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Year 2005 No. 36, March 11, 2005 ARCHIVE HOME JBBOOKS SUBSCRIBE

The Economy Can and Must Provide Pensioners with a Livelihood

Workers' Daily Internet Edition: Article Index :

The Economy Can and Must Provide Pensioners with a Livelihood

Britain's Foreign Economic Relations

Gross Domestic Product and Gross National Income

Interview with an "Economic Hit Man"

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The Economy Can and Must Provide Pensioners with a Livelihood

The Labour government's proposals to raise the public sector pension age from 60 to 65 and to change the calculation of pension from being based on the earnings over the best three years to one based on the average earnings over the working life has aroused anger amongst millions of workers. Paul Mackney, general secretary of NATFHE, the college and university lecturers' union, described the proposals as "the New Labour philosophy of choice – selecting whether you die in poverty or die in harness". In response to the proposals, the TUC called a day of action on February 18 when thousands of public sector workers lobbied MPs and joined protests. On March 23, a one-day strike has been called involving over a million workers from the PCS, Unison, Amicus, UCATT, T&GWU and the Fire Brigades Union control staff. A further one-day strike has been called for April 14 for teachers and lecturers, most of whom will be on holiday on March 23.

The justified outrage and action of the workers have been met by a campaign of disinformation from the monopolies and their media. Headlines highlighted a study published by actuaries Watson Wyatt which claimed that the cost of public sector pensions for all existing public sector employees would be some £700 billion as compared with the £380 billion which the government had estimated. This "finding" was then used as the basis for others to call for a 5p in £1 increase in income tax to "cover the shortfall".  The Liberal Democrat pensions spokesman, Lord Oakeshott, added: "The cost of promises made to Britain's public sector workers have been underestimated." He also claimed that "Britain's public sector employs 18% of the population with 17% of the nation's total earnings but has 36% – double its share – of pension rights." In similar vein, but with reference to the idea of a citizen's pension, CBI director general Sir Digby Jones added: "A much larger state pension is unnecessary for everyone and frankly the country can't afford it."

This campaign of disinformation is intended to undermine the opposition of the public sector workers to the government's attack on their rights. It is intended to convince them that their just demand for a livelihood after retirement is "unreasonable", "too expensive", a "further burden on the taxpayer" and so on. But the question arises as to how an economy, which the chancellor Gordon Brown describes as "the fourth largest economy in the world" and which is "enjoying the longest period of economic growth in two hundred years" is unable to provide its pensioners with a livelihood. 

What are the facts of Britain's economy?  Why do the monopolies, their government, media and spokespersons insist that it cannot provide its pensioners with a livelihood?  According to the Office for National Statistics (ONS), in 2003 the Gross National Income (GNI) of the UK stood at £1101.2 billion. The GNI is the amount of social product claimed by people living in this country regardless of where it was produced.  Of this amount £21.4 billion was social product produced in other countries and brought back to the UK for consumption. The ONS figures for 2003 state that of the total UK GNI, £ 275 billion was "gross operating surplus".  Therefore, it is clear that the gross operating surplus of just 3-4 years could easily cover Watson Wyatt's calculation for pension costs which are likely to be incurred over a period of no less than 40 years. Even if the amount of social product which passes into the government's hands through taxes and appears as the budget is taken into account, it is clear that there are ample resources to adequately fund the pension demands of the workers. For example, the budget for 2003 set aside £700 million to fund public service pensions but £22.5 billion to fund interest and dividend payments and £ 9.7 billion as capital grants to the owners of capital. The 2003 budget allocation for war and aggression stood at £ 32.3 billion.

What is clear from the ONS statistics is that Britain's economy can fully fund the demand of the workers for a guaranteed livelihood after retirement which allows them to live a life which reflects the standard of living in Britain. What stands in the way of this just claim being met is the insistence of big business and its government that the claims of the rich on the social product must be met first while the claims of the people should be swept aside. It cannot be accepted. The demand for a pension which provides retired workers with a satisfactory standard of living must be pressed and the funds must be found from the wealth produced in Britain by putting the people's claims first.

Article Index

Britain's Foreign Economic Relations

According to figures from the Office of National Statistics (ONS), in 2003 the UK had total investments abroad of £3550 billion. These investments were categorised as direct investments, portfolio investments and other investments (including reserve assets). Direct investment refers to those investments in which British companies had a controlling influence over, or at least 10% of the share capital in, the recipient companies. Portfolio investments refer to those investments where British companies have no controlling influence and hold less than 10% of the share capital and other investment which refers to earnings on deposits and loans abroad by UK banks.

UK investment abroad (2003) (rounded to the nearest final digit)

Investment type



rate of return

Direct investment

£ 632.1 billion

£ 55.7 billion


Portfolio investment

£ 969.1 billion

£ 32.4 billion


Other investment

£1948.6 billion

£ 37.2 billion



£3549.7 billion

£125.2 billion


Source: The United Kingdom Balance of Payments – The Pink Book 2004

(Note: These figures give the "credit" side of the balance of payments for investment, i.e. to obtain what the Pink Book refers to as "net earnings", the foreign "earnings" on investment in the UK must be deducted. The net figures for direct, portfolio and other investment income are £31.4 billion, £0.7 billion, and minus £10.0 billion respectively, giving a net total investment income inflow of £22.1 billion, according to the Pink Book figures.)

The rate of return on UK direct investment varies significantly from region to region and country to country:

Direct Investment and rate of return by region



rate of return


£446.4 billion



£178.2 billion



£ 33.1 billion


Australasia & Oceania

£ 18.1 billion



£ 16.8 billion


Direct Investment and rate of return by country



rate of return


£146 billion



£ 2 billion



£ 1 billion


South Africa

£ 11 billion



£287 million



£ 48 million

89.5 %

These figures reflect almost exactly the preoccupations of Britain's foreign policy.  Its subservience to the US, where most British foreign direct investment (FDI)  is located; its vacillation between the USA and Europe, its the other  major FDI location; its preoccupation with Africa with  its very high rates of return and its hostility to the government of Zimbabwe which is endangering its astronomical rates of return.

Article Index

Gross Domestic Product and Gross National Income

Gross Domestic Product (GDP)
GDP measures the total value of output within a country's borders over a given period of time, irrespective of whether the labour or capital involved in production is from within that country  or not. The calculation of GDP is closely related to employment using the total labour-hours worked as a main means to tally the amount of goods and services produced, the aggregate social product. GDP does not concern itself with ownership of the social product and its distribution among the various claimants; it is an attempt to calculate the aggregate social product produced within the country and assign it a monetary value.

Gross National Income (GNI)
GNI is a tool used to calculate the amount of social product claimed by people living in a country whether it is produced in that country or abroad. The calculation of GNI requires two main steps.

The first step is to determine the portion of the country's GDP claimed by the owners of capital, the workers and governments. This amount represents the GDP reduced by the amount claimed by foreign owners of capital invested as equity or debt. The GDP is also reduced by the amount claimed by foreign labour working in the country and sent abroad.

The second step in the calculation of GNI is to total the amount of social product produced outside of the country and claimed on the basis of ownership of capital or their labour.

The amount from the first step is added to that of the second step and the total is called the Gross National Income.

A simple way of looking at it is to take the total GDP and add to it investment income (mostly interest and dividends) claimed by owners of capital on their foreign investments, and then deduct investment income (mostly interest and dividends) claimed by non-resident owners of capital on their investments inside the country. (This simple way ignores the issue of foreign labour in the country and those from the country working abroad.)

Generally, those countries with substantial investments abroad compared with foreign investments inside the home economy have a larger GNI than GDP. The larger GNI almost always reflects a greater inflow of social product from abroad based on ownership of capital abroad compared with the outflow of social product to satisfy claims of foreign owners of capital within the home economy. (Notable exceptions are those oppressed countries with small GDPs that export large numbers of migrant workers who send their earnings home to their families.) The countries that show a higher GDP compared with GNI usually reflect a greater outflow of social product to foreign owners of capital than flowing in.

GDP and GNI are more accurate when used in developed economies. Caution has to be employed when using these figures especially with countries that still have extensive petty production, which is not considered part of the social economy and GDP, and are also large exporters of migrant labour that send money back to their families such as Bangladesh, Pakistan, Nepal and many others. Also, the comparison of GDP with GNI does not deal directly with such issues as unequal terms of trade, international wholesale prices of commodities, military purchases from the handful of major weapons-producing countries (the US, etc.) or the destruction and looting of countries from constant war instigated by competing international monopolies and major powers (Congo, Colombia, etc.) and military occupation (Iraq). Those factors are additional features of exploitation by the most powerful imperialists.

The comparison of GDP with GNI over time reveals the relative economic (not military) strength of the most powerful imperialist countries. It shows how the international movement of capital, the uneven development of capitalism, military spending, war and the squandering of social product in a luxury economy can produce dramatic changes in the economic strength of even the most powerful economies. The comparison of GDP with GNI when combined with other statistics indicates the degree of an economy's integration with international financial capital and the extent of its annexation into the economies of the most powerful imperialists. Other factors that must be considered in detail when examining a particular economy include the amount of foreign capital invested in the economy compared with domestic investment (including debt ownership), the terms of trade for the particular economy's main commodities and the international wholesale prices for those principal commodities.

Article Index

Interview with an "Economic Hit Man"

Rush transcript from Democracy Now

John Perkins describes himself as a former economic hit man – a highly paid professional who cheated countries around the globe out of trillions of dollars. 20 years ago Perkins began writing a book with the working title "Conscience of an Economic Hit Man". Perkins writes, "The book was to be dedicated to the presidents of two countries, men who had been his clients whom I respected and thought of as kindred spirits – Jaime Roldós, president of Ecuador, and Omar Torrijos, president of Panama. Both had just died in fiery crashes. Their deaths were not accidental. They were assassinated because they opposed that fraternity of corporate, government, and banking heads whose goal is global empire. We Economic Hit Men failed to bring Roldós and Torrijos around, and the other type of hit men, the CIA-sanctioned jackals who were always right behind us, stepped in." John Perkins goes on to write: "I was persuaded to stop writing that book. I started it four more times during the next twenty years. On each occasion, my decision to begin again was influenced by current world events: the US invasion of Panama in 1980, the first Gulf War, Somalia, and the rise of Osama bin Laden. However, threats or bribes always convinced me to stop." But now Perkins has finally published his story. The book is titled Confessions of an Economic Hit Man.

AMY GOODMAN: John Perkins joins us now in our firehouse studio. Welcome to Democracy Now!

JOHN PERKINS: Thank you, Amy. It's great to be here.

AMY GOODMAN: It's good to have you with us. Okay, explain this term, "economic hit man", e.h.m., as you call it.

JOHN PERKINS: Basically what we were trained to do and what our job is to do is to build up the American empire. To bring – to create situations where as many resources as possible flow into this country, to our corporations, and our government, and in fact we've been very successful. We've built the largest empire in the history of the world. It's been done over the last 50 years since World War II with very little military might, actually. It's only in rare instances like Iraq where the military comes in as a last resort.

This empire, unlike any other in the history of the world, has been built primarily through economic manipulation, through cheating, through fraud, through seducing people into our way of life, through the economic hit men. I was very much a part of that.

AMY GOODMAN: How did you become one? Who did you work for?

JOHN PERKINS: Well, I was initially recruited while I was in business school back in the late sixties by the National Security Agency, the nation's largest and least understood spy organization; but ultimately I worked for private corporations. The first real economic hit man was back in the early 1950's, Kermit Roosevelt, the grandson of Teddy, who overthrew of government of Iran, a democratically elected government, Mossadegh's government who was Time's magazine person of the year; and he was so successful at doing this without any bloodshed – well, there was a little bloodshed, but no military intervention, just spending millions of dollars and replaced Mossadegh with the Shah of Iran. At that point, we understood that this idea of economic hit man was an extremely good one. We didn't have to worry about the threat of war with Russia when we did it this way. The problem with that was that Roosevelt was a C.I.A. agent. He was a government employee. Had he been caught, we would have been in a lot of trouble. It would have been very embarrassing. So, at that point, the decision was made to use organizations like the C.I.A. and the N.S.A. to recruit potential economic hit men like me and then send us to work for private consulting companies, engineering firms, construction companies, so that if we were caught, there would be no connection with the government

AMY GOODMAN: Okay. Explain the company you worked for.

JOHN PERKINS: Well, the company I worked for was a company named Chas T Main in Boston, Massachusetts. We were about 2,000 employees, and I became its chief economist. I ended up having fifty people working for me. But my real job was deal-making. It was giving loans to other countries, huge loans, much bigger than they could possibly repay. One of the conditions of the loan-let's say a $1 billion to a country like Indonesia or Ecuador-and this country would then have to give ninety percent of that loan back to a US company, or U.S companies, to build the infrastructure-a Halliburton or a Bechtel. These were big ones. Those companies would then go in and build an electrical system or ports or highways, and these would basically serve just a few of the very wealthiest families in those countries. The poor people in those countries would be stuck ultimately with this amazing debt that they couldn't possibly repay. A country today like Ecuador owes over fifty percent of its national budget just to pay down its debt. And it really can't do it. So, we literally have them over a barrel. So, when we want more oil, we go to Ecuador and say, "Look, you're not able to repay your debts, therefore give our oil companies your Amazon rain forest, which are filled with oil." And today we're going in and destroying Amazonian rain forests, forcing Ecuador to give them to us because they've accumulated all this debt. So we make this big loan, most of it comes back to the United States, the country is left with the debt plus lots of interest, and they basically become our servants, our slaves. It's an empire. There's no two ways about it. It's a huge empire. It's been extremely successful.

AMY GOODMAN: We're talking to John Perkins, author of Confessions of an Economic Hit Man. You say because of bribes and other reason you didn't write this book for a long time. What do you mean? Who tried to bribe you, or who – what are the bribes you accepted?

JOHN PERKINS: Well, I accepted a half a million dollar bribe in the nineties not to write the book.


JOHN PERKINS: From a major construction engineering company.

AMY GOODMAN: Which one?

JOHN PERKINS: Legally speaking, it wasn't – Stoner-Webster. Legally speaking it wasn't a bribe, it was – I was being paid as a consultant. This is all very legal. But I essentially did nothing. It was a very understood, as I explained in Confessions of an Economic Hit Man, that it was – I was – it was understood when I accepted this money as a consultant to them I wouldn't have to do much work, but I mustn't write any books about the subject, which they were aware that I was in the process of writing this book, which at the time I called "Conscience of an Economic Hit Man". And I have to tell you, Amy, that, you know, it's an extraordinary story from the standpoint of – It's almost James Bondish, truly, and I mean–

AMY GOODMAN: Well that's certainly how the book reads.

JOHN PERKINS: Yeah, and it was, you know? And when the National Security Agency recruited me, they put me through a day of lie detector tests. They found out all my weaknesses and immediately seduced me. They used the strongest drugs in our culture, sex, power and money, to win me over. I come from a very old New England family, Calvinist, steeped in amazingly strong moral values. I think I, you know, I'm a good person overall, and I think my story really shows how this system and these powerful drugs of sex, money and power can seduce people, because I certainly was seduced. And if I hadn't lived this life as an economic hit man, I think I'd have a hard time believing that anybody does these things. And that's why I wrote the book, because our country really needs to understand, if people in this nation understood what our foreign policy is really about, what foreign aid is about, how our corporations work, where our tax money goes, I know we will demand change.

AMY GOODMAN: We're talking to John Perkins. In your book, you talk about how you helped to implement a secret scheme that funnelled billions of dollars of Saudi Arabian petrol dollars back into the US economy, and that further cemented the intimate relationship between the House of Saud and successive US administrations. Explain.

JOHN PERKINS: Yes, it was a fascinating time. I remember well, you're probably too young to remember, but I remember well in the early seventies how OPEC exercised this power it had, and cut back on oil supplies. We had cars lined up at gas stations. The country was afraid that it was facing another 1929-type of crash-depression; and this was unacceptable. So, they – the Treasury Department hired me and a few other economic hit men. We went to Saudi Arabia. We –

AMY GOODMAN: You're actually called economic hit men –e.h.m.'s?

JOHN PERKINS: Yeah, it was a tongue-in-cheek term that we called ourselves

Officially, I was a chief economist. We called ourselves e.h.m.'s. It was tongue-in-cheek. It was like, nobody will believe us if we say this, you know? And, so, we went to Saudi Arabia in the early seventies. We knew Saudi Arabia was the key to dropping our dependency, or to controlling the situation. And we worked out this deal whereby the Royal House of Saud agreed to send most of their petro-dollars back to the United States and invest them in US government securities. The Treasury Department would use the interest from these securities to hire US companies to build Saudi Arabia-new cities, new infrastructure-which we've done. And the House of Saud would agree to maintain the price of oil within acceptable limits to us, which they've done all of these years, and we would agree to keep the House of Saud in power as long as they did this, which we've done, which is one of the reasons we went to war with Iraq in the first place. And in Iraq we tried to implement the same policy that was so successful in Saudi Arabia, but Saddam Hussein didn't buy.

When the economic hit men fail in this scenario, the next step is what we call the jackals. Jackals are CIA-sanctioned people that come in and try to foment a coup or revolution. If that doesn't work, they perform assassinations. Or try to. In the case of Iraq, they weren't able to get through to Saddam Hussein. He had – His bodyguards were too good. He had doubles. They couldn't get through to him. So the third line of defence, if the economic hit men and the jackals fail, the next line of defence is our young men and women, who are sent in to die and kill, which is what we've obviously done in Iraq.

AMY GOODMAN: Can you explain how Torrijos died?

JOHN PERKINS: Omar Torrijos, the President of Panama. Omar Torrijos had signed the Canal Treaty with Carter much – and, you know, it passed our congress by only one vote. It was a highly contended issue. And Torrijos then also went ahead and negotiated with the Japanese to build a sea-level canal. The Japanese wanted to finance and construct a sea-level canal in Panama.

Torrijos talked to them about this which very much upset Bechtel Corporation, whose president was George Schultz and senior council was Casper Weinberger. When Carter was thrown out (and that's an interesting story-how that actually happened), when he lost the election, and Reagan came in and Schultz came in as Secretary of State from Bechtel, and Weinberger came from Bechtel to be Secretary of Defence, they were extremely angry at Torrijos – tried to get him to renegotiate the Canal Treaty and not to talk to the Japanese. He adamantly refused. He was a very principled man. He had his problem, but he was a very principled man. He was an amazing man, Torrijos. And so, he died in a fiery airplane crash, which was connected to a tape recorder with explosives in it, which – I was there. I had been working with him. I knew that we economic hit men had failed. I knew the jackals were closing in on him, and the next thing, his plane exploded with a tape recorder with a bomb in it.

There's no question in my mind that it was CIA sanctioned, and most – many Latin American investigators have come to the same conclusion. Of course, we never heard about that in our country.

AMY GOODMAN: So, where – when did your change of heart happen?

JOHN PERKINS: I felt guilty throughout the whole time, but I was seduced.

The power of these drugs, sex, power, and money, was extremely strong for me.

And, of course, I was doing things I was being patted on the back for. I was chief economist. I was doing things that Robert McNamara liked and so on.

AMY GOODMAN: How closely did you work with the World Bank?

JOHN PERKINS: Very, very closely with the World Bank. The World Bank provides most of the money that's used by economic hit men, it and the IMF. But when 9/11 struck, I had a change of heart. I knew the story had to be told because what happened at 9/11 is a direct result of what the economic hit men are doing. And the only way that we're going to feel secure in this country again and that we're going to feel good about ourselves is if we use these systems we've put into place to create positive change around the world. I really believe we can do that. I believe the World Bank and other institutions can be turned around and do what they were originally intended to do, which is help reconstruct devastated parts of the world. Help – genuinely help poor people.

There are twenty-four thousand people starving to death every day. We can change that.

AMY GOODMAN: John Perkins, I want to thank you very much for being with us.

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