón posted on his Facebook page in March 2012, showing that he was going 200 kilometres per hour. However, there is no comment indicating where the photograph was taken and 200 kilometres per hour is common for high-speed trains.

Adif President Gonzalo Ferre participated in the media scapegoating of Garzón. He stated that “four kilometres before the location of the accident, [the driver] was notified to reduce his speed, because as he comes out of the tunnel he has to be going at 80 [km/h].”

Even before investigations have been completed, Ferre declared that all Adif’s security systems worked and that, in any case, the driver’s main function is to control the speed, “otherwise he would be another passenger”. He ruled out any “black spot” in the network.

The A Grandeira curve where the train derailed was always a potentially dangerous hazard on a route where trains alternate between the Spanish High Speed (Alta Velocidad Espanola, AVE) lines and conventional track. On top of this, the train had to reduce its speed in a matter of seconds. Spanish journalist Miguel Murado told the BBC that there had been concerns about the curve since the line opened two years ago, explaining: “People who travelled in the train felt that it was dangerous that the train had to go from 200km/h to 80km/h in just a matter of seconds.… They felt that was a very difficult manoeuvre for the driver to execute.”

The accident could have been averted had the most modern train safety systems, such as the European Train Control System (ETCS), been installed. These use equipment on the track and in the driver’s cab to replace traditional trackside signals and control the speed and movement of the train automatically. The ECTS system exists in parts of Spain’s railway network, including an earlier section of the route Garzón’s train had travelled from Madrid. However, the accident took place on a track with the older signalling system ASFA, which warns but does not control the train speed.

Francisco José Garzón has spent 30 of his 52 years working as a train driver. Originally from Monforte de Lemos (Lugo) and resident in A Coruña, he spent the last year driving trains along the route where the accident took place. In 1998 he was promoted to assistant driver and in 2003 to driver.

Work colleagues have come to Garzón’s defence. One worker told El País, “One would expect it from anyone except him.”

Another, Ángel Rodríguez, said, “Yesterday on a terrace in Ourense I heard on the table next to ours that the driver had had several accidents. I’ve known him since 1982 and he has not had any negative record against him.”

Another worker furiously denounced the Facebook photographs of the speedometer, stating that “what are they being scandalized for? That is the normal speed of these trains.”

There are more reasons behind the campaign against Garzón than just the attempts to cover up the potentially dangerous A Grandeira curve or the train control system. Nuñez Feijóo expressed the fears of the ruling elite about the effect the accident might have on Spain’s export markets, declaring, “Spain, in high-speed and high-speed security is one of the best in the world, although some countries are not interested in this fact. It is not a political opinion, but technical.”

He suggested that “economic interests by certain companies or high-speed providers” wanted to discredit the Spanish rail system to eliminate competition.

Spain has 3,100 kilometres of high-speed rail routes and is now second in the world behind China. The construction became a top priority of successive Spanish governments after the first high-speed route between Madrid and Seville was inaugurated in 1992.

This has generated a powerful industry that pockets €5 billion a year and exports 60 percent of its production. In 2012, when most of Spanish industry was suffering in the global slump, the high-speed industry was about the only sector to see its exports grow. Its success resulted in the largest contract awarded to a Spanish multinational valued at €16.7 billion for the construction of a high-speed rail route in Saudi Arabia.

With the tragedy in Santiago de Compostela, international megaprojects such as the contract for the high-speed train between Sao Paulo and Rio de Janeiro in Brazil worth €12 billion are at risk, as are the contracts in Kazakhstan, the lines between Moscow and Saint Petersburg worth €14 billion, and between Sacramento and San Diego in the US worth around €60 billion.



Glenn Ford: Barack Obama & The Crisis of Capitalism (VIDEO)