Posts Tagged ‘Politics’
Humans are often both so funny and tragic at the same time that one does not know whether to laugh or cry on hearing a particular news item. Thus it was for me when reading about Cuba’s apparent ideological U-turn.
The Cuban dogma of the last 50 years has been “State good; private bad.” This is familiar “Communist” territory, so Cubans have been born, grown up and died while being told that “capitalism” was evil, private ownership was bad and that the state was best suited to running everything.
This then was “the truth” for 50 years. But suddenly, amazingly, it seems that this was NOT the truth after all, since now entrepreneurship is to be encouraged in a bid to breathe life into the dinosauric Cuban economy. So, for 50 years Cuba was living a lie? And if so, will those responsible take the blame for these lies?
Errrrmmmm … the heirs and cronies of the apparent lie of over 50 years are the very same people (apart from the conveniently-sidelined Fidel himself, who can of course take the blame whether explicitly or implicitly) who are now proclaiming a new “truth”. So are they admitting their lie, or to be charitable – since XMAS is approaching – their total wrongness?
This is of course the big problem for those enforcing dogma. If there comes a time when the dogma is so manifestly absurd that it has to be changed then the long-time enforcers of the ridiculous are clearly seen to have been wrong for as long as the dogma has been enforced. And of course, the LONGER the dogma has gone on the MORE wrong the enforcers of same are seen to be. So for the dogma-enforcers there is every incentive to NEVER admit the nonsensicality of the dogma, whatever the evidence. Hence the ossification of dogma, when in the end enforcing the dogma is seen as more important than the actual dogma itself.
This is also one reason for the extraordinary conservatism that Humans are often “guilty” of. “Why do we do it that way?” -> “Errrmmmm … we’ve ALWAYS done it that way …”
Well, some credit has to go to the Cuban regime for admitting – tacitly or otherwise – that the last 50 years’ dogma was wrong. Kind as I am, I do not use the word “idiotic”, though some would say that would be more appropriate …… Kind? Am I too kind in giving them any credit at all? After all, in a dictatorship, the only true definition of “truth” is “that which the leadership says is true.”
I haven’t worked out yet whether they are using the common ploy of dogma-changers, the only one in fact that gets them off the hook. This is to say: “Yes, we’ve always believed A was good and B was evil and now we believe the opposite. This is because CIRCUMSTANCES HAVE CHANGED.” Has anyone worked that out yet? The problem with the “Circumstances have changed” argument is of course that circumstances are ALWAYS changing and so dogma PER SE would seem to be a ludicrous way to manage our lives.
Well whatever, the latest pronouncements could have been made by the British centre-right Coalition Party rather than the old-style Cuban Communist Party:
“Our state cannot and should not continue maintaining companies, productive entities, services and budgeted sectors with bloated payrolls [and] losses that hurt the economy,” said the official Cuban labour federation, which announced the news.
George Osbourne, rightist British Chancellor of the Exchequer, would have been quite proud of that newsbite.
One has to wonder how this redefining of “the truth” will go down with the Cuban people. As has been argued, the main problem with changing the dogma is that you have to admit being wrong before, and often massively and for many years. And the longer-term ticking time-bomb is that once you allow questioning of the dogma then you open a door to the questioning of everything. This is why people who enforce dogma don’t really like any sort of questioning whatsoever. Encouraging it is like opening Pandora’s box; where will it all end? And the most hideous question of all of course is: “Don’t we deserve more say in our own government.” or – in the case of a “world-religion”, “Is the whole basis of our “beliefs” (for which we are prepared to kill people for) plain WRONG? Have we been living a LIE for over 1500 years? ” This question is a terrible one for individuals to face, so terrible that their leaders will do ANYTHING to prevent them ever facing it, including of course kill them if the questioning becomes too loud.
This is the real reason why dictatorships don’t like questioning of any kind; mindless sheep would be their preferred populace. A populace that asks too many questions is – frankly – to be avoided like the plague. They are currently plagued in Iran by sheep with very much a mind of their own, which is why oppression is great and increasing of course.
Anyway, I for one rejoice at the Cuban change of direction, even though one has often seen leaders tempted to open Pandora’s box only to violently slam it shut again when they see what starts to happen.
I always admired the Cuban revolution; chucking out a nauseating “Capitalist” mafiosi-style American-backed regime. The problem has been the extreme ossification of Cuban political and economic thought and development since the day Castro took over. Are better days ahead and will Cuba one day end up as a role-model for South America, much as Scandinavia is for the world in general?
The comic in all this? Listening to previous apologists for the former “lie” having to find linguistic justifications for their previous wrongness. This is marvellous for lovers of language as the arts of spin are brought fully into play justifying the previously unjustifiable.
The tragic? Knowing that the livers of the previous lie suffered both from living a lie and from the practical consequences of it, in Cuba’s case a quite unnecessarily high level of poverty in many areas even if there were some compensating factors. As Cuban apologists often say (said?) “The people may be poor but they are happy.” We might say (I assume): “Better to be much better-off and also happy ….”
PS Is the Pope watching all this (and the Islamic hierarchy come to that?) There is plenty of room for dogma change in the Vatican and Mecca …..
By Chris Snuggs
A modern Greek tragedy – that could have been foreseen.
As I tried to point out in a recent Learning From Dogs post, foreign policy is an extremely complicated thing. This sounds self-evident, but it’s amazing the extent to which certain officials think they can control events occurring around the world.
I like to characterize US foreign policy in the Middle East as throwing rocks at a hornet’s nest, and then expecting to be
able to control the hornets when they emerge. The consequences of intervention are so many, so widespread, so complicated, and so unforeseen that no one can hope to be able to manage them, without inevitably intervening even more and thus fueling even more unintended consequences. (You can see a strong parallel between the overconfidence of government officials in the area of foreign policy and their attitude in areas of attempted economic control. But, that’s a separate discussion.)
Thanks to the wonderful (in my opinion) people at WikiLeaks, we have been able to see a much more realistic picture of the war in Afghanistan than has so far been available. CNN reports on one element of these reports that is none other than one of these most unintended of consequences — some of the most advanced military technology in our country’s arsenal falling into the hands of…well we’re not really sure who. CNN reports:
When unmanned aircraft crash in Afghanistan, scavenger hunters frequently aren’t far behind, U.S. military incident reports published by WikiLeaks suggest.
On several occasions, military units sent to recover the aircraft — known as tactical unmanned aerial vehicles — have arrived to find the aircraft stripped of valuable parts.
In April 2007, a parachute deployed on one that had maintenance issues, one report says. Troops sent to recover the aircraft couldn’t reach it until the next day, when they discovered it was missing some of its electronic components and its payload.
Is this a surprise? For me, no!
For those who oversimplify foreign policy to international powers moving on a chess board, yes. Government officials often forget that at the end of the day we are not dealing simply with “the Taliban” or “Al Qaeda” — we are dealing with individual human beings.
And while the Taliban and Al Qaeda as groups may seem predictable, individual human beings are essentially the most advanced supercomputers ever to exist on this planet. To think that one can predict the actions of human beings on the other side of the world, especially human beings whose culture and background one hardly understandings, is nothing but the highest form of hubris.
And, just like in Greek tragedy, the hubris comes just before the fall, when it turns out that the prideful character did not have everything under control, and in fact is the victim of consequences that he was too prideful to foresee or even consider as a possibility.
By Elliot Engstrom
Let’s be real about Realism.
Usually when I talk with supporters of America’s current wars in the Middle East, those who discover that I am vehemently opposed to an American presence in the region find me to be naïve. In their minds, I just do not understand realism or how power politics actually functions. My anti-war sentiments are the idealistic notions of an inexperienced youth who thinks that everyone should just get along.
The great irony here is that when followed to its logical end, the realist school of internationalist relations which so
many use to justify the American presence all over the world is in fact one of the greatest arguments against our current foreign policy. I do not argue against America’s wars in Iraq, Afghanistan, and Pakistan because I think that we would all just get along if these wars ceased to happen. I argue against these wars because I come from a perspective that sees the people we are fighting as human beings with the same base motivations as myself, and when these people see their livelihood threatened, they take the best course of action that they can find, which unfortunately often involves siding with whatever group holds the most regional power.
The great mistake in logic made by many advocates of an interventionist foreign policy is to merely think of the world in terms of the international stage. Such people look at the world in terms of what Iran, Al Qaeda, Russia, China, OPEC, or other entities have done or might do, rather than considering actions based on their effects on individuals, and what these individuals are likely to do in response.
Fiddling with gravity!
Financial crises can be very difficult events to understand. Even for those who have spent a great deal of time studying such areas as finance and economics, comprehension of these disasters can be elusive. However, analyzing shared elements in the recent American and Greek financial crises can help give even the economic layman insight into their common causes.
One word can be used to sum up the basic concept behind both of these crises – overextension. Both the American and Greek governments attempted to take on a much heavier economic load than either could handle. While, in both cases, this has been painted by some as a noble, humanitarian effort to help those in need, methods such as inflationary monetary policy tantamount to theft and the disguising of massive budgetary deficits (in both cases with the help of Goldman Sachs) would not justify the means employed even had these efforts been successful, and certainly should be taken to task considering the disastrous ramifications of these actions.
In both cases, many are citing unrestrained spending as the source of the problem. For example, CNN wrote of the Greek crisis that “years of unrestrained spending, cheap lending and failure to implement financial reforms…whisked away a curtain of partly fiddled statistics to reveal debt levels and deficits that exceeded limits set by the Eurozone.”
Without suggesting that CNN was attempting to be deceptive in this explanation, as the points made certainly are important, it must be noted that things like unrestrained spending, cheap lending, and fiddled statistics are merely symptoms of the deeper disease. Instead of asking the government to spend less, tighten lending laws, and implement financial reform, one should instead ask the deeper question – how does the government even have the power to cause such problems in the first place, and why are the results of such government power so often much more hurtful than helpful?
This deeper problem, whose symptoms we are now dealing with, is central banking. The Federal Reserve System and its Greek counterpart, the Bank of Greece, each had a heavy hand in their respective nations’ financial collapses. This is due to these banks’ attempts at economic manipulation – the Federal Reserve directly sets interest rates, while the Greek system uses more indirect methods to do nearly the same thing. Note that it is due to their attempts at economic manipulation, as attempting to set economic law is about as useful as attempting to set gravity.
Consider this metaphor of setting gravity. A man claims to be able to set the force of gravity on the earth. He tells a stunt biker that he can set gravity to be half as much as normal. So, the biker attempts to jump a distance that is much longer than he normally would attempt. Upon jumping, the biker finds that, obviously, the first man never was able to set the nature of gravity at all, and he falls to the ground long before reaching his destination.
This is exactly what happened due to the actions of central banks in the cases of both the United States and Greece. Interest rates and other natural economic restrictions were said to be more flexible than they truly were. Thus, individuals who based their actions on this information ended up engaging in activities that were far more risky than usual. However, once they had “jumped,” so to speak, they found that, in fact, economic law was as strict as ever, and they “fell.”
However, if the answer is so obvious, why are we not hearing more about it? Each of these financial crises is extremely complicated, and the above described scene is, it must be admitted, an oversimplification. This is not to say that it is not accurate, but rather that this nature of the crises’ root cause is not immediately apparent to all upon examining the situation.
For example, a person who has been educated their entire life in an economic school that praises central banking, deficit spending, and government action in general would certainly seek to find another cause for the crisis, perhaps by blaming business owners for making risky investments or stating that government controls were not strict enough. However, a person who has studied and understands the damage done by central banking and government economic controls will be quick to realize what has occurred.
People with such knowledge are becoming more and more common in both the United States and around the world. “Even today, with an economic crisis raging, the response by our government and the Federal Reserve has been characteristic,” Ron Paul writes in his recent book, End the Fed. “Interest rates are driven to zero and trillions of dollars are pushed into the economy with no evidence that any problems will be solved. The authorities remain oblivious to the fact that they are only making our problems worse in the long run.”
While he may be one of the most popular adversaries of central banking, it is not just Ron Paul, or even Austrian economists, who are calling out government for its role in these financial crises. In an e-mail to supporters, Democratic congressman Dennis Kucinich cited “the 1913 Federal Reserve Act, the banks’ fractional reserve system and our debt-based economic system” as major factors in the American crisis.
Such complex and important issues as economic crises need all the attention we can give them, and it is impossible here to provide the in-depth analysis that these situations merit. It also must be noted that while both the United States and Greece have to an extent both engaged in central banking to their detriments, each country does have a different system. Still, the general principles hold, always returning us to that first word – overextension. As long as nations attempt to manipulate the laws of economics to engage in far grander pursuits than they can sustain, we can expect to see such economic crises as have been seen in the United States and Greece in the future.
By Elliot Engstrom
An outsider’s view of the European Union
However, the fact that it’s “for students” does not mean that others aren’t encouraged to check it out! (Who says you need to be in school to be a student, anyways?)
My article in this issue, “The European Union: Eurocrats and the Eurosphere,” discusses a few problems that I see with the European Union. The article begins:
During the 19th and early 20th centuries, European governments came under attack for their colonial policies in the African continent. One of the primary claims made by pan-Africanists and other anti-European individuals was that such European policies denied the peoples of Africa the right of self-determination. For example, the Declaration of Rights of the Negro Peoples of the World, drafted at a 1920 convention of the Universal Negro Improvement Association led by Marcus Garby, stated, “We believe in the self-determination of all peoples.” Through policies ranging from direct rule via military force to indirect rule via forced economic dependency, European governments were holding African countries back from determining their own course.
While the modern “third world” certainly is not free from the tethers of traditional western powers, the situation has greatly improved from what it was a hundred years ago. However, the modern European governments now are directly denying the right of self-determination not to the peoples of other continents, but to the peoples of Europe itself. Considering the rhetoric surrounding the European Union, such as a commitment to “sustainable development” and the goals of “peace, prosperity and freedom” for the people of Europe, this is a sad irony indeed.
Other articles in this issue of the FPH include:
- “The War on Terror and Sun Tzu: Is American Strategy Sound?”,
- “Why Conservatives Should Hate Our Foreign Policy,” and
- “Law or Hoax? Disproving Democratic Peace Theory.”
Check out an entire digital copy for free here.
By Elliot Engstrom
Day One for the new Prime Minister and his team has been good!
Less than 24 hours ago, I mused that maybe David Cameron and Nick Clegg represented something that the UK badly needs – a real positive change in Governing the country.
Spring shoot 1
Matthew Parris is an experienced reporter, columnist and a one-time Conservative Member of Parliament. Here’s what he said to the BBC a short while ago (at the time of writing this Post).
“I ought to be cynical, I ought to be saying it’s all going to end in tears, but I just sense something good and genuine in the air and it just might work,”
“You almost have a sense of two men staging a coup against the British political system,”
Spring shoot 2
It’s almost unknown for the Governor of the Bank of England to comment on political matters. The current Governor, Mervyn King, was recorded saying this today.
By Paul Handover
… David Cameron and Nick Clegg represent real positive change for the UK.
Another amazing day for British politics as Gordon Brown tendered his resignation to Her Majesty Queen Elizabeth II and in less than an hour the Queen asked David Cameron if he would form a Government.
That wonderful unwritten constitution dealing with a change of Prime Minister in such a beautiful and dignified manner.
All I want to say is that these two men have my prayers and best wishes for delivering what so many millions want – a better and fairer way of running a modern democracy.
By Paul Handover
Here’s a novel idea, let the Public Sector live within its means!
Robert Peston is the BBC’s Business Editor. I’ve read his Blog and listened to him on the Beeb for many years now. His latest Blog article hits the bulls-eye.
The smart solution would be to somehow depoliticise what’s known as fiscal consolidation, or the process of cutting spending and raising taxes such that the public sector can again live within its means.
A public sector that seeks not to burden society but to benefit it should not be an issue of party politics.
Well said, Mr P.
By Paul Handover
There are so many excellent Blogs out there that it is difficult at times to keep track of key articles. But here’s one reproduced from Washington’s Blog. It was published on the 30th April and sets out some powerful reasons why the so-called Too Big To Fail banks should, and must, be broken up. It is reproduced with permission. Ed.
5 Reasons We Must Break Up the Giant Banks
As everyone from Paul Krugman to Simon Johnson has noted, the banks are so big and politically powerful that they have bought the politicians and captured the regulators.
But the giant banks are not only dangerous because they skew the political system. There are five economic arguments against the mega-banks as well.
Fortune pointed out last February that the only reason that smaller banks haven’t been able to expand and thrive is that the too-big-to-fails have decreased competition:
Growth for the nation’s smaller banks represents a reversal of trends from the last twenty years, when the biggest banks got much bigger and many of the smallest players were gobbled up or driven under…
As big banks struggle to find a way forward and rising loan losses threaten to punish poorly run banks of all sizes, smaller but well capitalized institutions have a long-awaited chance to expand.
So the very size of the giants squashes competition.
Less Loans, More Bonuses
Small banks have been lending much more than the big boys.
The giant banks which received taxpayer bailouts actually slashed lending more, gave higher bonuses, and reduced costs less than banks which didn’t get bailed out.
Lack of Transparency in Derivatives
JP Morgan Chase, Bank of America, Goldman Sachs, Citigroup, and Morgan Stanley together hold 80% of the country’s derivatives risk, and 96% of the exposure to credit derivatives.
Experts say that derivatives will never be reined in until the mega-banks are broken up.
Increased Debt Problems
As I pointed out in December 2008:
The Bank for International Settlements (BIS) is often called the “central banks’ central bank”, as it coordinates transactions between central banks.
BIS points out in a new report that the bank rescue packages have transferred significant risks onto government balance sheets, which is reflected in the corresponding widening of sovereign credit default swaps:
The scope and magnitude of the bank rescue packages also meant that significant risks had been transferred onto government balance sheets. This was particularly apparent in the market for CDS referencing sovereigns involved either in large individual bank rescues or in broad-based support packages for the financial sector, including the United States. While such CDS were thinly traded prior to the announced rescue packages, spreads widened suddenly on increased demand for credit protection, while corresponding financial sector spreads tightened.
In other words, by assuming huge portions of the risk from banks trading in toxic derivatives, and by spending trillions that they don’t have, central banks have put their countries at risk from default.
Now, Greece, Portugal, Spain and many other European countries – as well as the U.S. and Japan – are facing serious debt crises. See this, this and this.
By failing to break up the giant banks, the government is guaranteeing that they will take crazily risky bets again and again and again.
(Anyone who claims that Chris Dodd’s proposed “reform” legislation will prevent banks from getting bailed out again is wrong. If the giant banks aren’t broken up now – when they are threatening to take down the world economy – they won’t be broken up next time they become insolvent, either. And see this.)
Unfair Competition and Manipulation of Markets
Moreover, Richard Alford – former New York Fed economist, trading floor economist and strategist – recently showed that banks that get too big benefit from “information asymmetry” which disrupts the free market.
Nobel prize winning economist Joseph Stiglitz noted in September that giants like Goldman are using their size to manipulate the market:
“The main problem that Goldman raises is a question of size: ‘too big to fail.’ In some markets, they have a significant fraction of trades. Why is that important? They trade both on their proprietary desk and on behalf of customers. When you do that and you have a significant fraction of all trades, you have a lot of information.”
Further, he says, “That raises the potential of conflicts of interest, problems of front-running, using that inside information for your proprietary desk. And that’s why the Volcker report came out and said that we need to restrict the kinds of activity that these large institutions have. If you’re going to trade on behalf of others, if you’re going to be a commercial bank, you can’t engage in certain kinds of risk-taking behavior.”
The giants (especially Goldman Sachs) have also used high-frequency program trading which not only distorted the markets – making up more than 70% of stock trades – but which also let the program trading giants take a sneak peak at what the real (aka “human”) traders are buying and selling, and then trade on the insider information. See this, this, this, this and this. (This is frontrunning, which is illegal; but it is a lot bigger than garden variety frontrunning, because the program traders are not only trading based on inside knowledge of what their own clients are doing, they are also trading based on knowledge of what all other traders are doing).
Goldman also admitted that its proprietary trading program can “manipulate the markets in unfair ways”. The giant banks have also allegedly used their Counterparty Risk Management Policy Group (CRMPG) to exchange secret information and formulate coordinated mutually beneficial actions, all with the government’s blessings.
Again, size matters. If a bunch of small banks did this, manipulation by numerous small players would tend to cancel each other out. But with a handful of giants doing it, it can manipulate the entire economy in ways which are not good for the American citizen.
No wonder virtually every independent economist and financial expert is calling for the big banks to be broken up.
Some argue that it is logistically impossible to break up the behemoths. But if we broke up Standard Oil, we can break up the giant banks as well.
What fun the Cubans miss out on!!!
No bloated hyperbole about past achievements! No slagging off of the opposition! No daft prognostications. No ludicrous excuses. No pretentious blather. No lies! No wild scare-mongering!! No spin-ridden soundbites! Yup, deciding whether Britain staggers back to its feet again or sinks ever-deeper into irrelevant, bureaucratic and debt-ridden mediocrity is pretty important, but you also have to see the funny side of things.
Just recently Peter Hain said:
I think it’s important for people to act intelligently in this election.
This is brilliant advice, suggesting of course that once the election is over we can all happily go back to being stupid.
It is so useful to get really good advice from our prospective leaders. Thanks Peter.
I will try to act intelligently, but it’s never been a real strong point. Got any hints?
Would voting Labour be intelligent, perhaps? Or indeed the opposite? I am a bit confused ….. which is sad, as the future of my country is at stake.
Without intelligence we are done for. Such a shame it has been so lacking in government for the last 13 years of course.
By Chris Snuggs