Category Archives: Poverty

Quote of the day: Putting the Gasolinazo in context


The New Year saw a dramatic increase in gasoline prices south of the border, with the government ordering gasoline prices raised to about four dollars, or what an average Mexican minimum wage worker earns in a day.

The result, as he have reported extensively, has been a wave of massive protests, looting, and violence.

But the protests, dubbed El Gasolinazo, have their roots in a deeper agenda art work in the government of Mexican President Enrique Peña Nieto, the most unpopular incumbent in recent history.

From Luis Rangel and Eva María, writing in Jacobin:

What’s happening right now in México is a result of an accumulation of offenses by the regime led by Peña Nieto. For one, Ayotzinapa (one of the thousands of cases of disappeared people, as is the case of Raquel Gutiérrez, the disappeared daughter of our comrade Guillermo Gutiérrez), as well as massacres such as that of Tlatlaya or Nochixtlán, and the seven femicides per day reported in our country that, for the most part, go with impunity.

Politically, Peña Nieto’s government has killed the constitution of 1917 (which came out of the revolution) and the Mexican state’s “social pact” that was created in the twentieth century.

Additionally, with the new energy reform, oil, until now under state control, has been newly sold to the transnational companies expropriated under Cárdenas. If we add to this the surreal cases of corruption, the mining concessions (at least 20 percent of the national territory), the invitation to Trump to come to México when he was just a presidential candidate (!), among other things, what we are seeing is not only the little credibility this government has, but also the deep crisis that the regime is facing as an “oligarchic-neoliberal” state which substituted the “Bonapartist sui generis” of the twentieth century.

Thus, “el Gasolinazo” isn’t a last drop in the bucket, but part of a climate of constant crisis and mass uprisings in México.

And massive protests continue throughout Mexico

The latest from teleSUR English:

Thousands of protesters from various organizations gathered Sunday in Mexico City’s main square to reject the increase in gasoline prices, which came into effect at the beginning of 2017, while similar protests took place in other parts of the country.

Shouting “Peña Out,” in reference to Mexican President Enrique Peña Nieto, and demanding “social justice,” thousands gathered at the Plaza de la Constitucion to denounce a double-digit spike in fuel prices known as the “gasolinazo” which is also set to raise the cost of basic food staples like tortillas by up to 20 percent.

Other groups of protesters gathered in front of the National Palace as well as other government buildings in the city to protest against the measure. No official figures were available but EFE news agency reported that at least 7,500 people were at the main square.

Another large mobilization took place in Guadalajara, the capital of the western state of Jalisco, where some 10,000 people from local unions, nongovernmental organizations and civil society groups walked the main streets of the city in rejection of the government’s economic policies.

Protests also took place in Villahermosa, the capital of Tabasco state, Morelos state capital Cuernavaca and Sinaloa’s capital, Culiacan. The large nationwide demonstrations united around the demand of calling for the resignation of the president and rolling back hikes in fuel prices.

Peña Nieto’s government hiked gasoline prices by 20 percent on the first day of 2017, insisting that the move corresponds to international prices and is not a result of his neoliberal reforms.

Headline of the day: Hang on to your hats, folks


From the New York Times:

18 Million May Lose Insurance After Repeal, Study Finds

  • The nonpartisan Congressional Budget Office said that repealing major provisions of the Affordable Care Act would cost 18 million people their insurance in the first year.
  • The number of uninsured Americans would increase to 32 million in 10 years, while causing insurance premiums to double over that time.

From the study, a report on investigations by the Congressional Budget Office [CBO] and the staff of the Joint Committee on Taxation [JCT]:

Estimated Changes Before the Elimination of the Medicaid Expansion and Subsidies

Following enactment but before the Medicaid expansion and subsidies for insurance purchased through the marketplaces were eliminated, the effects of H.R. 3762 on insurance coverage and premiums would stem primarily from repealing the penalties associated with the individual mandate.

Effects on Insurance Coverage. CBO and JCT expect that the number of people without health insurance coverage would increase upon enactment of H.R. 3762 but that the increase would be limited initially, because insurers would have already set their premiums for the current year, and many people would have already made their enrollment decisions for the year. Subsequently, in the first full plan year following enactment, by CBO and JCT’s estimates, about 18 million people would become uninsured. That increase in the uninsured population would consist of about 10 million fewer people with coverage obtained in the nongroup market, roughly 5 million fewer people with coverage under Medicaid, and about 3 million fewer people with employment-based coverage.

Most of those reductions in coverage would stem from repealing the penalties associated with the individual mandate. However, CBO and JCT also expect that insurers in some areas would leave the nongroup market in the first new plan year following enactment. They would be leaving in anticipation of further reductions in enrollment and higher average health care costs among enrollees who remained after the subsidies for insurance purchased through the marketplaces were eliminated. As a consequence, roughly 10 percent of the population would be living in an area that had no insurer participating in the nongroup market.

Effects on Premiums. According to CBO and JCT’s analysis, premiums in the nongroup market would be roughly 20 percent to 25 percent higher than under current law once insurers incorporated the effects of H.R. 3762’s changes into their premium pricing in the first new plan year after enactment. The majority of that increase would stem from repealing the penalties associated with the individual mandate. Doing so would both reduce the number of people purchasing health insurance and change the mix of people with insurance—tending to cause smaller reductions in coverage among older and less healthy people with high health care costs and larger reductions among younger and healthier people with low health care costs. Thus, average health care costs among the people retaining coverage would be higher, and insurers would have to raise premiums in the nongroup market to cover those higher costs. Lower participation by insurers in the nongroup market would place further upward pressure on premiums because the market would be less competitive.

Estimated Changes After the Elimination of the Medicaid Expansion and Subsidies

The bill’s effects on insurance coverage and premiums would be greater once the repeal of the Medicaid expansion and the subsidies for insurance purchased through the marketplaces took effect, roughly two years after enactment.

Effects on Insurance Coverage. By CBO and JCT’s estimates, enacting H.R. 3762 would increase the number of people without health insurance coverage by about 27 million in the year following the elimination of the Medicaid expansion and marketplace subsidies and by 32 million in 2026, relative to the number of uninsured people expected under current law. (The number of people without health insurance would be smaller if, in addition to the changes in H.R. 3762, the insurance market reforms mentioned above were also repealed. In that case, the increase in the number of uninsured people would be about 21 million in the year following the elimination of the Medicaid expansion and marketplace subsidies; that figure would rise to about 23 million in 2026.)

The estimated increase of 32 million people without coverage in 2026 is the net result of roughly 23 million fewer with coverage in the nongroup market and 19 million fewer with coverage under Medicaid, partially offset by an increase of about 11 million people covered by employment-based insurance. By CBO and JCT’s estimates, 59 million people under age 65 would be uninsured in 2026 (compared with 28 million under current law), representing 21 percent of people under age 65. By 2026, fewer than 2 million people would be enrolled in the nongroup market, CBO and JCT estimate.

According to the agencies’ analysis, eliminating the mandate penalties and the subsidies while retaining the market reforms would destabilize the nongroup market, and the effect would worsen over time. The

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Gasolinazo protests continue to rage in Mexico


The gasolinazo, the name Mexicans have given the the government-mandated 20 percent hike in gas prices as a result of the partial privatization of Mexico’s national oil monopoly, continues to inspire massive discontent.

President Enrique Peña Nieto, whose administration mandated the price hike. Has watched his poll numbers plummet, with only one in four Mexicans approving of his handling of the office.

And now he’s trying to cool things down.

From the Associated Press:

Mexico’s president tried again on Thursday to calm anger over the big jump in gasoline prices this month amid a historically weak currency and continued threats by Donald Trump to steer manufacturers back to the United States.

In his latest speech, the deeply unpopular President Enrique Pena Nieto outlined measures that he said would help families mitigate the impact of the price hike. Yet steps like notifying more than 3 million Mexicans older than 65 that they have money in government retirement accounts seemed unlikely to dissipate the outrage that led to widespread looting in parts of the country and marches calling for his resignation.

Earlier this week, Pena Nieto promised to police price increases for staple goods and invest in modernizing public transportation. But it was difficult to see how any of that could make up for the overnight 20 percent increase in the price of gasoline when the government ended price controls.

After days of seeking ways to strike a calming chord, Pena Nieto tried taking a more relaxed posture Thursday, leaning casually on the podium, cracking jokes — and telling Mexicans to suck it up.

Protests lead to State Department warning

Just how tense the situation in Mexico has become can be judged by this travel advisory from the State Department:

The U.S. Consulate General Nogales informs U.S. citizens that large demonstrations are expected at Port of Entry DeConcini January 14-15, 2017 to protest the increase in gasoline prices.  U.S. citizens are urged to use the Mariposa Port of Entry until further notice. As always, avoid areas of demonstrations, and exercise caution if in the vicinity of any large gatherings, protests, or demonstrations.

Demonstrations in Nogales last Sunday turned violent, with police firing numerous warning shots in an attempt to turn back protesters.

Protests continue, on a reduced scale

A report from Business Insider:

Protests against the gas price hike imposed by the Mexican government at the start of this year have spread across the country, appearing in at least 28 of Mexico’s 32 states.

Many of the protests have been peaceful, but in some areas demonstrators have shut down gas stations and facilities belonging to the state oil company, Pemex.

Elsewhere, protests against the gasolinazo, as the price increase has come to be called, have boiled over into looting and violence.

In Mexico City, one police officer was killed while trying to stop looting at a department store, and elsewhere police officers joined in to ransack stores. At least six people have been killed and more than 1,500 have been arrested.

Looting seen during the first week of the year largely subsided this week, but in Tijuana, which shares the Western Hemisphere’s busiest land-border crossing with San Diego, protesters continue to block traffic and confront authorities. Since the price increase — designed to let prices float in response to supply and demand — Tijuana and Baja California state have seen some of the country’s highest prices.

One protest, a blockade in the city of Rosarita, turned violent earlier this week, with at least seven people hurt when a truck rammed the barricade.

A video via the San Diego Informer:

U.S. gas stations on the border do a booming business

While the gasolinazo had been bad for Mexican businesses, it’s proving a real boon for one kind of business on this side of the border.

From Bloomberg Markets:

Mexico’s fuel market liberalization has done something rarely seen before: make California’s pump prices look cheap.

Drivers are flooding across the border to southern California to fill up on gasoline, after protesters blocking distribution centers near the Baja California capital of Mexicali caused stations to run dry. Antunez’s Shell gas station in Calexico is just five blocks away from the Mexican border and rarely has business been as busy as now. Mexicali drivers wait four to five hours to cross into the U.S. just to fill their fuel tanks and then wait two more hours to cross back into Mexico.

>snip<

Unleaded gasoline in Mexicali was increased in January to 16.17 pesos a liter, or $2.815 a gallon. Seventeen miles north across the border in El Centro, California, pump prices jumped 5.3 cents a gallon to average $2.718 as of 5 p.m. New York time Wednesday, according to GasBuddy, a price tracking company.

“There is a very important commercial exchange happening in the border region,” said Jose Angel Garcia, the president of Mexico gasoline retailer association Onexpo. “There are trucks with large tanks being used to bring fuel into Mexico from the U.S.”

More from CSP News, a trade publication for gasoline retailers in the U.S.:

In Calexico, Calif., gas stations reported a tripling in fuel sales and waits of an hour or more for fill-ups, according to The Desert Sun. The town of 40,000 sits across the border from Mexicali, where protesters had earlier blocked the road into the central fuel distribution center, causing local gas stations to run out of fuel. Federal police cleared the blockade, but waits for fuel in Mexicali were still more than an hour that same day.

“It’s great for us,” Juan Arce, the manager of two SoCo Express gas stations in Calexico, told the newspaper. “I do feel bad for the people to the south.”

Several retailers in Calexico reported similar spikes in business. “It’s been more than double,” said Carlos Vera, manager of a Shell-branded site. On a high-volume day, the gas station typically sells 5,000 gallons of gas; the weekend of Jan. 7, it sold nearly 10,000. Its supplier has had to refill its underground storage tanks each day, Vera said.

Motorists were filling up gallon gasoline containers, empty laundry soap containers and even metal barrels to bring back into Mexico for family and friends.

Cartels add gas to their drug business

And in Mexico, there’s one organization already doing business in a highly valued commodity where the demand is great and the market is eager to buy.

So it should come as no surprise that they, too, are getting into the gasolinazo.

From Bloomberg Businessweek:

The black market is booming. Several states experienced gasoline shortages at the end of last year as more thieves tapped into state-owned Petróleos Mexicanos (Pemex) pipelines. The pilfered fuel was sold to drivers hoping to save money. Pipeline theft in 2015 increased sevenfold, to more than 5,500 taps, from just 710 in 2010. Pemex attributes the company’s 12-year slide in crude production in part to the growth in illegal taps.

The drug cartels have turned to fuel theft as a side business worth hundreds of millions of dollars each year, and crime groups focused solely on gasoline robbery have sprung up, says Alejandro Schtulmann, president of Empra, a political-risk consulting firm in Mexico City. “You only need to invest $5,000 or $8,000 to buy some specific equipment, and the outcome of that is huge earnings.”

Fuel theft creates a vicious cycle: The theft increases costs for Pemex and makes the official gasoline supply more scarce, contributing to higher prices for legal consumers. Theft amounts to about $1 billion a year, says Luis Miguel Labardini, an energy consultant at Marcos y Asociados and senior adviser to Pemex’s chief financial officer in the 1990s. “If Pemex were a public company, they would be in financial trouble just because of the theft of fuel,” he says. “It’s that bad.”

And while on the subject of funny business. . .

Consider this from teleSUR English:

An anti-corruption group in Mexico revealed Tuesday that the energy minister, as well as relatives of President Enrique Peña Nieto, had financial interests in the recent gas hikes that have sparked protests across the country for the second week in a row.

Energy Minister Pedro Joaquin Coldwell is a shareholder of four of the five gas stations on the Caribbean island of Cozumel in partnership with his sister and two sons.

One of the gas stations was closed down in April 2016 over alleged manipulations of prices, as the station was not providing the amount of diesel customers were paying for, Mexicans Against Corruption and Impunity exposed in the official reports by Profeco, the oil watchdog in Mexico. The ruling was appealed.

The investigative paper Aristegui Noticias denounced a conflict of interests even more problematic in the context of the contested gas price hike. “Coldwell is the head of the energy sector in Mexico. As the energy minister, he could access privileged information on the oil business,” said the article.

Coldwell denied any interference in the administration of the four gas stations in an interview with the anti-corruption group, adding he will pass over his shares to a trustee in order to avoid conflicts of interests.

Map of the day: U.S. poor hit as water bills soar


Census tracts where water rates are endangering the poor, From PLOS One.

Census tracts where water rates are endangering the poor, From PLOS One.

While lead-tainted water in some of America’s poorest neighborhoods has garnered a lot of attention in recent months, another water water is plaguing the nation’s poor: Soaring home water bills.

The problem is a direct result of the ruthless waves of government downsizing and privatization of public resources, and it’s bound to get much worse as cash-strapped cities finding themselves unable to repair aging infrastructure.

Consider this from the abstract of a sobering review in the open access scientific journal PLOS One:

If water rates rise at projected amounts over the next five years, conservative projections estimate that the percentage of U.S. households who will find water bills unaffordable could triple from 11.9% to 35.6%. This is a concern due to the cascading economic impacts associated with widespread affordability issues; these issues mean that utility providers could have fewer customers over which to spread the large fixed costs of water service. Unaffordable water bills also impact customers for whom water services are affordable via higher water rates to recover the costs of services that go unpaid by lower income households.

More on the study from Michigan State University:

If water rates continue rising at projected amounts, the number of U.S. households unable to afford water could triple in five years, to nearly 36 percent, finds new research by a Michigan State University scholar.

Elizabeth Mack said a variety of factors, ranging from aging infrastructure to climate change to population decline in urban areas, are making residents’ ability to afford water and wastewater services a burgeoning crisis.

Funded by the National Science Foundation and published online in the journal PLOS ONE, her study is one of the first nationwide investigations of water affordability.

“In cities across the United States, water affordability is becoming an increasingly critical issue,” said Mack, an assistant geography professor who analyzed water consumption, pricing and demographic and socioeconomic data for the study.

Spending on water and wastewater services combined should make up no more than 4.5 percent of household income, the Environmental Protection Agency recommends. Based on that criteria, some 13.8 million U.S. households (or 11.9 percent of all households) may find water bills unaffordable – a hardship that hits poor families particularly hard, Mack said.

Water rates have increased 41 percent since 2010, and if they continue at that pace over the next five years the number of households that cannot afford water and wastewater services could soar to an estimated 40.9 million, or 35.6 percent of all households.

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Mexican gas hike leads to riots, looting, and death


They call it the gasolinazo, a neologism we could loosely translate as petro punch, the shock of high prices for gasoline just mandated in Mexico as the result of the partial privatization of Pemex, the national oil company.

Soaring prices at the pump have led to protests, riots, looting, violence, and death, exemplified in this raw footage from RT showing supermarket looting in Verz Cruz:

RAW: Mob loots supermarket in Veracruz as protests against fuel price hike erupt across Mexico

Program notes:

Looting erupted in Veracruz and in other major Mexican cities, Wednesday, amid nationwide protests over a 20 percent rise in fuel prices.

Locals could be seen dismantling walling at Chedraui supermarket in the east coast city, breaking into the building and removing produce. Marines arrived on scene in a bid to curb the ransacking of the site.

More from teleSUR English:

The wave of looting and blockades over a double-digit hike in gasoline prices in Mexico has left one police officer dead and at least 250 people arrested as protests continue across the country.

At least 23 stores were ransacked and 27 blockades put up Wednesday in Mexico City alone, officials said, while the retailers’ association Antad has urged authorities to intervene quickly, saying 79 stores had been looted and 170 forcibly closed due to blockades.

In a failed attempt to calm the widespread anger, President Enrique Peña Nieto told Mexicans Wednesday that he shared their pain over the fuel price hike that went into effect Sunday, but declared that the alternative would have been even greater costs and more suffering for the country.

Still, Peña Nieto has promised that fuel prices would eventually decrease due to his 2014 energy reform that ended nearly seven decades of sovereign control over energy resources by the state-run oil company Pemex, breaking up its monopoly.

Protesters argue that the government’s decision to raise fuel prices by up to 20 percent has no justification in an oil-rich country. However, the government insists that the move is in line with international prices and is not a result of the government’s neoliberal reforms.

Meanwhile, Pemex has denounced blockades on roads that give access to fuel storage terminals and has warned that if the situation continues, it could trigger a crisis of shortages and aggravate the problem.

Pemex also asked angry citizens to avoid any further violent actions, which have already damaged stations and harmed pipeline workers in recent days. Dozens of terminals across the country have decided to cease operations in fear of possible risks presented by the unfolding movement.

Mexican gasoline price hike spurs anger, protests


Under neoliberal President Enrique Peña Nieto, just as north of the border, the rich have been getting richer, and once public assets have been auctioned off to the highest corporate bidders.

But now the consequences of one such sell-off of the commons has resulted in an outbreak of rage across the country.

And even one of Mexico’s drug cartels is threatening on the side of the public, threatening a wave of arsons.

From teleSUR English:

The people of Mexico are entering the New Year in a state of rage and anxiety, with protests planned for Sunday to strongly denounce the government’s huge hike in gasoline prices. The strong rise in prices has been called the “gasolinazo” in Spanish, which roughly translates to “gasoline-punch.”

Unpopular President Enrique Pena Nieto has promised that fuel prices will fall thanks to his neoliberal 2014 energy reforms, which dismantled the seven-decade-old national ownership of petroleum resources by state-owned firm Pemex.

The government plans to end subsidies and let the market dictate prices in March, but the already-strained Mexican people will feel the pinch at the pump before they start falling.

The finance ministry announced Tuesday that the price of gasoline would increase by as much as 20.1 percent to 88 cents per liter on Jan. 1, while diesel would rise by 16.5 percent to 83 cents.

The price ceiling will be adjusted daily starting Feb. 18, before letting supply and demand determine them in March.

Around 100 protestors blocked a service station in the Pacific Coast resort of Acapulco on Friday, while on Saturday an assembly of popular organizations in Chihuahua state’s capital pledged to block all commercial transportation from entering or exiting the city as a means toward paralyzing the economy and pressuring the federal government to reverse the hikes. The assembly of people’s organizations also announced their intention to block major highways and railways in response to what they see as a neoliberal looting of Mexico and handover of its resources to private capital, according to a statement.

Meanwhile, Jalisco authorities are investigating reports that the country’s powerful Jalisco New Generation cartel has entered the fray, threatening to torch gas stations in response to the price hikes.

“They are speculating in order to obtain million dollar profits from the majority of the people who don’t make even a minimum wage … we have already realized that the (shortage) of fuel is because dealers don’t want to sell fuel unless they can do so at a profit, all of our people are now ready to start the mission,” the cartel stated in a WhatsApp message circulating in Jalisco.

A protest is planned in the capital on Sunday while Mexicans were urged on social media to block service stations on Monday. People were also encouraged to boycott fuel for three days.

The Republican heathcare agenda targets the poor


J.B. Silvers is Professor of Health Finance at Case Western Reserve University, and as the former President and Chief Executive Officer of QualChoice, then owned by Catholic Health Initiatives, he knows healthcare insurance from the inside.

In this essay for The Conversation, an open source academic journal, he examines the Republican strategy for derailing Obamacare and predicts that Congress, under Rep. Paul Ryan, will effectively dismantle the program, an agenda directly targeted at America’s poorest and certain to drive insurers out of what companies think an onerous burden.

Call it class, rather than ethnic, cleansing:

There’s a joke among insurers that there are two things that health insurance companies hate to do – take risks and pay claims. But, of course, these are the essence of their business!

Yet, if they do too much of either, they will go broke, and if they do too little, their customers will find a better policy. This balancing act isn’t too hard if they have a pool sufficient to average out the highs and lows. I speak with some experience as the former CEO of one of these firms.

Employee-sponsored insurance has fit this model fairly well, providing good stability and reasonable predictability. Unfortunately, the market for individuals has never worked well.

Generally, this model forces insurers to take fewer risks so that they can still make money. They do this by excluding preexisting conditions and paying fewer claims. In such a market, fewer people are helped, and when they are able to get insurance, they pay a lot more for it than if they were part of an employee-sponsored plan.

The Affordable Care Act changed all of this. Companies were required to stop doing these bad things. In exchange for taking on substantially more risk of less healthy patients, they were promised more business by getting access to more potential customers.

The federal government offers subsidies to help pay the premiums for consumers whose income falls below a certain level. The law also stipulates that all people must be covered, or they face a penalty. This so-called individual mandate also guaranteed business for the insurance companies, because it led healthy people into the risk pool.

To entice insurers into the market, the ACA also offered well-established methods to reduce risk. For example, it built in protections for insurers who enrolled especially sick people. It also provided back-up payments for very high-cost cases and protected against big losses and limited big gains in the first three years.

These steps worked well in establishing a stable market for Medicare drug plans when this program started under President Bush in 2006. Competition there is vigorous, rates are lower than estimated and enrollees are satisfied. In other words, the market works well.

Congress did not honor the deal

But when the time came to pay up for risk reduction in the Obamacare exchanges, Congress reneged and paid only 12 percent of what was owed to the insurers. So, on top of the fact that the companies had to bear the risk of unknown costs and utilization in the start-up years, which turned out to be higher than they expected, insurers had to absorb legislative uncertainty of whether the rules would be rewritten.

It is no wonder that this year they have dramatically increased premiums, averaging 20 percent, to compensate for the extra risk they didn’t factor into the original lower rates. In contrast, underlying health costs are rising at about 5 percent.

Repeal and replace?

And now comes the reality of the “repeal and replace” initiatives from the Republicans. If the uncertainty of this market was large before with the ACA, it is almost unknowable under whatever comes next. Thus the initial exit of some latecomers, including United Healthcare, and undercapitalized minor entrants, such as nonprofit co-ops, is almost certain to become a flood of firms leaving the exchanges. They have little choice since the risks are too large and the actuarially appropriate rates are still not obvious given the political turmoil and changing rules.

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