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Multipolar World Order – Part 2

Multipolar World Order – Part 2

Authored by Iain Davis via Off-Guardian.org,

In Part 1, we discussed the nature of “world order” and…

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Multipolar World Order – Part 2

Authored by Iain Davis via Off-Guardian.org,

In Part 1, we discussed the nature of “world order” and global governance. We learned the crucial difference between the Westphalian model of equal, sovereign nation-states—a mythical ideal, never an actuality—and the various attempts to stamp a world order on that template.

In particular, we considered how the UN has been the leading organisation promoting global governance and how its founding Charter facilitates the centralisation of global power.

We observed that the UN has undergone a “quiet revolution” that has transformed it into a global public-private partnership (UN-G3P).

Latterly, we have seen the rise of a prospective multipolar world order that some say opposes the hegemony of its unipolar predecessor. This new model of global governance will apparently be led by allies Russia and China, the two countries that head up the multilateral partnerships of the BRICS (Brazil, Russia, India, China and South Africa).

The multipolar world order is predicated upon a more prominent role for the G20 rather than the G7. Thereby strengthening Russia’s and China’s positions as permanent members of the UN Security Council.

Whereas the existing unipolar world order established a system of global governance that enables UN-G3P oligarchs to influence policy agendas of nation-states around the world, the new multipolar world order is designed to advance the power of those oligarchs even further - by transforming their influence into absolute control.

Look no further than the Russian and Chinese governments, where the marriage between the political and corporate state is complete. We will address this in detail in Part 3.

President Vlaidimir Putin (left) and President [Supreme Leader] Xi Jinping (right)

WHO WANTS A MULTIPOLAR WORLD ORDER?

We ask: who wants a multipolar world order?

The short answer: everyone.

The longer answer: everyone who has sufficient power and influence to change global governance.

The multipolar model isn’t being pushed solely by the Russian and Chinese governments, their oligarchs and their think tanks. It’s also being promoted by the erstwhile “leaders” of the unipolar world order.

Consider this remark by German Chancellor Olaf Sholtz. His speech, set within the context of Russia’s military intervention in Ukraine—which every member of the Western establishment lambastes for the cameras—was given at the World Economic Forum’s 2022 Davos gathering:

I see another global development that constitutes a watershed. We are experiencing what it means to live in a multipolar world. The bipolarity of the Cold War is just as much part of the past as the relatively brief phase when the United States was the sole remaining global power[.] [. . .] The crucial question is this: how can we ensure that the multipolar world will also be a multilateral world? [. . .] I am convinced that it can succeed – if we explore new paths and fields of cooperation. [. . .] If we notice that our world is becoming multipolar, then that has to spur us on: to even more multilateralism! To even more international cooperation!

Western central banks, too, have looked toward the multipolar model. In a 2011 round table discussion at the Banque de France, then-French Finance Minister Christine Lagarde, who subsequently became the head of the International Monetary Fund (IMF) and then was appointed President of the European Central Bank (ECB), said:

Our starting point is to create the conditions to achieve two closely intertwined objectives, i.e. strong, sustainable, and balanced growth, on the one hand, and an orderly transition to a world that is multipolar in economic and monetary terms, on the other. [. . .] The G20 reached agreement [to] promote the orderly transition from a world where a small number of economies, with their currencies, represent the bulk of wealth and trade, to a multipolar world where emerging countries and their currencies represent a growing if not predominant share.

That same year, Mark Carney, then Governor of the Bank of Canada, delivered a speech to the Canada Club of Ottawa, during which he said:

We meet today in the midst of another great transformation—one that is occurring more rapidly than most recognise. The financial crisis has accelerated the shift in the world’s economic centre of gravity. Emerging-market economies now account for almost three-quarters of global growth. [. . .] [W]eakness in advanced economies and strength in emerging economies [. . .] determines the global economic outlook. [. . .] This shift to a multi-polar world is fundamentally positive, [but] it is also disruptive.

Still a third speech in 2011, this one by Lorenzo Bini Smaghi, who was representing the Executive Board of the ECB, emphasised the potential of the multipolar world order. Smaghi noted that, in order to move towards the new world order, an economic, financial and policy shift was required. Bemoaning the lack of progress in the financial and policy fields, he suggested:

[W]e have a multi-polar economic world, but no multi-polar financial or policy world yet. [. . .] [H]ow can we improve the functioning of the international monetary system? The first avenue is to start building a new institutional framework[.] [This] will have to be designed for this new multi-polar world. [. . .] The second avenue involves implementing policies consistent with the transition to a more complete multi-polar world, in all its dimensions. [. . .] A more balanced multi-polar world also requires deeper financial and economic integration in Europe[.] [. . .] The G20 is thus destined to become an over-arching grouping, capable of tasking institutions like the IMF, World Bank or FSB with specific mandates but also to give guidance on politically sensitive issues, in the way the G7 operated in the past.

The World Economic Forum, which describes itself as the international organisation of public-private cooperation, has been advocating the potential of a multipolar world order for some time.

For example, in 2019 it published an article by Credit Suisse’s Global Head of Investment Strategy & Research, Nannette Hechler Fayd’herbe, who advocated investment in “emerging markets.”

Credit Suisse is one of the nine global investment banking giants that collectively comprise the Bulge Bracket. The opinion of its head of strategic investment is notable:

In 2018, we moved closer to the multipolar world that looks set to replace the bipolar US-Russian geopolitical regime that emerged from the Cold War. China’s ascent as a serious economic and geostrategic rival for the US, and its growing assertiveness with programs like “One Belt, One Road” or “Made in China 2025”, has strengthened its influence on the world stage. [. . .] From an investor standpoint, the newly emerged multipolar world brings national champions [—companies in large countries with a sizeable domestic workforce in strategic sectors—] and brands into focus, including emerging market consumers.

Even the Council of Foreign Relations (CFR), whose elitist members are ardent pro-NATO US foreign policy supremacists, accepts the imminent arrival of the multipolar world order.

Stewart M. Patrick, the CFR senior fellow who defined the International Rules Based Order (IRBO), wrote in 2021:

[T]he Western-led order was on its heels well before Trump, knocked off balance by rising geopolitical competition from China and Russia; a shrinking collective share of global GDP among the member states of the high-income Organization for Economic Cooperation and Development; and public disillusionment with globalization, particularly after the financial crisis. These weaknesses remain. [. . .] The Cornwall summit [G7 summit] will also allow observers to gauge the G-7’s political cohesion and global relevance in an ideologically diverse, multipolar world.

A final example: Speaking at a White House business convention on 21st March 2022, US President Joe Biden said:

We are at an inflection point, I believe, in the world economy[.] [. . .] [I]t occurs every three of four generations. [. . .] Now is a time when things are shifting[.] [T]here’s going to be a new world order out there, and we’ve got to lead it and we’ve got to unite the rest of the free world in doing it.

What’s going on? Why would the architects of the unipolar hegemony obligingly accept being replaced by multipolarity—and offer to help make the transition? Why, no matter where you look, even in the most hawkish Western think tanks, is there universal acquiescence to the emergence of a new multipolar world order?

You could argue that this is the only realistic perspective.

Still, the lack of any resistance at all is conspicuous. It suggests that there is more to this baffling contradiction than meets the eye. Indeed, these statements we have quoted, and many more like them from other Western power brokers, reveal, more than acquiescence to a multipolar world, a clear rationale for the creation of a “new world order.”

The point is, if the current holders of global power wish to retain control, then transition to the multipolar world order is required. They understand that the multipolar system is the necessary next step in the evolution of the unipolar order.

Christine Lagarde – former French Finance Minister, President of the IMF and now Governor of the ECB.

THROWING THE DOLLAR RESERVE CURRENCY AWAY

As if to hammer home the fact that the dollar-backed unipolar world order is over, Jerome Powell, Governor of the US Federal Reserve (the Fed), said in April 2022:

The US federal budget is on an unsustainable path, meaning simply that the debt is growing meaningfully faster than the economy. And that’s by definition unsustainable over time.

He then added a reassuring, but ultimately empty caveat:

It’s a different thing to say the current level of the debt is unsustainable. It’s not. The current level of debt is very sustainable. And there’s no question of our ability to service and issue that debt for the foreseeable future.

If the gods were perfectly aligned, geopolitics didn’t exist, universal peace and joy sprang forth and the world ran smoothly and predictably, then Powell’s reassurances may have been plausible. But that is not how the world works. Nor are Powell’s imaginary “ifs” any basis for a sound global reserve currency. His admission was the salient point.

The US government debt-to-GDP ratio currently stands at an estimated 137.2% of GDP. The cost of the COVID-19 countermeasures and the West’s sanction response to Russia’s military action in Ukraine—including the vast sums the US and some European countries have invested in Ukraine’s supposed militarisation—has only made the situation worse.

Spiralling government debt is nearly as bad in every other major Western economy. It stands at 103.7% of UK GDP and in the Euro Monetary Union (Eurozone), it eclipsed 100% of GDP in 2021.

The economic, financial and political basis of the unipolar world is rapidly evaporating.

As central bankers like Powell (US), Lagarde (EU), Andrew Bailey (UK) Elvira Nabiullina (Russia) and Agustín Carstens (Bank for International Settlements) know, as do all the other major players like Carney (UN), there is every reason to question how long the US can service its debt obligations—that is, repay the minimum required amount.

America’s only option is to keep the metaphorical money printing presses running, which can only lead to further inflation and eventual economic ruin.

As the US economy sinks, so does the dominant global reserve currency and, apparently, the financial power of the Western-aligned oligarchs. This looks likes deliberate self-destruction.

Just two days after the launch of Russia’s so-called “special military operation” in Ukraine, the governments of the US, UK, Canada, and the European Union—the core of the G7—announced that they had decided to freeze the Central Bank of Russia’s $630 billion foreign currency reserves.

While the US administration has done this kind of thing before, it did it to Afghanistan two weeks earlier, taking the wealth of a major developed nation and a fellow member of the UN Security Council sent very clear signals to the rest of the world.

Countries hold foreign currency reserves for numerous reasons, but chief among them is to hedge against the economic impacts of crises of various kinds.

If, for example, the currency of a nation is devalued, holding reserves of a stable foreign currency ensures that it can maintain levels of international trade in the short term. For some markets, notably the global oil market, trade is overwhelmingly conducted in the current leading reserve currency, the US dollar.

As there is no single, overarching framework of “international law” adjudicating reserve currency, if ever the concept of an “international rules based order” were applicable it was to the agreed role of the US dollar as a global reserve currency.

Regardless of the morality of the Russian government’s military action or its human cost, the Western unipolar clique, in seizing Russia’s reserves based purely upon a foreign policy disagreement, announced to the world that their IRBO was completely meaningless.

The only reason nation-states agree to holding a dominant global reserve currency, beyond economic force, is that they trust the stability of that currency. If those currency reserves are seized whenever the issuing state feels like it, then that currency couldn’t be more unstable and has lost credibility as a viable reserve.

Despite the claims of the Western politicians and their mainstream media (MSM) propagandists, the whole of the world is not united in its condemnation of Russia’s military action in Ukraine. Beyond North America, Europe and Australasia, censure is notable for its absence. By grabbing Russia’s reserves, the so-called IRBO more or less openly declared to the rest of the world that its US dollar, as a global reserve currency, was dead.

Vladimir Putin was apparently right to observe:

Imposing sanctions is the logical continuation and the distillation of the irresponsible and short-sighted policy of the US and EU countries’ governments and central banks. [. . . ] The global economy and global trade as a whole have suffered a major blow, as did trust in the US dollar as the main reserve currency. The illegitimate freezing of some of the currency reserves of the Bank of Russia marks the end of the reliability of so-called first-class assets. [. . .] Now everybody knows that financial reserves can simply be stolen.

He also dropped in some virtue signalling, praising the Russian private sector for its “sustainable development” efforts:

I would like to thank the business community and the teams at companies, banks and organisations, which are not only responding effectively to sanction-related challenges but are also laying the foundation for the continued sustainable development of our economy.

The NATO-aligned nation-states behind the sanctions also decided to progressively cut Russian commercial banks out of the Society for Worldwide Interbank Financial Telecommunications (SWIFT) network.

This is the international financial communication system that enables banks and financial institutions to notify each other of international fund transfers using a standardised set of codes.

Both Russia and China have prospective alternatives to the SWIFT system. Russia developed its System for Transfer of Financial Messages (SPFS) in 2014 and China its Cross-Border Interbank Payment System (CIPS) in 2015.

According to the Central Bank of Russia (CBR) SPFS has expanded rapidly in response to the sanctions. Potentially both systems could supplant the West’s, but CIPS appears to be the most likely replacement for SWIFT.

The G7’s claimed objective for these sanctions was to sever the Russian Federation’s access to global markets, but the world is a big place. All the sanctions did was curtail Russia’s ability to trade its energy and other key commodities such as grain and palladium—vital for the manufacture of semiconductors, with the West. Primarily at the West’s own expense.

Russia and China have long sought to “de-dollarise” their economies and have forged numerous bilateral trade agreements outside of the dollar system. With the sanction, the West handed the Russian Federation one of its major monetary foreign policy objectives on a plate. A strange kind of punishment.

This year the IMF reported that countries around the world have increasingly diversified their foreign currency reserves over the past two decades. In the last quarter of 2021, the dollar share of global reserve currencies had already fallen to below 59%. The sanctions against the Russian Federation provided a massive boost to Russian and Chinese ambitions to reset global reserve currencies for the benefit of their own economies.

In June 2022, following the sanctions, the BRICS nations announced their plans to establish a new form of global reserve asset based upon a basket of BRICS currencies. This is a direct challenge to the special drawing rights (SDRs) that the IMF allocates to nation-states. Based upon the underlying value of the currencies in the “basket,” they can be exchanged, like any asset, for goods, services, or commodities—or redeemed for currency.

Jerome Powell – Chairman of the US Federal Reserve

MULTIPOLAR GLOBAL GOVERNANCE IS DIFFERENT BECAUSE REASONS

It is easy to believe, as some do, that the Western oligarchs are in danger of losing their power base. Many of the people who hold such views also contend that the current world order is dominated by these same oligarchs. We have to wonder what they think globalist oligarchs do with all that power and authority. Simply sit idle and watch it slip away as the world turns around them?

In reality, they haven’t been idle at all. As witnessed by their statements and actions, they have been making preparations to move to the new multipolar system for decades.

To illustrate: in 2009, global investor, currency speculator and oligarch George Soros told the Financial Times:

[Y]ou really need to bring China into the creation of a new world order, a financial world order. [. . .] I think you need a new world order that China has to be part of the process of creating it and they have to buy in. They have to own it the same way as, let’s say, the United States owns the Washington consensus, the current order[.] [. . .] I think the makings of it are already there because the G20, in agreeing to peer reviews, effectively is moving in that direction. [. . .] As long as the renminbi is tied to the dollar, I don’t see how the decline in the dollar can go too far. [. . .] [A]n orderly decline of the dollar is actually desirable. [. . .] China will emerge as the motor replacing the US consumer and [. . .] China will be the engine driving it [the world economy] forward and the US will be actually a drag that’s being pulled along through a gradual decline in the value of the dollar.

According to representatives of the Russian and Chinese governments, the multipolar world order, supposedly led by them, will empower the G20, rather than the G7, to manage “global economic governance.” No surprises there.

Further, the stated objective is to supposedly reinstate an “international law-based world order” that will enhance “genuine multipolarity with the United Nations.” The UN Security Council will continue to play “a central and coordinating role,” with the objective of promoting “democratic international relations” and “sustainable development across the world.”

This global agenda is virtually indistinguishable from the one promoted by the unipolar IRBO. The claimed difference is that Russia and China will lead a BRICS-centric multipolar order which does more than pay lip service to international law and multilateral agreement. Allegedly, the multipolar model will abide by international law and focus upon collective decision making.

The belated pushback by some US states against BlackRock’s investment strategy in US pension funds is only a minor irritation for the global corporate titan. While they have pressured the US economy to “decarbonise” they have not taken the same approach in China.

BlackRock, and the Western oligarchs who invest through it, decided to make an enormous investments in China’s “state owned” hydrocarbon giant PetroChina.

The China National Petroleum Corporation (CNPC) is among the largest “fossil fuel” energy companies in the world. It deals in both gas and oil and PetroChina is its publicly listed arm.

In 2021 BlackRock was the first foreign company “allowed” by the Chinese government to launch a mutual fund in China which aims to achieve “long-term capital growth” for Chinese investors. The capital growth will come from BlackRock’s commitment to “sustainable development.” This was met with consternation by the Western MSM, and disgruntled oligarch George Soros, who claimed this was a huge blunder, adding:

The BlackRock initiative imperils the national security interests of the U.S. and other democracies because the money invested in China will help prop up President Xi’s regime.

China’s authoritarian style of technocratic government suits BlackRock. Speaking to Bloomberg’s Erik Schatzker in 2011, BlackRock CEO Larry Fink infamously said:

Markets don’t like uncertainty. Markets like, actually, totalitarian governments where you have an understanding of what’s out there and, obviously, the whole dimension is changing now. [. . . ] with the democratisation of countries. And democracies are very messy, as we know in the United States[.]

This followed the 2010 comment of George Soros that “today China has not only a more vigorous economy, but actually a better functioning government than the United States.” So perhaps his little spat with BlackRock is surprising.

As mentioned in Part 1, oligarchs are not a homogenous group of automatons that all think with one mind. They are collectively committed to long-term goals but often disagree on how to achieve them.

While BlackRock’s investors apparently see China’s technate as advantageous, Soros has always sought to destabalise nation from within, through various revolutionary means, and then use his wealth to instal the system he wants. His apparent backing for violent revolt in Hong Kong and his financial crimes, directed against Chinese companies, hasn’t endeared him to China’s oligarchy.

But upsetting your partners is no reason to loose sight of the long game. Having publicly slated the Chinese government, calling Xi Jinping “the most dangerous enemy” of democracy in 2019, Soros backed NGO’s like the Sunrise Movement and ActionAid USA wrote an open letter to the US administration in 2021 urging closer cooperation with China on the oligarchs’ shared ambition of sustainable development.

Post Russia’s war with Ukraine and the West’s sanction response, BlackRock’s PetroChina investment doesn’t look like such a monumental mistake now. The spike in oil prices saw a huge surge in profits for PetroChina, as it did for nearly every other oil and gas company. But BlackRock’s Chinese investment strategy is astute for other reasons too.

With energy flows suddenly being directed away from the West and towards the East, moves such as the multibillion dollar deal between Russia’s “state owned” Gazprom and China’s “state owned” CNPC will further improve BlackRock’s bottom line.

Pushed by the sanctions, Gazprom and CNPC will conduct their business in the ruble and the yuan. The consequent underpinning of their currencies strengthens the BRICS plan to challenge the primacy of the dollar as a reserve currency. With its Chinese mutual fund in operation, not only will BlackRock investors capitalise on their PetroChina deal, they are also well placed to take advantage of the likely shift in the International Monetary and Financial System (IMFS).

It seems BlackRock possesses almost magical powers of prescience.

There is no hint that the multipolar world order will do anything the tackle the inordinate power of the private sector oligarchs who dominate the United Nations’ global public-private partnership (UN-G3P). Neither they nor their investment portfolios are confined within national borders. Any nation-state can be an investment vehicle and international relations are just part of their strategic financial planning.

The global mechanisms and partnership networks that “act as a force multiplier” for the globalist oligarchs are not at risk. In terms of global governance, from the oligarchs’ perspective, the shift to the multipolar model is simply a change of middle management.

The oligarchs’ policy agendas, including the creation of a new global economy built upon debt–based sustainable development and natural asset classes, set within a $4 quadrillion carbon-neutral IMFS, remain firmly on track. Far from a threat, the multipolar world order is crucial. Without it, the theft of our natural resources and the capitalisation of nature cannot proceed.

Recently, Larry Fink, speaking at the Clinton Foundation’s Global Initiative seminar, said:

If we are going to change the world, there’s just not enough money that is going in to the emerging world. We must change the Charters of the IMF and the World Bank if we are going to get there. [. . .] There’s huge pools of capital but that capital is not equipped[.] [. . .] Its up to the equity owners [. . .] basically the G20, they have to have a desire for doing this. [. . .] If we can do that, the amount of capital that is going to go into the emerging world, into Africa [for example], will be extraordinary. [. . .] there is that opportunity in the next few years to do this and then we will have, not just a tectonic shift in the developed world, but a tectonic shift in all of the world.

Perhaps Larry is thinking of the kind of reforms that the BRICS, exploiting the pseudopandemic, suggested in 2021. Collectively the BRICS stated priorities for reform of the IMF and the World Bank included “innovative and inclusive solutions, including digital and technological tools to promote sustainable development” and stregnthening nations’ capacity to tackle problem relating to “terrorism, money laundering, [the] cyber-realm, infodemics and fake news.”

The hegemons of the multipolar world order would also like to see “reform” of the UN Security Council by increasing “representation of the developing countries,” such as Brazil, India or South Africa, thereby swinging control in the BRICS favour. They also recognised “the 2030 Sustainable Development Agenda as a comprehensive, indivisible, far-reaching and people-centred set of universal and transformative targets.” All of this will supposedly improve “the system of global governance” they said.

The only perceptible difference is that the BRICS “emphasized the urgency of revitalization of the UN General Assembly so as to enhance its role and authority.”

As we discussed previously, under the UN Charter, the General Assembly doesn’t have any “authority.” Yet the BRICS envisaged reform of the General Assembly will be “in accordance with the UN Charter.” If the BRICS statement doesn’t make any sense that is because it doesn’t.

Clearly BlackRock and the BRICS are on the same page, but leaving that aside, this new model of global governance, headed by China and Russia, while the same as the existing model, will be better presumably because Russian, Chinese and Indian oligarchs are nicer people than their Western counterparts. We will explore that assumption in Part 3.

Just like the IRBO, the multipolar world order has signalled its intention to maintain the censorship agenda. The commitment to reform the IMF and the World Banks is firmly based upon an unshakeable commitment to “sustainable development” and Agenda 2030—thus Agenda21—which suits BlackRock, Vanguard and the rest of the global-public-private partnership perfectly.

In order for this new model of G20 based “global governance” to have a bite and not merely a bark, a global tax system is required.

To this end, in December 2021 the G20 and the Organisation for Economic Co-operation and Development (OECD) finalised their “Two Pillar Solution To Address Tax Challenges.”

Supposedly designed to stop the tax avoidance of “multinational enterprises” (MNEs), which it won’t, the impetus for this nascent global tax system has largely come from the G20.

Unsurprisingly, the BRICS core of the multipolar world order are all signatories to the first concerted effort to legislate a single, unified global tax system into being. It seems that the new world order will fund itself into existence just as all empires do—by taxing the people.

Larry Fink – CEO BlackRock

CHANGING THE NEIGHBOURHOOD

The Western, unipolar, debt-ridden world order is economically and financially spent and, for the UN-G3P, is approaching its used by date. The current IMFS, first established with the Bretton Woods Agreement and maintained by the subsequent petrodollar scheme, is finished. It finally pegged out in 2008 with the global financial collapse. Since then it has been kept on life support simply by printing—digitally speaking—trillions of dollars.

Little of that money found its way into the real economy that you and I inhabit. The bulk of it has been siphoned off to prop up the financial markets while the move towards the multipolar system progresses.

This excess supply of the US dollar, the current leading global reserve currency, will keep eroding—and ultimately destroy—its value. Consequently, the US economy in its present form, along with significant swathes of the Western economic order, is degrading.

As noted by BlackRock, the existing drivers of financial exploitation are tapped out. Now that Western economies have reached their limits of growth, new sources of global economic stimulus are required.

Neither Russia nor China have become the world’s engine for growth by chance. China is energy hungry and Russia is energy rich. Collectively they lead the world in military technology and China leads the world in manufacturing which Russia is happy to fuel with its oil, gas and coal.

Despite the enmities of the past, the leadership in both nations not only recognised the mutual benefit of a closer partnership, they forged one.

If capable, all nation-states engage in industrial espionage. It is silly to claim that Russia and China don’t. Equally silly were the comments of the former director of the US National Security Agency (NSA) and then head of US Cyber Command, Gen. Keith Alexander, who, when speaking about China’s technological development, told a 2015 US Senate Armed Forces Committee:

All they’re doing is stealing everything they can to grow their economy. [. . .] It’s intellectual property, it’s our future. I think it’s the greatest transfer of wealth in history.

Tax and inflation are the greatest transfers of wealth in history, but that wasn’t the end of Gen. Alexanders blunders. Contrary to his claims, the Western public-private partnership has done everything it possibly can to assist China’s development.

In 1970 Zbigniew Brzezinski published Between Two Ages: America’s Role In The Technetronic Era. He recognised that private sector power had already exceeded that of governments and saw the a merger of the political and corporate state as the logical way forward in an emerging world dominated by digital technology:

The nation-state as a fundamental unit of man’s organized life has ceased to be the principal creative force: International banks and multi-national corporations are acting and planning in terms that are far in advance of the political concepts of the nation-state.

In 1973 Brzezinki joined the oligarch David Rockefeller in the formation of the Trilateral Commission (think tank). Their objective, with a mind to US led public-private partnership dominance, was to invigorate development in the East, with a particular focus upon China. Recounting their initial purpose and subsequent evolution, the Commission says:

[T]here was a sense that the United States was no longer in such a singular leadership position as it had been in earlier post-World War II years. [. . .] , and that a more shared form of leadership [. . .] would be needed for the international system to navigate successfully the major challenges of the coming years. [. . .] [T]he enduring effects of the financial crisis that began in 2008 has been felt in every nation and region. It has fundamentally shaken confidence in the international system as a whole. The Commission sees in these unprecedented events a stronger need for shared thinking and leadership by the Trilateral countries.

In 2009 delegates from the governments of China and India joined the Pacific Asian Group of the Trilateral Commission. Hence trilateralist George Soros’ promotion of greater involvement for China in the creation of a “new world order” in the same year.

Efforts to shift the centre of global power eastward began in earnest in the 1980’s. Guided by the policy trajectories advised by the Trilaterlists and other globalist think tanks, the West notably stepped up its efforts to bolster China’s economic, financial and technological development.

Between 1983 – 1991, Western foreign direct investment (FDI) in China increased from $920M to $4.37Bn. In 1994, in terms of US overseas investment, China ranked 30th. By 2000, it was 11th, as Western multinational corporations quadrupled their FDI into China between 1994 and 2001. By 2019, it had eclipsed $2.1Tn.

The pseudopandemic saw an initial 42% slow-down in global FDI, but not in China where it grew again by another 4%. Consequently, China overtook the US to temporarily become the world’s leading recipient of foreign direct investment.

While the private sector drove the modernisation of the Chinese economy, the public sector in the West encouraged China to embolden its global political presence.

In 1979, the US granted China full diplomatic recognition; in 1982, the commitment was reaffirmed in the third joint communiqué; in 1984, Beijing was permitted to purchase US military hardware; in 1994, the Clinton Whitehouse intervened to scrap the cold war embargo on the export of “sensitive technology” to China (and Russia); the 2000 US – China Relations Act was signed by President Clinton (a member of the Trilateralist Commission), establishing further improvements to trade relations; In 2003 the US supported China’s entry into the World Trade Organisation and soon thereafter the Bush administration established permanent normal trading relations (PNTR) with China and, in 2005, then Deputy Secretary of State Robert B. Zoellick, called on China to take its place as a “responsible stakeholder.”

A 2019 report by the World Bank, titled Innovate China: New Drivers of Growth, noted the depth of the West’s G3P commitment to Chinese development:

Governments in other high-income countries have supported specific technologies and industries, particularly by targeting research and development (R&D). In the United States, government agencies such as the Defense Department’s Defense Advanced Research Projects Agency (DARPA) and the National Institutes of Health provided critical financing for key technologies. [. . .] These policies are complemented by support for key enabling technologies and industries—such as the space, defense, automotive, and steel industries—including through various funds, such as the European Structural and Investment Funds (five funds worth more than €450 billion) and Horizon 2020 (€77 billion for 2014–20).

Bringing his enthusiasm for the multipolar world order with him, then Bank of England Governor Mark Carney, and now UN Special Envoy for Climate Action & Finance, spoke at the G7 Central Bankers symposium in Jackson Hole, Wyoming, in August 2019. 

This remarkable speech, shocking to anyone who believes that politicians run the world, more or less laid out where the world order is heading:

[A] destabilising asymmetry at the heart of the IMFS is growing. While the world economy is being reordered, the US dollar remains as important as when Bretton Woods collapsed[.] [. . .] In the medium term, policymakers need to reshuffle the deck. That is, we need to improve the structure of the current IMFS. [. . .] In the longer term, we need to change the game. [. . .] Any unipolar system is unsuited to a multi-polar world. [. . .] In the new world order, a reliance on keeping one’s house in order is no longer sufficient.

The neighbourhood too must change. [. . .] [A] multi-polar global economy requires a new IMFS to realise its full potential. That won’t be easy. Transitions between global reserve currencies are rare events. [. . .] [I]t is an open question whether such a new Synthetic Hegemonic Currency (SHC) would be best provided by the public sector, perhaps through a network of central bank digital currencies. [. . .]

[A]n SHC might smooth the transition that the IMFS needs. [. . .] The deficiencies of the IMFS have become increasingly potent. Even a passing acquaintance with monetary history suggests that this centre won’t hold. [. . .] Let’s end the malign neglect of the IMFS and build a system worthy of the diverse, multi-polar global economy that is emerging.

In a nutshell, according to Carney: The “world economy is being reordered,” the dollar only remains “important” in the short term and “we”—the G7 central bankers—need to improve the IMFS by changing “the game” to suit a “multi-polar world” because the unipolar system is unsuitable. “The neighbourhood” (the Earth) must change to realise the potential of a “multi-polar” IMFS.

This requires transforming “the global reserve currency” to some sort of “Synthetic Hegemonic Currency,” perhaps based upon “central bank digital currencies” (CBDCs).

China, thanks in part to Western assistance, leads the world’s developed economies in CBDC technology. It began seriously testing CBDC in 2014, and started rolling it out in cities like Shenzhen, Chengdu and Suzhou in 2020. This year, China extended use of the digital yuan, called e-CNY, as it surged ahead in the race to become the first cashless major economy.

Russia aren’t far behind. Russia 12 leading banks began technical trials of the digital ruble in 2021 prior to its official launch on the 15th February 2022, just nine days before the “special military operation” began in Ukraine. The First Deputy Chairman of the CBR, Olga Skorobogatova, said:

The digital ruble platform is a new opportunity for citizens, businesses and the state. We plan for citizens transfers in digital rubles [to] be free and available in any region of the country[.] [. . .] The state will also receive a new tool for targeted payments and administration of budget payments.

More than that, adoption of CBDC in a cashless society, where no other form of payment is “permitted,” enslaves every citizen to the state. CBDC is both programmable money and a liability of the central banks. Not only does it always belong to the central bank, and never the user, it can be programmed to function as they see fit.

Russia has already installed the legal framework to make this a reality.

In 2019 Vladimir Putin announced amendments to Russian federal law that enables the Russian state to outlaw the use of cryptocurrencies. In a “cashless society” these could potentially be a form of alternative currency.

As yet, the legal amendments have had little effect. But, if and when Russia moves to a cashless control grid the regulatory platform is ready and waiting.

According to the NATO think tank, the Atlantic Council, as 105 countries representing 95% of global GDP explore CBDC, “the G7 economies, the US and UK are the furthest behind on CBDC development.”

It seems strange that the unipolar IRBO is apparently lagging so far behind again. Especially given that fact that some of its leading “thinkers” would like to see “a network of central bank digital currencies.”

Still, in its search for a Synthetic Hegemonic Currency, it may come as some relief to the leaders of the IRBO that, as noted by the Atlantic Council, “many countries are exploring alternative international payment systems” and that the “proliferation of different CBDC models is creating new urgency for international standard setting.”

While it is evident that China are leading, perhaps the IRBO and the Central Bank of Russia can take some consolation in the NATO think tank’s assessment:

The trend is likely to accelerate following financial sanctions on Russia.

The neighbourhood is certainly changing.

Mark Carney – former MD Goldman Sachs, Governor of the Bank of Canada and the Bank of England, UK Prime Minister’s Special Climate Envoy To COP26, Chairman of the FSB, WEF Board of Trustees member and current vice chairman and head of Impact Investing at Brookfield Asset Management and UN Special Envoy on Climate Change.

BUILDING THE NEW IMFS

Russia is the third–largest oil-producing nation after the US and Saudi Arabia and the second–largest producer of natural gas after the US. But since US domestic energy consumption far exceeds Russia’s, it is the second–largest oil exporter, after Saudi Arabia, and the leading natural gas exporter in the world. Russia also possesses the largest gas reserves on Earth.

In 2018, the Shanghai International Energy Exchange started trading oil futures denominated in the Chinese yuan (CNY). All that was required, in order to make the yuan a full-blown petroyuan, was for crude oil exporters to widely accept it as payment. China has been paying Russia and Iran for oil using yuan since 2012, but the sanctions this year moved the credibility of the petroyuan to a whole new level.

The Russian Federation has not only massively increased its oil exports to China, becoming its leading oil supplier, but is accepting payment in renminbi (RMB). The CNY is the principle of account for the RMB. Globally, as a direct consequence of the West’s sanctions, the petroyuan is now a practical reality.

Venezuela, too, has already agreed to accept the petroyuan. If Saudi Arabia accepts the petroyuan, as seems increasingly likely, the yuan will also have taken a leap forward as a potentially dominant global reserve currency.

Perhaps it is just a coincidence that both the pseudopandemic and the war in Ukraine have resulted in nation-states the world over committing to policies that precisely facilitate the transition to the multipolar world order. That both of these world-changing events just happen to “reshuffle the deck” exactly as desired by the global parasite class is certainly uncanny, if not downright unbelievable.

Nonetheless, as the centre of power moves eastward, maybe the new world order will ultimately deliver on the promise claimed by some—namely, that Russia and China really are standing up to the insidious Great Reset. Could it be true? We live in hope.

Despite the fact that the Western public-private partnership has played a pivotal and seemingly intentional role in this polarity shift, perhaps the Russian and Chinese governments are determined to create a better world order for us all, as some commentators suggest:

[A] higher geopolitical reality is being born which will have a much greater benefit to [. . .] humanity more generally if it is not sabotaged. [. . .] A potentially beautiful new future driven by the re-awakening of the spirit of the Silk Road is being painted before our eyes.

When we conclude this series with Part 3, we may just discover that the wondrous vision of a “beautiful new future” led by China and Russia is a realistic prospect.

Or perhaps not.

Tyler Durden Thu, 09/29/2022 - 03:30

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The Coming Of The Police State In America

The Coming Of The Police State In America

Authored by Jeffrey Tucker via The Epoch Times,

The National Guard and the State Police are now…

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The Coming Of The Police State In America

Authored by Jeffrey Tucker via The Epoch Times,

The National Guard and the State Police are now patrolling the New York City subway system in an attempt to do something about the explosion of crime. As part of this, there are bag checks and new surveillance of all passengers. No legislation, no debate, just an edict from the mayor.

Many citizens who rely on this system for transportation might welcome this. It’s a city of strict gun control, and no one knows for sure if they have the right to defend themselves. Merchants have been harassed and even arrested for trying to stop looting and pillaging in their own shops.

The message has been sent: Only the police can do this job. Whether they do it or not is another matter.

Things on the subway system have gotten crazy. If you know it well, you can manage to travel safely, but visitors to the city who take the wrong train at the wrong time are taking grave risks.

In actual fact, it’s guaranteed that this will only end in confiscating knives and other things that people carry in order to protect themselves while leaving the actual criminals even more free to prey on citizens.

The law-abiding will suffer and the criminals will grow more numerous. It will not end well.

When you step back from the details, what we have is the dawning of a genuine police state in the United States. It only starts in New York City. Where is the Guard going to be deployed next? Anywhere is possible.

If the crime is bad enough, citizens will welcome it. It must have been this way in most times and places that when the police state arrives, the people cheer.

We will all have our own stories of how this came to be. Some might begin with the passage of the Patriot Act and the establishment of the Department of Homeland Security in 2001. Some will focus on gun control and the taking away of citizens’ rights to defend themselves.

My own version of events is closer in time. It began four years ago this month with lockdowns. That’s what shattered the capacity of civil society to function in the United States. Everything that has happened since follows like one domino tumbling after another.

It goes like this:

1) lockdown,

2) loss of moral compass and spreading of loneliness and nihilism,

3) rioting resulting from citizen frustration, 4) police absent because of ideological hectoring,

5) a rise in uncontrolled immigration/refugees,

6) an epidemic of ill health from substance abuse and otherwise,

7) businesses flee the city

8) cities fall into decay, and that results in

9) more surveillance and police state.

The 10th stage is the sacking of liberty and civilization itself.

It doesn’t fall out this way at every point in history, but this seems like a solid outline of what happened in this case. Four years is a very short period of time to see all of this unfold. But it is a fact that New York City was more-or-less civilized only four years ago. No one could have predicted that it would come to this so quickly.

But once the lockdowns happened, all bets were off. Here we had a policy that most directly trampled on all freedoms that we had taken for granted. Schools, businesses, and churches were slammed shut, with various levels of enforcement. The entire workforce was divided between essential and nonessential, and there was widespread confusion about who precisely was in charge of designating and enforcing this.

It felt like martial law at the time, as if all normal civilian law had been displaced by something else. That something had to do with public health, but there was clearly more going on, because suddenly our social media posts were censored and we were being asked to do things that made no sense, such as mask up for a virus that evaded mask protection and walk in only one direction in grocery aisles.

Vast amounts of the white-collar workforce stayed home—and their kids, too—until it became too much to bear. The city became a ghost town. Most U.S. cities were the same.

As the months of disaster rolled on, the captives were let out of their houses for the summer in order to protest racism but no other reason. As a way of excusing this, the same public health authorities said that racism was a virus as bad as COVID-19, so therefore it was permitted.

The protests had turned to riots in many cities, and the police were being defunded and discouraged to do anything about the problem. Citizens watched in horror as downtowns burned and drug-crazed freaks took over whole sections of cities. It was like every standard of decency had been zapped out of an entire swath of the population.

Meanwhile, large checks were arriving in people’s bank accounts, defying every normal economic expectation. How could people not be working and get their bank accounts more flush with cash than ever? There was a new law that didn’t even require that people pay rent. How weird was that? Even student loans didn’t need to be paid.

By the fall, recess from lockdown was over and everyone was told to go home again. But this time they had a job to do: They were supposed to vote. Not at the polling places, because going there would only spread germs, or so the media said. When the voting results finally came in, it was the absentee ballots that swung the election in favor of the opposition party that actually wanted more lockdowns and eventually pushed vaccine mandates on the whole population.

The new party in control took note of the large population movements out of cities and states that they controlled. This would have a large effect on voting patterns in the future. But they had a plan. They would open the borders to millions of people in the guise of caring for refugees. These new warm bodies would become voters in time and certainly count on the census when it came time to reapportion political power.

Meanwhile, the native population had begun to swim in ill health from substance abuse, widespread depression, and demoralization, plus vaccine injury. This increased dependency on the very institutions that had caused the problem in the first place: the medical/scientific establishment.

The rise of crime drove the small businesses out of the city. They had barely survived the lockdowns, but they certainly could not survive the crime epidemic. This undermined the tax base of the city and allowed the criminals to take further control.

The same cities became sanctuaries for the waves of migrants sacking the country, and partisan mayors actually used tax dollars to house these invaders in high-end hotels in the name of having compassion for the stranger. Citizens were pushed out to make way for rampaging migrant hordes, as incredible as this seems.

But with that, of course, crime rose ever further, inciting citizen anger and providing a pretext to bring in the police state in the form of the National Guard, now tasked with cracking down on crime in the transportation system.

What’s the next step? It’s probably already here: mass surveillance and censorship, plus ever-expanding police power. This will be accompanied by further population movements, as those with the means to do so flee the city and even the country and leave it for everyone else to suffer.

As I tell the story, all of this seems inevitable. It is not. It could have been stopped at any point. A wise and prudent political leadership could have admitted the error from the beginning and called on the country to rediscover freedom, decency, and the difference between right and wrong. But ego and pride stopped that from happening, and we are left with the consequences.

The government grows ever bigger and civil society ever less capable of managing itself in large urban centers. Disaster is unfolding in real time, mitigated only by a rising stock market and a financial system that has yet to fall apart completely.

Are we at the middle stages of total collapse, or at the point where the population and people in leadership positions wise up and decide to put an end to the downward slide? It’s hard to know. But this much we do know: There is a growing pocket of resistance out there that is fed up and refuses to sit by and watch this great country be sacked and taken over by everything it was set up to prevent.

Tyler Durden Sat, 03/09/2024 - 16:20

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Another beloved brewery files Chapter 11 bankruptcy

The beer industry has been devastated by covid, changing tastes, and maybe fallout from the Bud Light scandal.

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Before the covid pandemic, craft beer was having a moment. Most cities had multiple breweries and taprooms with some having so many that people put together the brewery version of a pub crawl.

It was a period where beer snobbery ruled the day and it was not uncommon to hear bar patrons discuss the makeup of the beer the beer they were drinking. This boom period always seemed destined for failure, or at least a retraction as many markets seemed to have more craft breweries than they could support.

Related: Fast-food chain closes more stores after Chapter 11 bankruptcy

The pandemic, however, hastened that downfall. Many of these local and regional craft breweries counted on in-person sales to drive their business. 

And while many had local and regional distribution, selling through a third party comes with much lower margins. Direct sales drove their business and the pandemic forced many breweries to shut down their taprooms during the period where social distancing rules were in effect.

During those months the breweries still had rent and employees to pay while little money was coming in. That led to a number of popular beermakers including San Francisco's nationally-known Anchor Brewing as well as many regional favorites including Chicago’s Metropolitan Brewing, New Jersey’s Flying Fish, Denver’s Joyride Brewing, Tampa’s Zydeco Brew Werks, and Cleveland’s Terrestrial Brewing filing bankruptcy.

Some of these brands hope to survive, but others, including Anchor Brewing, fell into Chapter 7 liquidation. Now, another domino has fallen as a popular regional brewery has filed for Chapter 11 bankruptcy protection.

Overall beer sales have fallen.

Image source: Shutterstock

Covid is not the only reason for brewery bankruptcies

While covid deserves some of the blame for brewery failures, it's not the only reason why so many have filed for bankruptcy protection. Overall beer sales have fallen driven by younger people embracing non-alcoholic cocktails, and the rise in popularity of non-beer alcoholic offerings,

Beer sales have fallen to their lowest levels since 1999 and some industry analysts

"Sales declined by more than 5% in the first nine months of the year, dragged down not only by the backlash and boycotts against Anheuser-Busch-owned Bud Light but the changing habits of younger drinkers," according to data from Beer Marketer’s Insights published by the New York Post.

Bud Light parent Anheuser Busch InBev (BUD) faced massive boycotts after it partnered with transgender social media influencer Dylan Mulvaney. It was a very small partnership but it led to a right-wing backlash spurred on by Kid Rock, who posted a video on social media where he chastised the company before shooting up cases of Bud Light with an automatic weapon.

Another brewery files Chapter 11 bankruptcy

Gizmo Brew Works, which does business under the name Roth Brewing Company LLC, filed for Chapter 11 bankruptcy protection on March 8. In its filing, the company checked the box that indicates that its debts are less than $7.5 million and it chooses to proceed under Subchapter V of Chapter 11. 

"Both small business and subchapter V cases are treated differently than a traditional chapter 11 case primarily due to accelerated deadlines and the speed with which the plan is confirmed," USCourts.gov explained. 

Roth Brewing/Gizmo Brew Works shared that it has 50-99 creditors and assets $100,000 and $500,000. The filing noted that the company does expect to have funds available for unsecured creditors. 

The popular brewery operates three taprooms and sells its beer to go at those locations.

"Join us at Gizmo Brew Works Craft Brewery and Taprooms located in Raleigh, Durham, and Chapel Hill, North Carolina. Find us for entertainment, live music, food trucks, beer specials, and most importantly, great-tasting craft beer by Gizmo Brew Works," the company shared on its website.

The company estimates that it has between $1 and $10 million in liabilities (a broad range as the bankruptcy form does not provide a space to be more specific).

Gizmo Brew Works/Roth Brewing did not share a reorganization or funding plan in its bankruptcy filing. An email request for comment sent through the company's contact page was not immediately returned.

 

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Government

Students lose out as cities and states give billions in property tax breaks to businesses − draining school budgets and especially hurting the poorest students

An estimated 95% of US cities provide economic development tax incentives to woo corporate investors, taking billions away from schools.

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Exxon Mobil Corp.'s campus in East Baton Rouge Parish, left, received millions in tax abatements to the detriment of local schools, right. Barry Lewis/Getty Images, Tjean314/Wikimedia

Built in 1910, James Elementary is a three-story brick school in Kansas City, Missouri’s historic Northeast neighborhood, with a bright blue front door framed by a sand-colored stone arch adorned with a gargoyle. As bustling students and teachers negotiate a maze of gray stairs with worn wooden handrails, Marjorie Mayes, the school’s principal, escorts a visitor across uneven blue tile floors on the ground floor to a classroom with exposed brick walls and pipes. Bubbling paint mars some walls, evidence of the water leaks spreading inside the aging building.

“It’s living history,” said Mayes during a mid-September tour of the building. “Not the kind of living history we want.”

The district would like to tackle the US$400 million in deferred maintenance needed to create a 21st century learning environment at its 35 schools – including James Elementary – but it can’t. It doesn’t have the money.

Property tax redirect

The lack of funds is a direct result of the property tax breaks that Kansas City lavishes on companies and developers that do business there. The program is supposed to bring in new jobs and business but instead has ended up draining civic coffers and starving schools. Between 2017 and 2023, the Kansas City school district lost $237.3 million through tax abatements.

Kansas City is hardly an anomaly. An estimated 95% of U.S. cities provide economic development tax incentives to woo corporate investors. The upshot is that billions have been diverted from large urban school districts and from a growing number of small suburban and rural districts. The impact is seen in districts as diverse as Chicago and Cleveland, Hillsboro, Oregon, and Storey County, Nevada.

The result? A 2021 review of 2,498 financial statements from school districts across 27 states revealed that, in 2019 alone, at least $2.4 billion was diverted to fund tax incentives. Yet that substantial figure still downplays the magnitude of the problem, because three-quarters of the 10,370 districts analyzed did not provide any information on tax abatement agreements.

Tax abatement programs have long been controversial, pitting states and communities against one another in beggar-thy-neighbor contests. Their economic value is also, at best, unclear: Studies show most companies would have made the same location decision without taxpayer subsidies. Meanwhile, schools make up the largest cost item in these communities, meaning they suffer most when companies are granted breaks in property taxes.

A three-month investigation by The Conversation and three scholars with expertise in economic development, tax laws and education policy shows that the cash drain from these programs is not equally shared by schools in the same communities. At the local level, tax abatements and exemptions often come at the cost of critical funding for school districts that disproportionately serve students from low-income households and who are racial minorities.

In Missouri, for example, in 2022 nearly $1,700 per student was redirected from Kansas City public and charter schools, while between $500 and $900 was redirected from wealthier, whiter Northland schools on the north side of the river in Kansas City and in the suburbs beyond. Other studies have found similar demographic trends elsewhere, including New York state, South Carolina and Columbus, Ohio.

The funding gaps produced by abated money often force schools to delay needed maintenance, increase class sizes, lay off teachers and support staff and even close outright. Schools also struggle to update or replace outdated technology, books and other educational resources. And, amid a nationwide teacher shortage, schools under financial pressures sometimes turn to inexperienced teachers who are not fully certified or rely too heavily on recruits from overseas who have been given special visa status.

Lost funding also prevents teachers and staff, who often feed, clothe and otherwise go above and beyond to help students in need, from earning a living wage. All told, tax abatements can end up harming a community’s value, with constant funding shortfalls creating a cycle of decline.

Incentives, payoffs and guarantees

Perversely, some of the largest beneficiaries of tax abatements are the politicians who publicly boast of handing out the breaks despite the harm to poorer communities. Incumbent governors have used the incentives as a means of taking credit for job creation, even when the jobs were coming anyway.

“We know that subsidies don’t work,” said Elizabeth Marcello, a doctoral lecturer at Hunter College who studies governmental planning and policy and the interactions between state and local governments. “But they are good political stories, and I think that’s why politicians love them so much.”

Academic research shows that economic development incentives are ineffective most of the time – and harm school systems.

While some voters may celebrate abatements, parents can recognize the disparities between school districts that are created by the tax breaks. Fairleigh Jackson pointed out that her daughter’s East Baton Rouge third grade class lacks access to playground equipment.

The class is attending school in a temporary building while their elementary school undergoes a two-year renovation.

The temporary site has some grass and a cement slab where kids can play, but no playground equipment, Jackson said. And parents needed to set up an Amazon wish list to purchase basic equipment such as balls, jump ropes and chalk for students to use. The district told parents there would be no playground equipment due to a lack of funds, then promised to install equipment, Jackson said, but months later, there is none.

Cement surface surrounded by a fence with grass beyond. There's no playground equipment..
The temporary site where Fairleigh Jackson’s daughter goes to school in East Baton Rouge Parish lacks playground equipment. Fairleigh Jackson, CC BY-ND

Jackson said it’s hard to complain when other schools in the district don’t even have needed security measures in place. “When I think about playground equipment, I think that’s a necessary piece of child development,” Jackson said. “Do we even advocate for something that should be a daily part of our kids’ experience when kids’ safety isn’t being funded?”

Meanwhile, the challenges facing administrators 500-odd miles away at Atlanta Public Schools are nothing if not formidable: The district is dealing with chronic absenteeism among half of its Black students, many students are experiencing homelessness, and it’s facing a teacher shortage.

At the same time, Atlanta is showering corporations with tax breaks. The city has two bodies that dole them out: the Development Authority of Fulton County, or DAFC, and Invest Atlanta, the city’s economic development agency. The deals handed out by the two agencies have drained $103.8 million from schools from fiscal 2017 to 2022, according to Atlanta school system financial statements.

What exactly Atlanta and other cities and states are accomplishing with tax abatement programs is hard to discern. Fewer than a quarter of companies that receive breaks in the U.S. needed an incentive to invest, according to a 2018 study by the Upjohn Institute for Employment Research, a nonprofit research organization.

This means that at least 75% of companies received tax abatements when they’re not needed – with communities paying a heavy price for economic development that sometimes provides little benefit.

In Kansas City, for example, there’s no guarantee that the businesses that do set up shop after receiving a tax abatement will remain there long term. That’s significant considering the historic border war between the Missouri and Kansas sides of Kansas City – a competition to be the most generous to the businesses, said Jason Roberts, president of the Kansas City Federation of Teachers and School-Related Personnel. Kansas City, Missouri, has a 1% income tax on people who work in the city, so it competes for as many workers as possible to secure that earnings tax, Roberts said.

Under city and state tax abatement programs, companies that used to be in Kansas City have since relocated. The AMC Theaters headquarters, for example, moved from the city’s downtown to Leawood, Kansas, about a decade ago, garnering some $40 million in Promoting Employment Across Kansas tax incentives.

Roberts said that when one side’s financial largesse runs out, companies often move across the state line – until both states decided in 2019 that enough was enough and declared a cease-fire.

But tax breaks for other businesses continue. “Our mission is to grow the economy of Kansas City, and application of tools such as tax exemptions are vital to achieving that mission, said Jon Stephens, president and CEO of Port KC, the Kansas City Port Authority. The incentives speed development, and providing them "has resulted in growth choosing KC versus other markets,” he added.

In Atlanta, those tax breaks are not going to projects in neighborhoods that need help attracting development. They have largely been handed out to projects that are in high demand areas of the city, said Julian Bene, who served on Invest Atlanta’s board from 2010 to 2018. In 2019, for instance, the Fulton County development authority approved a 10-year, $16 million tax abatement for a 410-foot-tall, 27,000-square-foot tower in Atlanta’s vibrant Midtown business district. The project included hotel space, retail space and office space that is now occupied by Google and Invesco.

In 2021, a developer in Atlanta pulled its request for an $8 million tax break to expand its new massive, mixed-use Ponce City Market development in the trendy Beltline neighborhood with an office tower and apartment building. Because of community pushback, the developer knew it likely did not have enough votes from the commission for approval, Bene said. After a second try for $5 million in lower taxes was also rejected, the developer went ahead and built the project anyway.

Invest Atlanta has also turned down projects in the past, Bene said. Oftentimes, after getting rejected, the developer goes back to the landowner and asks for a better price to buy the property to make their numbers work, because it was overvalued at the start.

Trouble in Philadelphia

On Thursday, Oct. 26, 2023, an environmental team was preparing Southwark School in Philadelphia for the winter cold. While checking an attic fan, members of the team saw loose dust on top of flooring that contained asbestos. The dust that certainly was blowing into the floors below could contain the cancer-causing agent. Within a day, Southwark was closed – the seventh Philadelphia school temporarily shuttered since the previous academic year because of possible asbestos contamination.

A 2019 inspection of the John L Kinsey school in Philadelphia found asbestos in plaster walls, floor tiles, radiator insulation and electrical panels. Asbestos is a major problem for Philadelphia’s public schools. The district needs $430 million to clean up the asbestos, lead, and other environmental hazards that place the health of students, teachers and staff at risk. And that is on top of an additional $2.4 billion to fix failing and damaged buildings.

Yet the money is not available. Matthew Stem, a former district official, testified in a 2023 lawsuit about financing of Pennsylvania schools that the environmental health risks cannot be addressed until an emergency like at Southwark because “existing funding sources are not sufficient to remediate those types of issues.”

Meanwhile, the city keeps doling out abatements, draining money that could have gone toward making Philadelphia schools safer. In the fiscal year ending June 2022, such tax breaks cost the school district $118 million – more than 25% of the total amount needed to remove the asbestos and other health dangers. These abatements take 31 years to break even, according to the city’s own scenario impact analyses.

Huge subsets of the community – primarily Black, Brown, poor or a combination – are being “drastically impacted” by the exemptions and funding shortfalls for the school district, said Kendra Brooks, a Philadelphia City Council member. Schools and students are affected by mold, asbestos and lead, and crumbling infrastructure, as well as teacher and staffing shortages – including support staff, social workers and psychologists.

More than half the district’s schools that lacked adequate air conditioning – 87 schools – had to go to half days during the first week of the 2023 school year because of extreme heat. Poor heating systems also leave the schools cold in the winter. And some schools are overcrowded, resulting in large class sizes, she said.

Front of a four-story brick school building with tall windows, some with air-conditioners
Horace Furness High School in Philadelphia, where hot summers have temporarily closed schools that lack air conditioning. Nick-philly/Wikimedia, CC BY-SA

Teachers and researchers agree that a lack of adequate funding undermines educational opportunities and outcomes. That’s especially true for children living in poverty. A 2016 study found that a 10% increase in per-pupil spending each year for all 12 years of public schooling results in nearly one-third of a year of more education, 7.7% higher wages and a 3.2% reduction in annual incidence of adult poverty. The study estimated that a 21.7% increase could eliminate the high school graduation gap faced by children from low-income families.

More money for schools leads to more education resources for students and their teachers. The same researchers found that spending increases were associated with reductions in student-to-teacher ratios, increases in teacher salaries and longer school years. Other studies yielded similar results: School funding matters, especially for children already suffering the harms of poverty.

While tax abatements themselves are generally linked to rising property values, the benefits are not evenly distributed. In fact, any expansion of the tax base due to new property construction tends to be outside of the county granting the tax abatement. For families in school districts with the lost tax revenues, their neighbors’ good fortune likely comes as little solace. Meanwhile, a poorly funded education system is less likely to yield a skilled and competitive workforce, creating longer-term economic costs that make the region less attractive for businesses and residents.

“There’s a head-on collision here between private gain and the future quality of America’s workforce,” said Greg LeRoy, executive director at Good Jobs First, a Washington, D.C., advocacy group that’s critical of tax abatement and tracks the use of economic development subsidies.

Three-story school building with police officers out front and traffic lights in the foreground
Roxborough High School in Philadelphia. AP Photo/Matt Rourke

As funding dwindles and educational quality declines, additional families with means often opt for alternative educational avenues such as private schooling, home-schooling or moving to a different school district, further weakening the public school system.

Throughout the U.S., parents with the power to do so demand special arrangements, such as selective schools or high-track enclaves that hire experienced, fully prepared teachers. If demands aren’t met, they leave the district’s public schools for private schools or for the suburbs. Some parents even organize to splinter their more advantaged, and generally whiter, neighborhoods away from the larger urban school districts.

Those parental demands – known among scholars as “opportunity hoarding” – may seem unreasonable from the outside, but scarcity breeds very real fears about educational harms inflicted on one’s own children. Regardless of who’s to blame, the children who bear the heaviest burden of the nation’s concentrated poverty and racialized poverty again lose out.

Rethinking in Philadelphia and Riverhead

Americans also ask public schools to accomplish Herculean tasks that go far beyond the education basics, as many parents discovered at the onset of the pandemic when schools closed and their support for families largely disappeared.

A school serving students who endure housing and food insecurity must dedicate resources toward children’s basic needs and trauma. But districts serving more low-income students spend less per student on average, and almost half the states have regressive funding structures.

Facing dwindling resources for schools, several cities have begun to rethink their tax exemption programs.

The Philadelphia City Council recently passed a scale-back on a 10-year property tax abatement by decreasing the percentage of the subsidy over that time. But even with that change, millions will be lost to tax exemptions that could instead be invested in cash-depleted schools. “We could make major changes in our schools’ infrastructure, curriculum, staffing, staffing ratios, support staff, social workers, school psychologists – take your pick,” Brooks said.

Other cities looking to reform tax abatement programs are taking a different approach. In Riverhead, New York, on Long Island, developers or project owners can be granted exemptions on their property tax and allowed instead to shell out a far smaller “payment in lieu of taxes,” or PILOT. When the abatement ends, most commonly after 10 years, the businesses then will pay full property taxes.

At least, that’s the idea, but the system is far from perfect. Beneficiaries of the PILOT program have failed to pay on time, leaving the school board struggling to fill a budget hole. Also, the payments are not equal to the amount they would receive for property taxes, with millions of dollars in potential revenue over a decade being cut to as little as a few hundred thousand. On the back end, if a business that’s subsidized with tax breaks fails after 10 years, the projected benefits never emerge.

And when the time came to start paying taxes, developers have returned to the city’s Industrial Development Agency with hat in hand, asking for more tax breaks. A local for-profit aquarium, for example, was granted a 10-year PILOT program break by Riverhead in 1999; it has received so many extensions that it is not scheduled to start paying full taxes until 2031 – 22 years after originally planned.

Kansas City border politics

Like many cities, Kansas City has a long history of segregation, white flight and racial redlining, said Kathleen Pointer, senior policy strategist for Kansas City Public Schools.

James Elementary in Kansas City, Mo. Danielle McLean, CC BY-ND

Troost Avenue, where the Kansas City Public Schools administrative office is located, serves as the city’s historic racial dividing line, with wealthier white families living in the west and more economically disadvantaged people of color in the east. Most of the district’s schools are located east of Troost, not west.

Students on the west side “pretty much automatically funnel into the college preparatory middle school and high schools,” said The Federation of Teachers’ Roberts. Those schools are considered signature schools that are selective and are better taken care of than the typical neighborhood schools, he added.

The school district’s tax levy was set by voters in 1969 at 3.75%. But successive attempts over the next few decades to increase the levy at the ballot box failed. During a decadeslong desegregation lawsuit that was eventually resolved through a settlement agreement in the 1990s, a court raised the district’s levy rate to 4.96% without voter approval. The levy has remained at the same 4.96% rate since.

Meanwhile, Kansas City is still distributing 20-year tax abatements to companies and developers for projects. The district calculated that about 92% of the money that was abated within the school district’s boundaries was for projects within the whiter west side of the city, Pointer said.

“Unfortunately, we can’t pick or choose where developers build,” said Meredith Hoenes, director of communications for Port KC. “We aren’t planning and zoning. Developers typically have plans in place when they knock on our door.”

In Kansas City, several agencies administer tax incentives, allowing developers to shop around to different bodies to receive one. Pointer said he believes the Port Authority is popular because they don’t do a third-party financial analysis to prove that the developers need the amount that they say they do.

With 20-year abatements, a child will start pre-K and graduate high school before seeing the benefits of a property being fully on the tax rolls, Pointer said. Developers, meanwhile, routinely threaten to build somewhere else if they don’t get the incentive, she said.

In 2020, BlueScope Construction, a company that had received tax incentives for nearly 20 years and was about to roll off its abatement, asked for another 13 years and threatened to move to another state if it didn’t get it. At the time, the U.S. was grappling with a racial reckoning following the murder of George Floyd, who was killed by a Minneapolis police officer.

“That was a moment for Kansas City Public Schools where we really drew a line in the sand and talked about incentives as an equity issue,” Pointer said.

After the district raised the issue – tying the incentives to systemic racism – the City Council rejected BlueScope’s bid and, three years later, it’s still in Kansas City, fully on the tax rolls, she said. BlueScope did not return multiple requests for comment.

Recently, a multifamily housing project was approved for a 20-year tax abatement by the Port Authority of Kansas City at Country Club Plaza, an outdoor shopping center in an affluent part of the city. The housing project included no affordable units. “This project was approved without any independent financial analysis proving that it needed that subsidy,” Pointer said.

All told, the Kansas City Public Schools district faces several shortfalls beyond the $400 million in deferred maintenance, Superintendent Jennifer Collier said. There are staffing shortages at all positions: teachers, paraprofessionals and support staff. As in much of the U.S., the cost of housing is surging. New developments that are being built do not include affordable housing, or when they do, the units are still out of reach for teachers.

That’s making it harder for a district that already loses about 1 in 5 of its teachers each year to keep or recruit new ones, who earn an average of only $46,150 their first year on the job, Collier said.

East Baton Rouge and the industrial corridor

It’s impossible to miss the tanks, towers, pipes and industrial structures that incongruously line Baton Rouge’s Scenic Highway landscape. They’re part of Exxon Mobil Corp.’s campus, home of the oil giant’s refinery in addition to chemical and plastics plants.

Aerial view of industrial buildings along a river
Exxon Mobil Corp.’s Baton Rouge campus occupies 3.28 square miles. AP Photo/Gerald Herbert

Sitting along the Mississippi River, the campus has been a staple of Louisiana’s capital for over 100 years. It’s where 6,000 employees and contractors who collectively earn over $400 million annually produce 522,000 barrels of crude oil per day when at full capacity, as well as the annual production and manufacture of 3 billion pounds of high-density polyethylene and polypropylene and 6.6 billion pounds of petrochemical products. The company posted a record-breaking $55.7 billion in profits in 2022 and $36 billion in 2023.

Across the street are empty fields and roads leading into neighborhoods that have been designated by the U.S. Department of Agriculture as a low-income food desert. A mile drive down the street to Route 67 is a Dollar General, fast-food restaurants, and tiny, rundown food stores. A Hi Nabor Supermarket is 4 miles away.

East Baton Rouge Parish’s McKinley High School, a 12-minute drive from the refinery, serves a student body that is about 80% Black and 85% poor. The school, which boasts famous alums such as rapper Kevin Gates, former NBA player Tyrus Thomas and Presidential Medal of Freedom recipient Gardner C. Taylor, holds a special place in the community, but it has been beset by violence and tragedy lately. Its football team quarterback, who was killed days before graduation in 2017, was among at least four of McKinley’s students who have been shot or murdered over the past six years.

The experience is starkly different at some of the district’s more advantaged schools, including its magnet programs open to high-performing students.

Black-and-white outline of Louisiana showing the parishes, with one, near the bottom right, filled in red
East Baton Rouge Parish, marked in red, includes an Exxon Mobil Corp. campus and the city of Baton Rouge. David Benbennick/Wikimedia

Baton Rouge is a tale of two cities, with some of the worst outcomes in the state for education, income and mortality, and some of the best outcomes. “It was only separated by sometimes a few blocks,” said Edgar Cage, the lead organizer for the advocacy group Together Baton Rouge. Cage, who grew up in the city when it was segregated by Jim Crow laws, said the root cause of that disparity was racism.

“Underserved kids don’t have a path forward” in East Baton Rouge public schools, Cage said.

A 2019 report from the Urban League of Louisiana found that economically disadvantaged African American and Hispanic students are not provided equitable access to high-quality education opportunities. That has contributed to those students underperforming on standardized state assessments, such as the LEAP exam, being unprepared to advance to higher grades and being excluded from high-quality curricula and instruction, as well as the highest-performing schools and magnet schools.

“Baton Rouge is home to some of the highest performing schools in the state,” according to the report. “Yet the highest performing schools and schools that have selective admissions policies often exclude disadvantaged students and African American and Hispanic students.”

Dawn Collins, who served on the district’s school board from 2016 to 2022, said that with more funding, the district could provide more targeted interventions for students who were struggling academically or additional support to staff so they can better assist students with greater needs.

But for decades, Louisiana’s Industrial Ad Valorem Tax Exemption Program, or ITEP, allowed for 100% property tax exemptions for industrial manufacturing facilities, said Erin Hansen, the statewide policy analyst at Together Louisiana, a network of 250 religious and civic organizations across the state that advocates for grassroots issues, including tax fairness.

The ITEP program was created in the 1930s through a state constitutional amendment, allowing companies to bypass a public vote and get approval for the exemption through the governor-appointed Board of Commerce and Industry, Hansen said. For over 80 years, that board approved nearly all applications that it received, she said.

Since 2000, Louisiana has granted a total of $35 billion in corporate property tax breaks for 12,590 projects.

Louisiana’s executive order

A few efforts to reform the program over the years have largely failed. But in 2016, Gov. John Bel Edwards signed an executive order that slightly but importantly tweaked the system. On top of the state board vote, the order gave local taxing bodies – such as school boards, sheriffs and parish or city councils – the ability to vote on their own individual portions of the tax exemptions. And in 2019 the East Baton Rouge Parish School Board exercised its power to vote down an abatement.

Throughout the U.S., school boards’ power over the tax abatements that affect their budgets vary, and in some states, including Georgia, Kansas, Nevada, New Jersey and South Carolina, school boards lack any formal ability to vote or comment on tax abatement deals that affect them.

Edwards’ executive order also capped the maximum exemption at 80% and tightened the rules so routine capital investments and maintenance were no longer eligible, Hansen said. A requirement concerning job creation was also put in place.

Concerned residents and activists, led by Together Louisiana and sister group Together Baton Rouge, rallied around the new rules and pushed back against the billion-dollar corporation taking more tax money from the schools. In 2019, the campaign worked: the school board rejected a $2.9 million property tax break bid by Exxon Mobil.

After the decision, Exxon Mobil reportedly described the city as “unpredictable.”

However, members of the business community have continued to lobby for the tax breaks, and they have pushed back against further rejections. In fact, according to Hansen, loopholes were created during the rulemaking process around the governor’s executive order that allowed companies to weaken its effectiveness.

In total, 223 Exxon Mobil projects worth nearly $580 million in tax abatements have been granted in the state of Louisiana under the ITEP program since 2000.

“ITEP is needed to compete with other states – and, in ExxonMobil’s case, other countries,” according to Exxon Mobil spokesperson Lauren Kight.

She pointed out that Exxon Mobil is the largest property taxpayer for the EBR school system, paying more than $46 million in property taxes in EBR parish in 2022 and another $34 million in sales taxes.

A new ITEP contract won’t decrease this existing tax revenue, Kight added. “Losing out on future projects absolutely will.”

The East Baton Rouge Parish School Board has continued to approve Exxon Mobil abatements, passing $46.9 million between 2020 and 2022. Between 2017 and 2023, the school district has lost $96.3 million.

Taxes are highest when industrial buildings are first built. Industrial property comes onto the tax rolls at 40% to 50% of its original value in Louisiana after the initial 10-year exemption, according to the Ascension Economic Development Corp.

Exxon Mobil received its latest tax exemption, $8.6 million over 10 years – an 80% break – in October 2023 for $250 million to install facilities at the Baton Rouge complex that purify isopropyl alcohol for microchip production and that create a new advanced recycling facility, allowing the company to address plastic waste. The project created zero new jobs.

The school board approved it by a 7-2 vote after a long and occasionally contentious board meeting.

“Does it make sense for Louisiana and other economically disadvantaged states to kind of compete with each other by providing tax incentives to mega corporations like Exxon Mobil?” said EBR School Board Vice President Patrick Martin, who voted for the abatement. “Probably, in a macro sense, it does not make a lot of sense. But it is the program that we have.”

Obviously, Exxon Mobil benefits, he said. “The company gets a benefit in reducing the property taxes that they would otherwise pay on their industrial activity that adds value to that property.” But the community benefits from the 20% of the property taxes that are not exempted, he said.

“I believe if we don’t pass it, over time the investments will not come and our district as a whole will have less money,” he added.

In 2022, a year when Exxon Mobil made a record $55.7 billion, the company asked for a 10-year, 80% property tax break from the cash-starved East Baton Rouge Parish school district. A lively debate ensued.

Meanwhile, the district’s budgetary woes are coming to a head. Bus drivers staged a sickout at the start of the school year, refusing to pick up students – in protest of low pay and not having buses equipped with air conditioning amid a heat wave. The district was forced to release students early, leaving kids stranded without a ride to school, before it acquiesced and provided the drivers and other staff one-time stipends and purchased new buses with air conditioning.

The district also agreed to reestablish transfer points as a temporary response to the shortages. But that transfer-point plan has historically resulted in students riding on the bus for hours and occasionally missing breakfast when the bus arrives late, according to Angela Reams-Brown, president of the East Baton Rouge Federation of Teachers. The district plans to purchase or lease over 160 buses and solve its bus driver shortage next year, but the plan could lead to a budget crisis.

A teacher shortage looms as well, because the district is paying teachers below the regional average. At the school board meeting, Laverne Simoneaux, an ELL specialist at East Baton Rouge’s Woodlawn Elementary, said she was informed that her job was not guaranteed next year since she’s being paid through federal COVID-19 relief funds. By receiving tax exemptions, Exxon Mobil was taking money from her salary to deepen their pockets, she said.

A young student in the district told the school board that the money could provide better internet access or be used to hire someone to pick up the glass and barbed wire in the playground. But at least they have a playground – Hayden Crockett, a seventh grader at Sherwood Middle Academic Magnet School, noted that his sister’s elementary school lacked one.

“If it wasn’t in the budget to fund playground equipment, how can it also be in the budget to give one of the most powerful corporations in the world a tax break?” Crockett said. “The math just ain’t mathing.”

Christine Wen worked for the nonprofit organization Good Jobs First from June 2019 to May 2022 where she helped collect tax abatement data.

Nathan Jensen has received funding from the John and Laura Arnold Foundation, the Smith Richardson Foundation, the Ewing Marion Kauffman Foundation and the Washington Center for Equitable Growth. He is a Senior Fellow at the Niskanen Center.

Danielle McLean and Kevin Welner do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.

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