For those looking for answers to the crisis in liberal democracy, this may well be it.
In yesterday’s post Tensions abound in many societies I offered a viewpoint that the ‘left’ arguing with the ‘right’ in politics was utterly inappropriate. Simply for we, as in the people who live on this planet, have to start working together if we wish to have a future for mankind on Planet Earth.
Yesterday’s post also referred to Inductive and Deductive Reasoning with me proposing that the future had to be built on a universally acknowledged relationship between ’cause’ and ‘effect’. A relationship that was built on a clear axiom, or theorem; as we see all around us in both the physical and natural worlds.
This idea does take a little time to filter through and I would be the first to say that I had to spend quite a while reflecting on the idea to fully understand the difference, the power, of deductive reasoning. Plus how something that was a behaviourial ‘law’ could be seen as much as an axiom as is, for example, the calculation of the speed of light, or the relationship of gravity to mass.
His thesis is that there is a direct relationship between “… about how well dispersed economic decision-making power is and how much control and financial security people have over their lives.“
That relationship is the core message of his essay.
In other words, as I see it, there is an axiom, a theorem, that governs the relationship between the leadership process of a country and the degree to which that country’s society could be classed as a democratic society.
If 2016 brought Brexit, Donald Trump and a backlash against cosmopolitan visions of globalisation and society, the great fear for 2017 is further shocks from right-wing populists like Geert Wilders in Holland and Marine Le Pen in France. A new mood of intolerance, xenophobia and protectionist economics seems to be in the air.
In a world of zero-hour contracts, Uber, Deliveroo and the gig economy, access to decent work and a sustainable family income remains the main fault line between the winners and losers from globalisation. Drill into the voter data behind Brexit and Trump and they have much to do with economically marginalised voters in old industrial areas, from South Wales to Nord-Pas-de-Calais, from Tyneside to Ohio and Michigan.
These voters’ economic concerns about industrial closures, immigrants and businesses decamping to low-wage countries seemed ignored by a liberal elite espousing free trade, flexible labour and deregulation. They turned instead to populist “outsiders” with simplistic yet ultimately flawed political and economic narratives.
Much has been said about the crisis of liberal political democracy, but these trends look inextricably linked with what is sometimes referred to as economic democracy. This is about how well dispersed economic decision-making power is and how much control and financial security people have over their lives. I’ve been involved in a project to look at how this compares between different countries. The results say much about the point we have reached, and where we might be heading in future.
Our economic democracy index looked at 32 countries in the OECD (omitting Turkey and Mexico, which had too much missing data). While economic democracy tends to focus on levels of trade union influence and the extent of cooperative ownership in a country, we wanted to take in other relevant factors.
We added three additional indicators: “workplace and employment rights”; “distribution of economic decision-making powers”, including everything from the strength of the financial sector to the extent to which tax powers are centralised; and “transparency and democratic engagement in macroeconomic decision-making”, which takes in corruption, accountability, central bank transparency and different social partners’ involvement in shaping policy.
What is striking is the basic difference between a more “social” model of northern European capitalism and the more market-driven Anglo-American model. Hence the Scandinavian countries score among the best, with their higher levels of social protection, employment rights and democratic participation in economic decision-making. The reverse is true of the more deregulated, concentrated and less democratic economies of the English-speaking world. The US ranks particularly low, with only Slovakia below it. The UK too is only 25th out of 32.
Interestingly, France ranks relatively highly. This reflects its strong levels of job protection and employee involvement in corporate decision-making – the fact that the far right has been strong in France for a number of years indicates its popularity stems from race at least as much as economics.
Yet leading mainstream presidential candidates François Fillon and Emmanuel Macron are committed to reducing France’s protections. These are often blamed – without much real evidence – for the country’s sluggish job creation record. There is a clear danger both here and in the Netherlands that a continuing commitment to such neoliberal labour market policies might push working class voters further towards Le Pen and Wilders.
One other notable disparity in the index is between the scores of Austria and Germany, despite their relatively similar economic governance. Germany’s lower ranking reflects the growth of labour market insecurity and lower levels of job protection, particularly for part-time workers as part of the Hartz IV labour market reforms in the 1990s that followed reunification.
The index also highlights the comparatively poor levels of economic democracy in the “transition” economies of eastern Europe. The one very interesting exception is Slovenia, which merits further study. It might reflect both its relatively stable transition from communism and the civil war in the former Yugoslavia, and the continuing presence of active civil society elements in the trade union and cooperative movements. Southern European economies also tend to rank below northern European countries, as does Japan.
Poverty and inequality
The index provides strong evidence that xenophobic politics may be linked to changing levels of economic participation and empowerment – notwithstanding the French data. We found that the greater the poverty and inequality in a country, the lower the rates of economic democracy.
These findings suggest, for example, that the Anglo-American-led attack on trade unions and flexible labour policies may actually drive up poverty and inequality by cutting welfare benefits and driving up individual employment insecurity. While the OECD itself advocated these policies until recently, countries with high levels of economic democracy such as Norway, Denmark and Iceland have much lower levels of poverty than countries such as the US and UK.
Far-right populism is on the march everywhere, including the Nordic countries. But Brexit, Trump and the more serious shift to the far right in Eastern Europe have been accompanied by diminishing economic security and rights at work, disenfranchised trade unions and cooperatives, and economic decision-making concentrated among financial, political and corporate elites.
We will monitor these scores in future to see what happens over time. It will be interesting to see how the correlations between economic democracy, poverty and voting patterns develop in the coming years. For those looking for answers to the crisis in liberal democracy, this may well be it.
I shall be writing to Professor Cumbers asking if my analysis of that relationship is supported by his research.
For if it is then we do have a very clear axiom that few would disagree with. That is the political consensus this world needs now.
The power of corporations must never be permitted to override democratic choice.
The main thrust in yesterday’s post was a plea by Chip Colwell , Lecturer on Anthropology, University of Colorado, Denver for our natural lands to be given the legal status of a person. Here’s how Prof. Colwell concluded his essay (my emphasis):
In New Zealand, the Te Urewera Act offers a higher level of protection, empowering a board to be the land’s guardian. The Te Urewera Act, though, does not remove its connection to humans. With a permit, people can hunt, fish, farm and more. The public still has access to the forest. One section of the law even allows Te Urewera to be mined.
Te Urewera teaches us that acknowledging cultural views of places as living does not mean ending the relationship between humans and nature, but reordering it – recognizing nature’s intrinsic worth and respecting indigenous philosophies.
In the U.S. and elsewhere, I believe we can do better to align our legal system with the cultural expressions of the people it serves. For instance, the U.S. Congress could amend the NHPA or the American Indian Religious Freedom Act to acknowledge the deep cultural connection between tribes and natural places, and afford better protections for sacred landscapes like New Mexico’s Mount Taylor.
Until then, it says much about us when companies are considered people before nature is.
Chip Colwell was alerting us, as in humanity, that our natural resources are way, way too important for them to be considered corporate assets.
The days between a Christmas Day and a New Year’s Day are frequently a time for introspection; well they are for me! A few days to reflect on what did or did not work in the year just coming to an end and to find some clarity about the important issues for the new year.
That mood of introspection, of reflection, seems to be creeping into my blog posts this last week of 2016. For following Chip Colwell comes George Monbiot and an essay he published on the 6th December, 2016, that is republished here with Mr. Monbiot’s very kind permission.
Regarding the power of corporations there are strong echoes between Prof. Colwell and Mr. Monbiot.
The Golden Arches Theory of Decline
10th December 2016
Why is there a worldwide revolt against politics as usual? Because corporate globalisation has crushed democratic choice.
By George Monbiot, published in the Guardian, 6th December 2016
A wave of revulsion rolls around the world. Approval ratings for incumbent leaders are everywhere collapsing. Symbols, slogans and sensation trump facts and nuanced argument. One in six Americans now believes that military rule would be a good idea. From all this I draw the following, peculiar conclusion: no country with a McDonald’s can remain a democracy.
Twenty years ago, the New York Times columnist Thomas Friedman proposed his “golden arches theory of conflict prevention”. This holds that “no two countries that both have McDonald’s have ever fought a war against each other since they each got their McDonald’s”.
Friedman’s was one of several end-of-history narratives suggesting that global capitalism would lead to permanent peace. He claimed that it might create “a tip-over point at which a country, by integrating with the global economy, opening itself up to foreign investment and empowering its consumers, permanently restricts its capacity for troublemaking and promotes gradual democratization and widening peace.” He didn’t mean that McDonald’s ends war, but that its arrival in a nation symbolised the transition.
In using McDonalds as shorthand for the forces tearing democracy apart, I am, like him, writing figuratively. I do not mean that the presence of the burger chain itself is the cause of the decline of open, democratic societies (though it has played its part in Britain, using our defamation laws against its critics). Nor do I mean that countries hosting McDonald’s will necessarily mutate into dictatorships.
What I mean is that, under the onslaught of the placeless, transnational capital McDonald’s exemplifies, democracy as a living system withers and dies. The old forms and forums still exist – parliaments and congresses remain standing – but the power they once contained seeps away, re-emerging where we can no longer reach it.
The political power that should belong to us has flitted into confidential meetings with the lobbyists and donors who establish the limits of debate and action. It has slipped into the dictats of the IMF and the European Central Bank, which respond not to the people but to the financial sector. It has been transported, under armed guard, into the icy fastness of Davos, where Mr Friedman finds himself so warmly welcomed (even when he’s talking cobblers).
Above all, the power that should belong to the people is being crushed by international treaty. Contracts such as NAFTA, CETA, the proposed TransPacific Partnership and Trade in Services Agreement and the failed Transatlantic Trade and Investment Partnership are crafted behind closed doors in discussions dominated by corporate lobbyists. They are able to slip in clauses that no informed electorate would ever approve, such as the establishment of opaque offshore tribunals, through which corporations can bypass national courts, challenge national laws and demand compensation for the results of democratic decisions.
These treaties limit the scope of politics, prevent states from changing social outcomes and drive down labour rights, consumer protection, financial regulation and the quality of neighbourhoods. They make a mockery of sovereignty. Anyone who forgets that striking them down was one of Donald Trump’s main promises will fail to understand why people were prepared to risk so much in electing him.
At the national level too, the McDonalds model destroys meaningful democracy. Democracy depends on a reciprocal sense of belief, trust and belonging: the conviction that you belong to the nation and the nation belongs to you. The McDonalds model, by rooting out attachment, could not have been better designed to erase that perception.
As Tom Wolfe observes in his novel A Man in Full, “the only way you could tell you were leaving one community and entering another was when the franchise chains started repeating and you spotted another 7-Eleven, another Wendy’s, another Costco, another Home Depot.” The alienation and anomie this destruction of place promotes are enhanced by the casualisation of labour and a spirit-crushing regime of monitoring, quantification and assessment (at which McDonald’s happens to excel). Public health disasters contribute to the sense of rupture. After falling for decades, for example, death rates among middle-aged white Americans are now rising. Among the likely causes are obesity and diabetes, opioid addiction and liver failure, diseases whose vectors are corporations.
In his book The Globalisation Paradox, the Harvard economist Dani Rodrik describes a political trilemma. Democracy, national sovereignty and hyperglobalisation, he argues, are mutually incompatible. You cannot have all three at once. McDonalisation crowds out domestic politics. Incoherent and dangerous as it often is, the global backlash against mainstream politicians is, at heart, an attempt to reassert national sovereignty against the forces of undemocratic globalisation.
An article about the history of the Democratic party by Matt Stoller in The Atlantic reminds us that a similar choice was articulated by the great American jurist Louis Brandeis. “We may have democracy, or we may have wealth concentrated in the hands of a few, but we can’t have both.” In 1936, the congressman Wright Patman managed to pass a bill against the concentration of corporate power. Among his targets was A&P, the giant chainstore of his day, that was hollowing out towns, destroying local retailers and turning “independent tradesmen into clerks”.
In 1938, President Roosevelt warned that “the liberty of a democracy is not safe if the people tolerate the growth of private power to a point where it becomes stronger than their democratic state itself. That, in its essence, is fascism.” The Democrats saw concentrated corporate power as a form of dictatorship. They broke up giant banks and businesses and chained the chainstores. What Roosevelt, Brandeis and Patman knew has been forgotten by those in power, including powerful journalists. But not by the victims of this system.
One of the answers to Trump, Putin, Orban, Erdogan, Salvini, Duterte, Le Pen, Farage and the politics they represent is to rescue democracy from transnational corporations. It is to defend the crucial political unit that’s under assault by banks, monopolies and chainstores: community. It is to recognise that there is no greater hazard to peace between nations than a corporate model which crushes democratic choice.
It’s very easy to pick out from Mr. Monbiot’s essay what the theme should be for 2017, and beyond. What each and every one of us who cares about the future and understands the huge changes that have to take place if our grandchildren are to have a viable future.
It was that compelling quotation by Louis Brandeis:
We may have democracy, or we may have wealth concentrated in the hands of a few, but we can’t have both.
Dogs ‘teaching’ man to be so successful a hunter enabled evolution, some 20,000 years later, to farming, thence the long journey to modern man. But in the last, say 100 years, that farming spirit has become corrupted to the point where we see the planet’s plant and mineral resources as infinite. Mankind is close to the edge of extinction, literally and spiritually.
I continue that theme in Part Two of my book (Chapter 7: This Twenty-First Century)
Bad news sells! Bad news also causes stress and worry. In my previous explanation, I explained that the last thing you want is a catalogue of all the things that have that power to cause you stress and worry. However, I do see three fundamental aspects of this new century that have their roots in that loss of principles that I referred to in the previous chapter. They are
1. the global financial system,
2. the potential for social disorder, and
3. the process of government.
Because they are at the heart of how the coming years will pan out.
The first aspect, our global financial system, was selected because it underpins all our lives in so many ways. When I was living in southwest England I was a client of Kauders Portfolio Services. The founder of the company, David Kauders, published a book, The Greatest Crash, in 2011. It was an obvious read for me at that time and I still have the book on my shelves here in Oregon.
David explained that whether we like it or not, our lives are inextricably caught up in the twin dependencies of the global financial system: credit and debt. As he wrote in his opening chapter:
Households can barely afford their existing debts, let alone take on more. Since households now prefer not to borrow, indeed some even choose to pay back debt, it follows that those who have already borrowed, as a group, can no longer contribute to economic expansion.
People can be divided into borrowers and savers. With existing borrowers unable to afford or unwilling to take on extra debt, can new borrowers be found instead? Those who do not need to borrow are unlikely to volunteer. Except for the young wishing to buy houses, facing the reality that house prices are beyond their pockets, where are the new borrowers?
Businesses are also under pressure. There has been an inadequate recovery from recession, business prospects are poor as households cut back their spending. Lack of bank lending is a symptom rather than a cause, for if existing businesses were to be given more credit, they would probably be unlikely to find profitable growth opportunities in a world of austerity.
Later on in the book David describes this as “the financial system limit”. In other words, the period of growth and expansion, especially of financial and economic expansion, has come to an end in a structural sense. This was his perspective from 2011.
Recently, I chose to reread The Greatest Crash. What struck me forcibly, reading the book again some four years later on, was how visible this “system limit” appeared in the world today. Everywhere there are signs that the era of growth has come to an end. Many countries are now indebted to a point that reinforces the proposition of there being a financial system limit. The United States is greatly in debt but the only thing mitigating that situation, for the time being anyway, is that the American dollar is the quasi dominant global currency.
The changing nature of the global population is also reinforcing the fact that this is the end of a long period of growth. Even without embracing the question of how much longer we can increase the number of people living on a finite planet, the demographics spell out a greater-than-even chance of a decline in consumption and economic activity. Simply because in all regions of the planet, except for India where there is still a growing youth element in the country, people are ageing. To state the obvious, ageing persons do not consume as much as middle-aged and younger persons.
Thus, the world’s economy that is just around the corner is certainly going to be very different to what it has been in the past. It is not being widely discussed. Worse than that, there is a widespread assumption adopted by many governments that a return to the “normal” economic growth of previous times is a given. Many do not share that assumption.
The second aspect that isn’t being spoken about is the potential for massive, widespread social disorder. All summed up in just three words: greed, inequality, and poverty. Just three words that metaphorically appear to me like a round, wooden lid hiding a very deep, dark well. That lifting this particular lid, the metaphorical one, exposes an almost endless drop into the depths of where our society appears to have fallen.
Even the slightest raising of awareness of where this modern global world is heading is scary. I have in mind the author Thomas Piketty who warned that, “the inequality gap is toxic, dangerous.” Then there was the news in 2015 that, “Billionaires control the vast majority of the world’s wealth, 67 billionaires already own half the world’s assets; by 2100 we’ll have 11 trillionaires, while American worker income has stagnated for a generation.”
The third and final aspect that isn’t being widely discussed is the process of government. Not from the viewpoint of “left” or “right”, Labour or Conservative, Democratic or Republican (insert the labels appropriate to your own country), that is being discussed ad nauseum, but from the viewpoint of good government. It might be a terrible generalisation but it is still a fair criticism to say that many peoples of many countries have lost faith in their governments.
There appears to be a chronic absence of open debate about the need for good government, what that good government would look like, and how do societies bring it about.
If we were a dog pack, then our leader, our female mentor dog, would have moved us all to a new, pristine territory!
So, dear reader, you can understand why a recent article over on Naked Capitalism spoke to me. It was penned by Satyajit Das, a former banker and the author of a number of books. Both Satyajit and Yves, of Naked Capitalism, were delighted to offer me permission to republish the full post.
Yves here. If you’ve read Das regularly, one of the characteristics of his writing is wry detachment. The shift to a sense of foreboding is a big departure.
By Satyajit Das, a former banker and author whose latest book, The Age of Stagnation, is now available. The following is an edited excerpt from Age of Stagnation (published with the permission of Prometheus Books)
If you look for truth, you may find comfort in the end; if you look for comfort you will not get either comfort or truth, only . . . wishful thinking to begin, and in the end, despair. C.S. Lewis
The world is entering a period of stagnation, the new mediocre. The end of growth and fragile, volatile economic conditions are now the sometimes silent background to all social and political debates. For individuals, this is about the destruction of human hopes and dreams.
For most of human history, as Thomas Hobbes recognised, life has been ‘solitary, poor, nasty, brutish, and short’. The fortunate coincidence of factors that drove the unprecedented improvement in living standards following the Industrial Revolution, and especially in the period after World War II, may have been unique, an historical aberration. Now, different influences threaten to halt further increases, and even reverse the gains.
Since the early 1980s, economic activity and growth have been increasingly driven by financialisation – the replacement of industrial activity with financial trading and increased levels of borrowing to finance consumption and investment. By 2007, US$5 of new debt was necessary to create an additional US$1 of American economic activity, a fivefold increase from the 1950s. Debt levels had risen beyond the repayment capacity of borrowers, triggering the 2008 crisis and the Great Recession that followed. But the world shows little sign of shaking off its addiction to borrowing. Ever-increasing amounts of debt now act as a brake on growth.
Growth in international trade and capital flows is slowing. Emerging markets that have benefited from and, in recent times, supported growth are slowing.
Rising inequality and economic exclusion also impacts negatively upon activity.
Financial problems are compounded by lower population growth and ageing populations; slower increases in productivity and innovation; looming shortages of critical resources, such as water, food and energy; and manmade climate change and extreme weather conditions.
The world requires an additional 64 billion cubic metres of water a year, equivalent to the annual water flow through Germany’s Rhine River. Agronomists estimate that production will need to increase by 60–100 percent by 2050 to feed the population of the world. While the world’s supply of energy will not be exhausted any time soon, the human race is on track to exhaust the energy content of hundreds of millions years’ worth of sunlight stored in the form of coal, oil and natural gas in a few hundred years. 10 tons of pre-historic buried plant and organic matter converted by pressure and heat over millennia was needed to create a single gallon (4.5 litres) of gasoline.
Europe is currently struggling to deal with a few million refugees fleeing conflicts in the Middle East. How will the world deal with hundreds of millions of people at risk of displacement as a resulting of rising sea levels?
Extend and Pretend
The official response to the 2008 crisis was a policy of ‘extend and pretend’, whereby authorities chose to ignore the underlying problem, cover it up, or devise deferral strategies to ‘kick the can down the road’. The assumption was that government spending, lower interest rates, and the supply of liquidity or cash to money markets would create growth. It would also increase inflation to help reduce the level of debt, by decreasing its value.
It was the grifter’s long con, a confidence trick with a potentially large payoff but difficult to pull off. Houses prices and stock markets have risen, but growth, employment, income and investment have barely recovered to pre-crisis levels in most advanced economies. Inflation for the most part remains stubbornly low.
In countries that have ‘recovered’, financial markets are, in many cases, at or above pre-crisis prices. But conditions in the real economy have not returned to normal. Must-have latest electronic gadgets cannot obscure the fact that living standards for most people are stagnant. Job insecurity has risen. Wages are static, where they are not falling. Accepted perquisites of life in developed countries, such as education, houses, health services, aged care, savings and retirement, are increasingly unattainable.
In more severely affected countries, conditions are worse. Despite talk of a return to growth, the Greek economy has shrunk by a quarter. Spending by Greeks has fallen by 40 percent, reflecting reduced wages and pensions. Reported unemployment is 26 percent of the labour force. Youth unemployment is over 50 percent. One commentator observed that the government could save money on education, as it was unnecessary to prepare people for jobs that did not exist.
Future generations may have fewer opportunities and lower living standards than their parents. A 2013 Pew Research Centre survey conducted in thirty-nine countries asked whether people believed that their children would enjoy better living standards: 33 percent of Americans believed so, as did 28 percent of Germans, 17 percent of British and 14 percent of Italians. Just 9 percent of French people thought their children would be better off than previous generations.
The Deadly Cure
Authorities have been increasingly forced to resort to untested policies including QE forever and negative interest rates. It was an attempt to buy time, to let economies achieve a self-sustaining recovery, as they had done before. Unfortunately the policies have not succeeded. The expensively purchased time has been wasted. The necessary changes have not been made.
There are toxic side effects. Global debt has increased, not decreased, in response to low rates and government spending. Banks, considered dangerously large after the events of 2008, have increased in size and market power since then. In the US the six largest banks now control nearly 70 percent of all the assets in the US financial system, having increased their share by around 40 percent.
Individual countries have sought to export their troubles, abandoning international cooperation for beggar-thy-neighbour strategies. Destructive retaliation, in the form of tit-for-tat interest rate cuts, currency wars, and restrictions on trade, limits the ability of any nation to gain a decisive advantage.
The policies have also set the stage for a new financial crisis. Easy money has artificially boosted prices of financial assets beyond their real value. A significant amount of this capital has flowed into and destabilised emerging markets. Addicted to government and central bank support, the world economy may not be able to survive without low rates and excessive liquidity.
Authorities increasingly find themselves trapped, with little room for manoeuvre and unable to discontinue support for the economy. Central bankers know, even if they are unwilling to publicly acknowledge it, that their tools are inadequate or exhausted, now possessing the potency of shamanic rain dances. More than two decades of trying similar measures in Japan highlight their ineffectiveness in avoiding stagnation.
Heart of the Matter
Conscious that the social compact requires growth and prosperity, politicians, irrespective of ideology, are unwilling to openly discuss the real issues. They claim crisis fatigue, arguing that the problems are too far into the future to require immediate action. Fearing electoral oblivion, they have succumbed to populist demands for faux certainty and placebo policies. But in so doing they are merely piling up the problems.
Policymakers interrogate their models and torture data, failing to grasp that ‘many of the things you can count don’t count [while] many of the things you can’t count really count’. The possibility of a historical shift does not inform current thinking.
It is not in the interest of bankers and financial advisers to tell their clients about the real outlook. Bad news is bad for business. The media and commentariat, for the most part, accentuate the positive. Facts, they argue, are too depressing. The priority is to maintain the appearance of normality, to engender confidence.
Ordinary people refuse to acknowledge that maybe you cannot have it all. But there is increasingly a visceral unease about the present and a fear of the future. Everyone senses that the ultimate cost of the inevitable adjustments will be large. It is not simply the threat of economic hardship; it is fear of a loss of dignity and pride. It is a pervasive sense of powerlessness.
For the moment, the world hopes for the best of times but is afraid of the worst. People everywhere resemble Dory, the Royal Blue Tang fish in the animated film Finding Nemo. Suffering from short-term memory loss, she just tells herself to keep on swimming. Her direction is entirely random and without purpose.
The world has postponed, indefinitely, dealing decisively with the challenges, choosing instead to risk stagnation or collapse. But reality cannot be deferred forever. Kicking the can down the road only shifts the responsibility for dealing with it onto others, especially future generations.
A slow, controlled correction of the financial, economic, resource and environmental excesses now would be serious but manageable. If changes are not made, then the forced correction will be dramatic and violent, with unknown consequences.
During the last half-century each successive economic crisis has increased in severity, requiring progressively larger measures to ameliorate its effects. Over time, the policies have distorted the economy. The effectiveness of instruments has diminished. With public finances weakened and interest rates at historic lows, there is now little room for manoeuvre. Geo-political risks have risen. Trust and faith in institutions and policy makers has weakened.
Economic problems are feeding social and political discontent, opening the way for extremism. In the Great Depression the fear and disaffection of ordinary people who had lost their jobs and savings gave rise to fascism. Writing of the period, historian A.J.P. Taylor noted: ‘[the] middle class, everywhere the pillar of stability and respectability . . . was now utterly destroyed . . . they became resentful . . . violent and irresponsible . . . ready to follow the first demagogic saviour . . .’
The new crisis that is now approaching or may already be with us will be like a virulent infection attacking a body whose immune system is already compromised.
As Robert Louis Stevenson knew, sooner or later we all have to sit down to a banquet of consequences.
There is no question that we are living in interesting times!
Back in the old country there was a popular saying: “There are liars, damn liars, and politicians.” I am insufficiently aware of politics in both my new home country, the US of A, and my new home state, Oregon, to know if that saying is equally pertinent to life in America as it was in Great Britain – I suspect that it is.
So what’s getting ‘my knickers in a twist’ today? Namely the state of the world economy.
There seems to be so much spin and counter-spin that getting to the truth of what is going on, economically speaking, is not straightforward.
Which is why a recent article posted by Raúl Ilargi Meijerover on The Automatic Earth jumped out at me. To my eyes, it really did cover the truth of what’s going on. And to double-check my analysis I shared it with Dan Gomez, no stranger to global finances, and he found it useful. Indeed, this was Dan’s reply: “That’s pretty much it. This should be the top of the world news every week until governments become accountable. All the other big issues of the day pale compare to the backlash from this sclerotic thinking. Good luck to all of us.”
Raúl has very kindly given me his permission to republish this. It’s not an easy read but that doesn’t detract from the value of the essay.
Why This Slump Has Legs
January 18, 2016Posted by Raúl Ilargi Meijer
We’ve only really been in two weeks of trading in the new year, things are looking pretty bad to say the least, so predictably the press are asking -and often answering- questions about when the slump will be over. Rebound, recovery, the usual terminology. When will we get back to growth?
For me personally, but that’s just me, that last question sounds a bit more stupid every single time I hear and read it. Just a bit, but there’s been a lot of those bits, more than I care to remember. Luckily, the answer is easy. The slump will not be over for a very long time, there will be no rebound or recovery, and please stop talking about a return to growth unless you can explain what you want to grow into.
I’m sorry, I know that’s not what you want to hear, but life’s a bitch and so’s the economy. You’ve lived on pink fumes for a long time, most of you for their whole lives, but reality dictates that real ‘growth’ stopped decades ago, and you never figured that out because, and I quote here (see below), you and the world you’re part of became “addicted to borrowing money, spending it, and passing this off as ‘growth’”.
That you believed this was actual growth, however, is on you. You fell for a scam and you’re going to have to pay the price. If there’s one single thing people are good at, it’s lying. It’s as old as human history, and it happens every day, so you’re no exception to any rule. You’re perhaps just not particularly clever.
How do we know a ‘recovery’ is so far off it’s really no use to even talk about it? As I said, it’s easy. Let me lead this in with a graph I saw just today, which deals with a topic the Automatic Earth has covered a lot: marginal debt, or more precisely, the productivity/growth gained from each additional dollar of debt.
Please note, this particular graph deals with private non-financial debt only, we’ll get to other kinds of added debt, but that restriction is actually quite illuminating.
Now of course, you have to wonder about the parameters the St. Louis Fed uses for its data and graphs, and whether ‘growth’ was all that solid in the run up to 2008. There’s plenty of very valid arguments that would say growth in the 1960’s was a whole lot more solid than that in the naughties, after the Glass-Steagall repeal, and after the dot.com blubber.
However, that’s not what I want to take away from this, I use this to show what has happened since 2008, more than before, when it comes to “passing debt off as ‘growth’”.
But it’s another thing that has happened since 2008, or rather not happened, that points out to us why this slump will have legs. That is, in 2008 a behemoth bubble started bursting, and it was by no means just US housing market. That bubble should have been allowed to fully deflate, because that is the only way to allow an economy to do a viable restart.
Instead, all that has been done since 2008, QE, ZIRP, the works, has been aimed at keeping a facade ‘alive’, and aimed at protecting the interests of the bankers and other rich parties. That facade, expressed most of all in rising stock markets, has allowed for societies to be gutted while people were busy watching the S&P rise to 2,100 and the Kardashians bare 2,100 body parts.
It was all paid for, apart from western QE, with $28 trillion and change of newfangled Chinese debt. The problem with this is that if you find yourself in a bubble and you don’t go through the inevitable deleveraging process that follows said bubble in a proper fashion, you’re not only going to kill economies, you’ll destroy entire societies.
And that is not just morally repugnant, it also works as much against the rich as it does against the poor. It’s just that that is a step too far for most people to understand. That even the rich need a functioning society, and that inequality as we see it today is a real threat to everyone.
Recognizing this simple fact, and the consequences that follow from it, is nothing new. It’s why in days of old, there were debt jubilees. It’s also why we still quote the following from Marriner Eccles, chairman of the Federal Reserve under FDR and Truman from 1934-1948, in his testimony to the Senate Committee on the Investigation of Economic Problems in 1933, which prompted FDR to make him chairman in the first place.
It is utterly impossible, as this country has demonstrated again and again, for the rich to save as much as they have been trying to save, and save anything that is worth saving. They can save idle factories and useless railroad coaches; they can save empty office buildings and closed banks; they can save paper evidences of foreign loans; but as a class they cannot save anything that is worth saving, above and beyond the amount that is made profitable by the increase of consumer buying.
It is for the interests of the well to do – to protect them from the results of their own folly – that we should take from them a sufficient amount of their surplus to enable consumers to consume and business to operate at a profit. This is not “soaking the rich”; it is saving the rich. Incidentally, it is the only way to assure them the serenity and security which they do not have at the present moment.
Everything would all be so much simpler if only more people understood this, that you need a – fleeting, ever-changing equilibrium- to prosper.
Instead, we’re falling into that same trap again. Or, more precisely, we already have. We have been fighting debt with more debt and built the facade put up by the Fed, the BoJ and the ECB, central banks that all face the same problems and all take the same approach: save the rich at the cost of the poor. Something Eccles said way back when could not possibly work.
Anyway, so here are the graphs that prove to us why the slump has legs. There’s been no deleveraging, the no. 1 requirement after a bubble bursts. There’s only been more leveraging, more debt has been issued, and while households have perhaps deleveraged a little bit, though that is likely strongly influenced by losses on homes etc. plus the fact that people were simply maxed out.
First, global debt and the opposite of deleveraging:
And global debt from a longer, 65 year, more historical perspective:
It’s a global debt graph, but it’s perhaps striking to note that big ‘growth’ spurts happened in the days when Reagan, Clinton and Obama were the respective US presidents. Not so much in the Bush era.
Next, China. What we’re looking at is what allowed the post 2008 global economic facade to have -fake- credibility, an insane rise in debt, largely spent on non-productive overinvestment, overcapacity highways to nowhere and many millions of empty apartments, in what could have been a cool story had not Beijing gone all-out on performance enhancing financial narcotics.
Today, the China Ponzi is on its last legs, and so is the global one, because China was the last ‘not-yet-conquered’ market large enough to provide the facade with -fleeting- credibility. Unless Elon Musk gets us to Mars very soon, there are no more such markets.
So US debt will have to come down too, belatedly, with China, and it will have to do that now. because there are no continents to conquer and hide the debt behind. We’re all going to regret engaging in the debt game, and not letting the bubble deflate in an orderly fashion when we still could, but all those thoughts are too late now.
What the facade has wrought is not just the idea that deleveraging was not needed (though it always is, after every single bubble), but that net US household worth rose by 55% in the 6-7 years since the bottom of the crisis, an artificial bottom fabricated with…more debt, with QE, and ZIRP.
Meanwhile, in today’s world, as stock markets go down at a rapid clip, China, having lost control of a market system it never had the control over that Politburos are ever willing to acknowledge they don’t have, plays a game of Ponzi whack-a-mole, with erratic ‘policies’ such as circuit breakers and CIA-style renditions of fund managers and the like.
And all the west can do is watch them fumble the ball, and another one, and another. And this whole thing is nowhere near the end.
China bad loans have now become a theme, but the theme doesn’t mean a thing without including the shadow banking system, which in China has been given the opportunity to grow like a tumor, on which Beijing’s grip is limited, and which has huge claims on local party officials forced by the Politburo to show overblown growth numbers. If you want to address bad loans, that’s where they are.
Chinese credit/debt graphs paint only a part of the picture if and when they don’t include shadow banks, but keeping their role hidden is one of Xi’s main goals, lest the people find out how bad things really are and start revolting. But they will anyway. That makes China a very unpredictable entity. And unpredictable means volatile, and that means even more money flowing out of, and being lost in, markets.
The ‘least worst’ place to be for what money will be left is US dollars, US treasuries and perhaps metals. But there’ll be a whole lot less left than just about anyone thinks. That’s the price of deleveraging.
The price of not deleveraging, on the other hand, is what we see in the markets today. And there is no cure. It must be done. The price for keeping up the facade rises sharply with each passing day, and the effort will in the end be futile. All bubbles have limited lifespans.
I’ll close this with a few recent words from Tim Morgan, who puts it so well I don’t feel the need to try and do it better.
In order to set the Ponzi economy into some context, let’s put some figures on it. In the United States, total “real economy” debt (which excludes inter-bank borrowing) increased by $19.4 trillion – in real, inflation-adjusted terms – between 2000 and 2014, whilst real GDP expanded by only $3.7 trillion. Britain, meanwhile, added £1.9 trillion of new debt for less than £400bn on “growth” over the same period. I spent part of the holiday period unearthing quite how much debt countries added for each dollar of “growth” over a period starting at the end of 2000 and ending in mid-2015.
Unsurprisingly, the league is topped by Portugal ($5.65 for each $1 of growth), Ireland ($5.42) and Greece ($5.39). Britain’s ratio ($3.46) is somewhat flattering, in that the UK has used asset sales as well as borrowing to sustain its consumption. The average for the Eurozone ($3.54) covers ratios as diverse as Germany (just $1.87) and France ($4.22).
China’s $2.56 looks unexceptional until you note that the more recent (post-2007) number is much worse. Economies which seem to have been growing without too much borrowing (such as Brazil and Russia) are now experiencing dramatic worsening in their ratios, generally in the wake of tumbling commodity prices.
In the proverbial nutshell, then, the world has become addicted to borrowing money, spending it, and passing this off as “growth”. This is a copybook example of a pyramid scheme, which in turn means that the world’s most influential economic mentor is neither Keynes nor Hayek, but Charles Ponzi.
[..] How, in the absence of growth, can inflated capital values be sustained? The answer, of course, is that they can’t. Like all Ponzi schemes, this ends with a bang, not a whimper. This is why I find forecasts of a ‘big fall’ or ‘sharp correction’ in markets hard to swallow. Ponzi schemes don’t end gradually, any more than someone can fall off a cliff gradually, or be “slightly pregnant”.
The Ponzi economy simply continues for as long as irrationality prevails, and then implodes. Capital markets, though, are the symptom, not the cause. The fundamental problem is an inability to escape from an addictive practice of manufacturing supposed “growth” on the basis of borrowed money.
There may be shallow lulls in the asset markets, nothing ever only falls down in a straight line in the real world, but that debt I’ve described here will and must come down and be deleveraged.
The process will in all likelihood lead to warfare, and to refugee movements the likes of which the world has never seen just because of the sheer numbers of people added in the past 50 years.
When your children reach your age, they will not live in a world that you ever thought was possible. But they will still have to live in it, and deal with it. They will no longer have the facade you’ve been staring at for so long now, to lull them into a complacent sleep. And the Kardashians will no longer be looking so attractive either.
If you found your mind wandering somewhat as you tried to stay focussed on the essay, just go back and read the closing two paragraphs.
The process will in all likelihood lead to warfare, and to refugee movements the likes of which the world has never seen just because of the sheer numbers of people added in the past 50 years.
When your children reach your age, they will not live in a world that you ever thought was possible. But they will still have to live in it, and deal with it. They will no longer have the facade you’ve been staring at for so long now, to lull them into a complacent sleep. And the Kardashians will no longer be looking so attractive either.
As I said at the start: we are living in interesting times!
A sombre reflection on the killing abilities of man.
I was in two minds as to whether to post this today for it is certainly a grim reminder of the less desirable aspects of our species.
In the end, I decided to so do because it needs to be shared and if it changes the mindset of just one person it will have been worthwhile. I was originally seen by me on the EarthSky blogsite.
Want to see Earth’s super predator? Look in the mirror.
Our efficient killing technologies have given rise to the human super predator. Our impacts are as extreme as our behavior, says study.
Extreme human predatory behavior is responsible for widespread wildlife extinctions, shrinking fish sizes and disruptions to global food chains, according to research published in the August 21 edition of the journal Science these are extreme outcomes that non-human predators seldom impose, according to the article.
Lead researcher Chris Darimont is a professor of geography at the University of Victoria. Darimont said:
Our wickedly efficient killing technology, global economic systems and resource management that prioritize short-term benefits to humanity have given rise to the human super predator. Our impacts are as extreme as our behavior and the planet bears the burden of our predatory dominance.
The team’s global analysis indicates that humans typically exploit adult fish populations at 14 times the rate than do marine predators. Humans also hunt and kill large land carnivores such as bears, wolves and lions at nine times the rate that these predatory animals kill each other in the wild.
Researchers noted that in some cases, dwindling species of predatory land carnivores are more aggressively hunted for trophies, due to the premium placed on rare prey.
The result of human activity on wildlife populations is far greater than natural predation. Research suggests that socio-political factors can explain why humans repeatedly overexploit. Technology explains how: Humans use advanced killing tools, cheap fossil fuel, and professional harvesters – like high-volume commercial fishing fleets – to overcome the defensive adaptations of prey.
Humanity also departs fundamentally from predation in nature by targeting adult quarry.Co-author Tom Reimchen is a biology professor at University of Victoria. He said:
Whereas predators primarily target the juveniles or ‘reproductive interest’ of populations, humans draw down the ‘reproductive capital’ by exploiting adult prey.
During four decades of fieldwork on Haida Gwaii, an archipelago on the northern coast of British Columbia, Reimchen looked at how human predators differ from other predators in nature. Reimchen’s predator-prey research revealed that predatory fish and diving birds overwhelmingly killed juvenile forms of freshwater fish. Collectively, 22 predator species took no more than five per cent of the adult fish each year. Nearby, Reimchen observed a stark contrast: fisheries exclusively targeted adult salmon, taking 50 per cent or more of the runs.
The authors conclude with an urgent call to reconsider the concept of “sustainable exploitation” in wildlife and fisheries management. A truly sustainable model, they argue, would mean cultivating cultural, economic and institutional change that places limits on human activities to more closely follow the behavior of natural predators. Darimont said:
We should be protecting our wildlife and marine assets as an investor would in a stock portfolio.
Bottom line: According to research published in the August 21, 2015 edition of Science, extreme human predatory behavior is responsible for widespread wildlife extinctions, shrinking fish sizes and disruptions to global food chains.
Chris Darimont really put his finger on the spot in my opinion when he was quoted,”We should be protecting our wildlife and marine assets as an investor would in a stock portfolio.”
Going to close today’s post by repeating what is presented on the Welcome page of Learning from Dogs, namely:
As man’s companion, protector and helper, history suggests that dogs were critically important in man achieving success as a hunter-gatherer. Dogs ‘teaching’ man to be so successful a hunter enabled evolution, some 20,000 years later, to farming, thence the long journey to modern man. But in the last, say 100 years, that farming spirit has become corrupted to the point where we see the planet’s plant and mineral resources as infinite. Mankind is close to the edge of extinction, literally and spiritually.
Dogs know better, much better! Time again for man to learn from dogs!
Last Thursday, I published a post under the title of Oil, money, banks, guns and blood.It was such a departure from my normal style of blog post that I anticipated that it would slide by without any comment. Wrong! It had the highest readership of the week and attracted some powerful and insightful replies. So much so that I expressed the desire to reflect on those replies before responding. Thus, today’s post is my response to your comments and feelings.
First, Hariod Brawn of the blogsite Contentedness responded, in part:
Now, where are we? Val’s words are a good place to begin: “Nothing is what is seems, or will ever be the same again.” Nobody knows for sure, but piecing together fragments of world events, my instinct (fwiw) tells me that we are in the incipient stages of the collapse of the 20th.c. paradigm. Neoliberalism has failed; further than that, Capitalism has failed – we have no free markets where it counts; they’re all rigged. Politics has failed too, having been bought out by the corporates. [There are over 30,000 lobbyists in Washington alone] All that Western Governments have to offer is a doomed re-run of failed practices (same with Japan actually). Worse still, they have gone down on their knees and begged the financial sector to create a fix. The private banks have been given access to vast sums of QE cash at virtually zero interest in order to continue rigging markets (via their agents) all to their benefit whilst also creating huge market distortions in asset bubbles. Has the wealth they created trickled down? Has it hell. Whilst all this is going on, and as the film so clearly demonstrates, the Middle East looks like fulfilling its promise of the last century as being the flashpoint for warfare on a vast scale. And of course, if by some miracle we escape financial collapse, and world peace is not threatened by warfare, then the environment is going down the pan because – guess what? – our politicians have failed us once again. I have said enough on this.
Hariod then went on to recommend the films of Chris Hedges that will be featured on Learning from Dogs at a future date.
Without being informed yet … my thinking is that the world we live in is so complex, stressful and fast that we can’t absorb everything that happens. We simplify and label, in order to make sense. We chop and segment in order to understand, but we miss the full story and many have lost the ability to grasp the bigger picture…. or are too fearful of going against the expectations of others and becoming one of “them” instead of one of “us”.
Then reinforced by her comment after watching the film:
I just watched the movie Paul. It is powerful and very disturbing. As you say, it undermines what we believe is real. It also reveals the complexity – misunderstanding – manipulation – corruption – opium, oil and the struggle for power – naivety – chaos.
In the dualistic fairy tale world of good vs evil it has created a nightmare of errors.
Nothing is what is seems.
Or will ever be the same again.
Giant American global corporations, the 200 largest ones, do 100 billion dollars of tax evasion through Luxembourg alone. Each year. Many are media companies. Wonder why stories make no sense?
Juncker directed that. Now he is head of the European Commission, and insist Greece shall pay every single penny.
As it happened, my dad was among a European group of geologists working for the Afghan government, who discovered Afghanistan’s riches… In the 1970s. All hell broke loose shortly thereafter.
I write about these sorts of things, day in, day out. But most people prefer the opium of feel-good…
Patrice then went further in offering a post over on his own blog that carried the specific title of Great Bitter Lake. Let me quote a little from that:
“Bitter Lake” is about the conspiracy between American plutocracy and Saudi plutocracy. Plutocrat Roosevelt was freshly flown from Yalta, to the Great Bitter Lake, on the Suez Canal. The idea was to steal the Maghreb, and the Middle East from the French and the British, by making a theocratic alliance.
At Yalta, Roosevelt had given half of Europe to his Comrade Stalin. (Plutocrats of the world naturally unite!)
Never mind that Poland had fought the Nazis courageously the Nazis, at a time when the USA was militarily and diplomatically collaborating… with the Nazis (or maybe, precisely, the Poles had to be punished!) Roosevelt had to be strict: the French had successfully escaped from the military occupation (AMGOT) he had set-up for them.
The movie “Bitter Lake” exposes (some) of the American plutocracy led conspiracies which led to the devastation, among other things, of Afghanistan, and other constituencies, thanks to the Wahhabist Islam it unleashed on the world.
Readers of this site will be familiar with the general ambiance.
One caveat: all what is in the documentary and makes American plutocrats (Roosevelt) and their servants (Reagan) look bad, is correct. However the real situation, the real badness is way worse. (For example the secret, official USA intervention in Afghanistan was under Carter, on July 3, 1979. However the real even more secret intervention, through the Pakistani ISI was even earlier and even more vicious.
So what is my response?
It is this:
In 1887, Oscar Wilde said, referring to the differences between the British and the Americans: “We have really everything in common with America nowadays, except, of course, language.”
By way of example there is a saying back in my old country that when something is “… going to the dogs”, it means an irreversible decline in standards; the phrase usually aimed at an organisation or even a country.
Many, especially those of my age, might nod sagely and reflect that something ‘is going to the dogs‘ in terms of the wider Western world.
Let me be specific. There are destructive and dysfunctional issues in modern societies that I would list as: Selfishness; Power & Corruption; Short-termism; Materialism; Population growth; Greed, inequality and poverty. It’s not an exhaustive list!
Now many would argue the ‘whys’ and ‘wherefores’ about what precisely is wrong with Western societies in this 21st century but far fewer would argue with the underlying premise; that something is fundamentally wrong with today’s world.
Indeed, one of the things that is impossible to miss is the body language, the look on a face, the shrug of a shoulder, when one casually remarks that these are interesting times! From strangers and friends alike.
There is no question that what mankind has ‘enjoyed’ these last fifty years or so cannot be continued for very much longer. That the era since the 1960s of growth, materialism and consumption is running one very basic and fundamental resource dry. You know the one I am referring to: Planet Earth.
My hope is that the widely-felt feelings that something is fundamentally wrong with today, are the feelings man has always experienced, since time immemorial, when mankind has passed through the threshold between two eras.
My hope is that the new era, one that we quite possibly may now just be entering, a new era of sustainable living on this planet, of social and political changes to replace extreme levels of inequality, of stronger communities of like-minded persons, will be obvious to all, but especially obvious to our next generation, within the next ten years; possibly fewer than ten years.
One thing is for sure. The sharing of ideas and feelings as is the style of modern blogging is critical to the forming of the opinions that precede the changes that so many now see as unstoppable.
The history of power, control, those who wield it, and where it has taken us all.
There is a real pain in me as I start into today’s post. A pain that comes from agonising over whether or not to write in this vein. A pain that has its roots in me being forced to accept that global politics, money and power-plays are much worse than I ever wanted to believe.
What, you must be asking, has got me plunging so far into this dark place? When just twenty-four hours ago I was writing of peace, calm and deep meditation?
Simply a film!
A film that was uploaded by the BBC a few days ago exclusively on to their BBC iPlayer platform.
The film is called Bitter Lake and here’s the trailer.
The full film is 2 hours, 20 minutes long. (But note that the film is age-restricted for obvious reasons.)
I can’t encourage you to watch it. For if you do, the world may never seem the same to you.
But Jeannie and I did watch it and think it should be shared widely. And, yes, it has changed the world for us.
Here’s how it is described by Adam Curtis and the BBC.
Published on Jan 26, 2015
Shown exclusively on the BBC iPlayer service in the UK
This upload is for those outside of the UK
Politicians used to have the confidence to tell us stories that made sense of the chaos of world events.
But now there are no big stories and politicians react randomly to every new crisis – leaving us bewildered and disorientated.
And journalism – that used to tell a grand, unfurling narrative – now also just relays disjointed and often wildly contradictory fragments of information.
Events come and go like waves of a fever. We – and the journalists – live in a state of continual delirium, constantly waiting for the next news event to loom out of the fog – and then disappear again, unexplained.
And the formats – in news and documentaries – have become so rigid and repetitive that the audiences never really look at them.
In the face of this people retreat from journalism and politics. They turn away into their own worlds, and the stories they and their friends tell each other.
I think this is wrong, sad, and bad for democracy – because it means the politicians become more and more unaccountable.
I have made a film that tries to respond to this in two ways.
It tells a big story about why the stories we are told today have stopped making sense.
But it is also an experiment in a new way of reporting the world. To do this I’ve used techniques that you wouldn’t normally associate with TV journalism. My aim is to make something more emotional and involving – so it reconnects and feels more real.
BBC iPlayer has given me the opportunity to do this – because it isn’t restrained by the rigid formats and schedules of network television. It’s a place you can go to experiment and try out new ideas.
It is also liberating – both because things can be any length, and also because it allows the audience to watch the films in different ways.
The film is called Bitter Lake. It is a bit of an epic – it’s two hours twenty minutes long.
It tells a big historical narrative that interweaves America, Britain, Russia and Saudi Arabia. It shows how politicians in the west lost confidence – and began to simplify the stories they told. It explains why this happened – because they increasingly gave their power away to other forces, above all global finance.
But there is one other country at the center of the film.
This is because Afghanistan is the place that has repeatedly confronted politicians, as their power declines, with the terrible truth – that they cannot understand what is going on any longer. Let alone control it.
The film shows in detail how all the foreigners who went to Afghanistan created an almost totally fictional version of the country in their minds.
They couldn’t see the complex reality that was in front of them – because the stories they had been told about the world had become so simplified that they lacked the perceptual apparatus to see reality any longer.
And this blindness led to a terrible disaster – support for a blatantly undemocratic government, wholesale financial corruption and thousands of needless deaths.
A horrific scandal that we, in our disconnected bubble here in Britain, seem hardly aware of. And even if we are – it is dismissed as being just too complex to understand.
But it is important to try and understand what happened. And the way to do that is to try and tell a new kind of story. One that doesn’t deny the complexity and reduce it to a meaningless fable of good battling evil – but instead really tries to makes sense of it.
I have got hold of the unedited rushes of almost everything the BBC has ever shot in Afghanistan. It is thousands of hours – some of it is very dull, but large parts of it are extraordinary. Shots that record amazing moments, but also others that are touching, funny and sometimes very odd.
These complicated, fragmentary and emotional images evoke the chaos of real experience. And out of them I have tried to build a different and more emotional way of depicting what really happened in Afghanistan.
A counterpoint to the thin, narrow and increasingly destructive stories told by those in power today.
And I must include this comment from the relevant page on BBC Blogs:
Quite simply one of the best films I’ve ever watched. The theme and content made so many connections linking events of the last 40 years. It’s perhaps time to reflect on power ,control and those who wield it . The official narrative is not our narrative , we have a choice to decide what we believe . Time to reflect and make that choice.
Thanks for such an informing film.
Regular readers of this place will know that it is a rare couple of weeks without a republication of a George Monbiot essay. His voice seems so often to be a ray of common-sense shining into a dark cave of present-day madness. None more obvious than this essay that was published last Monday under the title of There Is An Alternative.
It’s a huge honour to be able to share this with you, dear readers.
There Is An Alternative
December 8, 2014
The great political question of our age is what to do about corporate power. It’s time we answered it.
By George Monbiot, published in the Guardian 8th December 2014
Does this sometimes feel like a country under enemy occupation? Do you wonder why the demands of so much of the electorate seldom translate into policy? Why the Labour Party, like other former parties of the left, seems incapable of offering effective opposition to market fundamentalism, let alone proposing coherent alternatives? Do you wonder why those who want a kind and decent and just world, in which both human beings and other living creatures are protected, so often appear to find themselves confronting the entire political establishment?
If so, you have already encountered corporate power. It is the corrupting influence that prevents parties from connecting with the public, distorts spending and tax decisions and limits the scope of democracy. It helps to explain the otherwise inexplicable: the creeping privatisation of health and education, hated by almost all voters; the private finance initiative, which has left public services with unpayable debts(1,2); the replacement of the civil service with companies distinguished only by their incompetence(3); the failure to re-regulate the banks and to collect tax; the war on the natural world; the scrapping of the safeguards that protect us from exploitation; above all the severe limitation of political choice in a nation crying out for alternatives.
There are many ways in which it operates, but perhaps the most obvious is through our unreformed political funding system, which permits big business and multimillionaires effectively to buy political parties. Once a party is obliged to them, it needs little reminder of where its interests lie. Fear and favour rule.
And if they fail? Well, there are other means. Before the last election, a radical firebrand said this about the lobbying industry(4): “It is the next big scandal waiting to happen … an issue that exposes the far-too-cosy relationship between politics, government, business and money. … secret corporate lobbying, like the expenses scandal, goes to the heart of why people are so fed up with politics.” That, of course, was David Cameron, and he’s since ensured that the scandal continues. His lobbying act restricts the activities of charities and trade unions, but imposes no meaningful restraint on corporations(5).
Ministers and civil servants know that if they keep faith with corporations while in office they will be assured of lucrative directorships in retirement. Dave Hartnett, who, as head of the government’s tax collection agency HMRC, oversaw some highly controversial deals with companies like Vodafone and Goldman Sachs(6,7), apparently excusing them from much of the tax they seemed to owe, now works for Deloitte, which advises companies like Vodafone on their tax affairs(8). As head of HMRC he met one Deloitte partner 48 times(9).
Corporations have also been empowered by the globalisation of decision-making. As powers but not representation shift to the global level, multinational business and its lobbyists fill the political gap. When everything has been globalised except our consent, we are vulnerable to decisions made outside the democratic sphere.
The key political question of our age, by which you can judge the intent of all political parties, is what to do about corporate power. This is the question, perennially neglected within both politics and the media, that this week’s series of articles will attempt to address. I think there are some obvious first steps.
A sound political funding system would be based on membership fees. Each party would be able to charge the same fixed fee for annual membership (perhaps £30 or £50). It would receive matching funding from the state as a multiple of its membership receipts. No other sources of income would be permitted. As well as getting the dirty money out of politics, this would force political parties to reconnect with the people, to raise their membership. It will cost less than the money wasted on corporate welfare every day.
All lobbying should be transparent. Any meeting between those who are paid to influence opinion (this could include political commentators like myself) and ministers, advisers or civil servants in government should be recorded, and the transcript made publicly available. The corporate lobby groups that pose as thinktanks should be obliged to reveal who funds them before appearing on the broadcast media(10,11), and if the identity of one of their funders is relevant to the issue they are discussing, it should be mentioned on air.
Any company supplying public services would be subject to freedom of information laws (there would be an exception for matters deemed commercially confidential by the information commissioner). Gagging contracts would be made illegal, in the private as well as the public sector (with the same exemption for commercial confidentiality). Ministers and top officials should be forbidden from taking jobs in the sectors they were charged with regulating.
But we should also think of digging deeper. Is it not time we reviewed the remarkable gift we have granted to companies in the form of limited liability? It socialises the risks which would otherwise be carried by a company’s owners and directors, exempting them from the costs of the debts they incur or the disasters they cause, and encouraging them to engage in the kind of reckless behaviour that caused the financial crisis. Should the wealthy authors of the crisis, like Fred Goodwin or Matt Ridley, not have incurred a financial penalty of their own?
We should look at how we might democratise the undemocratic institutions of global governance, as I outlined in my book The Age of Consent(12). This could involve the dismantling of the World Bank and the IMF, which are governed without a semblance of democracy, and cause more crises than they solve, and their replacement with a body rather like the international clearing union designed by John Maynard Keynes in the 1940s, whose purpose was to prevent excessive trade surpluses and deficits from forming, and therefore international debt from accumulating.
Instead of treaties brokered in opaque meetings between diplomats and transnational capital (of the kind now working towards a Transatlantic Trade and Investment partnership), which threaten democracy, the sovereignty of parliaments and the principle of equality before the law, we should demand a set of global fair trade rules, to which multinational companies would be subject, losing their licence to trade if they break them. Above all perhaps, we need a directly elected world parliament, whose purpose would be to hold other global bodies to account. In other words, instead of only responding to an agenda set by corporations, we must propose an agenda of our own.
This is not only about politicians, it is also about us. Corporate power has shut down our imagination, persuading us that there is no alternative to market fundamentalism, and that “market” is a reasonable description of a state-endorsed corporate oligarchy. We have been persuaded that we have power only as consumers, that citizenship is an anachronism, that changing the world is either impossible or best effected by buying a different brand of biscuits.
Corporate power now lives within us. Confronting it means shaking off the manacles it has imposed on our minds.
I’m preparing this post on Sunday; i.e. three days ago. Reason is that my sister, Elizabeth, and friend, Merle, are arriving on Monday afternoon (as in two days ago) bringing us up to three guests in the house. My mother leaves on tomorrow morning and then Elizabeth and Merle depart on Friday morning. So for all the right reasons, Learning from Dogs is taking a backstage. Hence me doing as much as I can ahead of time.
In Monday’s post, The tracks we leave, towards the end I wrote, “The utter madness of mankind’s group blindness is beyond comprehension.” Many know that there is something very badly wrong with the way politics is operating today. Yet, at the same time, many intuitively know the political changes that mankind has to see if there is to be any chance of a sustainable future for mankind on this planet.
Thus George Monbiot’s essay published on the 29th July makes encouraging reading in the context of the growing confidence of the UK Green Party. It is republished here with the kind permission of George Monbiot.
July 29, 2014
The justifications for extreme inequality have collapsed. But only the Green Party is prepared to take the obvious step
By George Monbiot, published in the Guardian 30th July 2014
When inequality reaches extreme and destructive levels, most governments seek not to confront it but to accommodate it. Wherever wealth is absurdly concentrated, new laws arise to protect it.
In Britain, for example, successive governments have privatised any public asset which excites corporate greed. They have cut taxes on capital and high incomes. They have legalised new forms of tax avoidance (1). They have delivered exotic gifts like subsidised shotgun licences and the doubling of state support for grouse moors (2). And they have dug a legal moat around the charmed circle, criminalising, for example, the squatting of empty buildings (3) and most forms of peaceful protest (4). However grotesque inequality becomes, however closely the accumulation of inordinate wealth resembles legalised theft, political norms shift to defend it.
None of this should surprise you. The richer the elite becomes, and the more it has to lose, the greater the effort it makes to capture public discourse and the political system. It scarcely bothers to disguise its wholesale purchase of political parties, by means of an utterly corrupt and corrupting funding system (5,6). You can feel its grip not only on policy but also on the choice of parliamentary candidates and appointments to the cabinet. The very rich want people like themselves in power, which is why we have a government of millionaires (7).
But that describes only one corner of their influence. They fund lobby groups, thinktanks and economists to devise ever more elaborate justifications for their seizure of the nation’s wealth (8). These justifications are then amplified by the newspapers and broadcasters owned by the same elite.
Among the many good points Thomas Piketty makes in Capital in the 21st Century – his world-changing but surprisingly mild book – is that extreme inequality can be sustained politically only through an “apparatus of justification.” (9) If voters can be persuaded that insane levels of inequality are sane, reasonable and even necessary, then the concentration of income can keep growing. If they can’t, then either states are forced to act, or revolutions happen.
For the notion that inequalities must be justified sits at the heart of democracy. It is possible to accept that some can have much more than others if one of two conditions are met: either that they reached this position through the exercise of their unique and remarkable talent; or that this inequality is good for everyone. So the network of think tanks, economists and tame journalists must make these justifications plausible.
It’s a tough job. If wages reflect merit, why do they seem so arbitrary? Are the richest executives 50 or 100 times better at their jobs than their predecessors were in 1980? Are they 20 times more skilled and educated than the people immediately below them, even though they went to the same business schools? Are US executives several times as creative and dynamic as those in Germany? If so, why are their results so unremarkable?
It is, of course, all rubbish. What we see is not meritocracy at work at all, but a wealth grab by a nepotistic executive class which sets its own salaries, tests credulity with its ridiculous demands and discovers that credulity is an amenable customer. They must marvel at how they get away with it.
Moreover, as education and even (in the age of the intern) work becomes more expensive, the opportunities to enter the grabbers’ class diminish. The nations which pay the highest top salaries, such as the US and Britain, are also among the least socially mobile (10). Here, you inherit not only wealth but opportunity.
Aha, they say, but extreme wealth is good for all of us. All will be uplifted by their god’s invisible hand. Their creed is based on the Kuznet’s curve, the graph which appears to show that inequality automatically declines as capitalism advances, spreading wealth from the elite to the rest.
When Piketty took the trouble to update the curve, which was first proposed in 1955, he discovered that the redistribution it documented was an artefact of the peculiar circumstances of its time. Since then the concentration of wealth has reasserted itself with a vengeance (11). The reduction in inequality by 1955 was not an automatic and inherent feature of capitalism, but the result of two world wars, a great depression and the fierce response of governments to these disruptions.
For example, the top federal income tax rate in the US rose from 25% in 1932 to 94% in 1944. The average top rate throughout the years 1932 to 1980 was 81%. In the 1940s, the British government imposed a top income tax of 98% (12). The invisible hand? Hahaha. As these taxes were slashed by Reagan and Thatcher and the rest, inequality boomed once more, and is exploding today. This is why the neoliberals hate Piketty with such passion and poison: he has destroyed with data the two great arguments with which the apparatus of justification seeks to excuse the inexcusable.
So here we have a perfect opportunity for progressive parties: the moral and ideological collapse of the system of thought to which they were previously in thrall. What do they do? Avoid the opportunity like diphtheria. Cowed by the infrastructure of purchased argument, Labour fiddles and dithers (13).
But there is another party, which seems to have discovered the fire and passion that moved Labour so long ago: the Greens. Last week they revealed that their manifesto for the general election will propose a living wage, the renationalisation of the railways, a maximum pay ratio (no executive should receive more than 10 times the salary of the lowest paid worker), and, at the heart of their reforms, a wealth tax of the kind Piketty recommends (14).
Yes, it raises plenty of questions, but none of them are unanswerable, especially if this is seen as one step towards the ideal position: a global wealth tax, that treats capital equally, wherever it might lodge. Rough as this proposal is, it will start to challenge the political consensus and draw people who thought they had nowhere to turn. Expect the billionaires’ boot boys to start screaming, once they absorb the implications. And take their boos and jeers as confirmation that it’s onto something. You wanted a progressive alternative? You’ve got it.
When you are a WordPress user, as is Learning from Dogs, you can pay $30 a year to stop advertisements from appearing on one’s blogsite.
This is how WordPress explain their policy on advertising:
We sometimes display advertisements on your blog to help pay the bills. This keeps free features free! We only run them in limited places, and we do not show ads to logged-in readers, which means only a very small percentage of your page views will actually contain ads. To eliminate ads on your blog entirely, you can purchase the No-Ads Upgrade for a single blog (per year).
I choose not to pay that upgrade, despite the ads being annoying; of that I have no doubt.
For this reason.
WordPress pay an amount of their advertising income to the owner of the blog. Thus twenty-four hours ago, WordPress sent me an email:
Just thought you’d like to know WordPress.com sent you $106.23 USD.
I’m not sure but I think that covers the last twelve months.
That $106 will be divided into two with $53 staying with Jean and me and $53 going to our nearest humane society; Rogue Valley Humane Society.