Category: Politics

Approaches to ‘growth’.

Some thought-provoking articles on the need, or otherwise, of continued growth.

Intellectually, most people, if they stopped and thought about it, would not challenge the absurdity of the notion that a finite rock in space, Planet Earth, can handle an infinite increase in the demands and resources of that finite planetary body, our home in space!

Yet the reality is very different.  For many complex reasons, way beyond the competencies of this writer to fully explain, we, as in the peoples of Planet Earth, continue to behave as though there are no limits to the resources of this beautiful planet that is home for all of us.

Here are some extracts from some recent items that have passed across my ‘in-box’.

A piece from the CASSE website:

What If We Stopped Fighting for Preservation and Fought Economic Growth Instead?

by Tim Murray

Seriously.

Each time environmentalists rally to defend an endangered habitat, and finally win the battle to designate it as a park “forever,” as Nature Conservancy puts it, the economic growth machine turns to surrounding lands and exploits them ever more intensively, causing more species loss than ever before, putting even more lands under threat. For each acre of land that comes under protection, two acres are developed, and 40% of all species lie outside of parks. Nature Conservancy Canada may indeed have “saved” – at least for now – two million acres, but many more millions have been ruined. And the ruin continues, until, once more, on a dozen other fronts, development comes knocking at the door of a forest, or a marsh or a valley that many hold sacred. Once again, environmentalists, fresh from an earlier conflict, drop everything to rally its defense, and once again, if they are lucky, yet another section of land is declared off-limits to logging, mining and exploration. They are like a fire brigade that never rests, running about, exhausted, trying to extinguish one brush fire after another, year after year, decade after decade, winning battles but losing the war.

Just read again the sentence, “For each acre of land that comes under protection, two acres are developed, and 40% of all species lie outside of parks.” Powerful ideas.

Anyway, do read the article in full and see if it changes your attitude.  Here’s how it ends.

Sir Peter Scott once commented that the World Wildlife Fund would have saved more wildlife it they had dispensed free condoms rather invested in nature reserves. Biodiversity is primarily threatened by human expansion, which may be defined as the potent combination of a growing human population and its growing appetite for resources. Economic growth is the root cause of environmental degradation, and fighting its symptoms is the Labor of Sisyphus.

The next article is from The Christian Science Monitor writing about how scientists are getting a new idea about the rate of loss of polar ice.

The seasonal cooling effect of light-reflecting snow and ice in the Northern Hemisphere may be weakening at twice the rate predicted by climate models, a new study shows, accelerating the impact of global warming.

By Pete Spotts, Staff writer / January 18, 2011

A long-term retreat in snow and ice cover in the Northern Hemisphere is weakening the ability of these seasonal cloaks of white to reflect sunlight back into space and cool global climate, according to a study published this week.

Indeed, over the past 30 years, the cooling effect from this so-called cryosphere – essentially areas covered by snow and ice at least part of the year – appears to have weakened at more than twice the pace projected by global climate models, the research team conducting the work estimates.

This is a well-constructed article, easy to read with obvious conclusions.  Towards the end, the author writes:

Snow appears to have its maximum cooling effect – reflecting the most sunlight back into space – in late spring, as the light strengthens but snow cover is still near its maximum extent for the year. Sea ice in the Arctic Ocean has its biggest effect in June, before its annual summer melt-back accelerates, explains Don Perovich, a researcher at the US Army Corps of Engineers Cold Regions Research and Engineering Laboratory in Hanover, N.H., and a member of the team reporting the results.

The final article that I want to include is one from the website Foreign Policy. I’m going to take the liberty of reproducing it in full because it strikes me as an extremely intelligent commentary on where mankind is in terms of our attitudes to growth.

Thomas Homer-Dixon
ECONOMIES CAN’T JUST KEEP ON GROWING

Humanity has made great strides over the past 2,000 years, and we often assume that our path, notwithstanding a few bumps along the way, goes ever upward. But we are wrong: Within this century, environmental and resource constraints will likely bring global economic growth to a halt.

Limits on available resources already restrict economic activity in many sectors, though their impact usually goes unacknowledged. Take rare-earth elements — minerals and oxides essential to the manufacture of many technologies. When China recently stopped exporting them, sudden shortages threatened to crimp a wide range of industries. Most commentators believed that the supply crunch would ease once new (or mothballed) rare-earth mines are opened. But such optimism overlooks a fundamental physical reality. As the best bodies of ore are exhausted, miners move on to less concentrated deposits in more difficult natural circumstances. These mines cause more pollution and require more energy. In other words, opening new rare-earth mines outside China will result in staggering environmental impact.

Or consider petroleum, which provides about 40 percent of the world’s commercial energy and more than 95 percent of its transportation energy. Oil companies generally have to work harder to get each new barrel of oil. The amount of energy they receive for each unit of energy they invest in drilling has dropped from 100 to 1 in Texas in the 1930s to about 15 to 1 in the continental United States today. The oil sands in Alberta, Canada, yield a return of only 4 to 1.

Coal and natural gas still have high energy yields. So, as oil becomes harder to get in coming decades, these energy sources will become increasingly vital to the global economy. But they’re fossil fuels, and burning them generates climate-changing carbon dioxide. If the World Bank’s projected rates for global economic growth hold steady, global output will have risen almost tenfold by 2100, to more than $600 trillion in today’s dollars. So even if countries make dramatic reductions in carbon emissions per dollar of GDP, global carbon dioxide emissions will triple from today’s level to more than 90 billion metric tons a year. Scientists tell us that tripling carbon emissions would cause such extreme heat waves, droughts, and storms that farmers would likely find they couldn’t produce the food needed for the world’s projected population of 9 billion people. Indeed, the economic damage caused by such climate change would probably, by itself, halt growth.

Humankind is in a box. For the 2.7 billion people now living on less than $2 a day, economic growth is essential to satisfying the most basic requirements of human dignity. And in much wealthier societies, people need growth to pay off their debts, support liberty, and maintain civil peace. To produce and sustain this growth, they must expend vast amounts of energy. Yet our best energy source — fossil fuel — is the main thing contributing to climate change, and climate change, if unchecked, will halt growth.

We can’t live with growth, and we can’t live without it. This contradiction is humankind’s biggest challenge this century, but as long as conventional wisdom holds that growth can continue forever, it’s a challenge we can’t possibly address.

Thomas Homer-Dixon is the CIGI chair of global systems at the Balsillie School of International Affairs in Waterloo, Canada.

As Rob Dietz of CASSE wrote in a recent email to me, “I’m a big Thomas Homer-Dixon fan.  His book, The Upside of Down, is outstanding.”

“Economic growth may one day turn out to be a curse rather than a good, and under no conditions can it either lead into freedom or constitute a proof for its existence” Hannah Arendt (1906-1975).

 

Well said, Hannah!

Power of social networks in the area of finance

“The nature and reach of social conversations in the investment arena.”

The above sub-heading is from a recent Post on Naked Capitalism that rather spookily comes hot on the heels of one of my recent musings.  Here’s what I published on the 12th January although I wrote it on the 9th.

In the past opinion and commentary has been in the hands, more or less, of the giant media moguls.  But technology has changed that.  Now more than ever a huge people have access to the Internet.  Indeed, a quick Google search reveals that of a world population of 6.85 billion people, just under 2 billion (29%) have internet access.  In North America that percentage is 77.4% (226 million) and in Europe the percentage is 58.4% (475 million).  I.e. nearly a billion people in just North America and Europe!

My point is that, in a manner never before experienced in human history, the vast majority of us have the ability to read, learn and muse about the critically important issues facing us today, coming to conclusions that carry political weight.  We have almost infinite choice as to where and how we form opinions.

Thus having access, via the internet, to the scribblings of so many wise people may end up giving democracy the boost it really needs in the face of overwhelming powerful plutocratic forces.

Coincidentally, also on the 12th Yves Smith of Naked Capitalism published an article entitled, The 20 most influential blogs in financial media.  You can find that article here.  Here’s a flavour of what was written.

Thanks to Minyanville for publicizing this study by MindfulMoney on the nature and reach of social conversations in the investment arena. But even bigger thanks go to loyal readers and contributors for their frequent comments, leads, and critiques. The success of a blog depends on its community and I am very grateful for all the input so many of you have generously provided.

Perhaps the most interesting finding (boldface ours):

The research confirms the existence of a network of investment super-connectors with extraordinary media influence and reach. These super-connected new influentials are, for the most part, not well established voices in the media but individual bloggers who fiercely champion their independence….In the US, the network functions as the unofficial voice of Wall Street & the US federal bank with no mainstream media players at the centre of the network.

Given how many of these top blogs are critical of the status quo, this map may be hopeful sign that the blogosphere is beginning to become a important channel of discourse outside the reach of the PR machinery of major corporations and government entities.

And rather than publish all the top 20 names, you can see that list here, the top 10 are as follows:

1. Naked Capitalism
2. Infectious Greed
3. The Big Picture
4. Jesse’s Cross Roads Cafe
5. Zerohedge
6. Mish’s Global Economic Analysis
7. Calculated Risk
8. Paul Krugman’s Blog
9. FT Alphaville
10. Ludwig von Mises Institute

Anyone interested in downloading the original report as published on the MindfulMoney website can go to the article here; the link to the pdf, requiring prior registration, is towards the end of the article.  The article opens thus:

Most investors would acknowledge that social media is playing an increasing role in their investment decisions. Yet no-one has mapped the emerging network of influence likely to be playing a crucial part in those decisions.

Until now that is.  MindfulMoney’s ‘Social Finance: The New Influentials” report is aiming to better understand what this network looks like and to see if a number of super connections, so beloved of writers like Malcolm Gladwell, exist.

The research indicates that they do.

As I said, to download the article you need to register first – that link is here.

It’s a very interesting new world that we are living in and one, I pray, that is returning real power to the electorates.

 

 

 

 

In humble recognition of great writers

The technology of the Internet will prove to be of huge democratic value.

Those who know me know a disquieted man.  Someone, who despite being more at peace with himself than ever before, nonetheless senses that we, as in the mankind of Planet Earth, are already deep in the ‘no mans land’ of change between the last, say, forty years and a very different future just around the corner.

In the past opinion and commentary has been in the hands, more or less, of the giant media moguls.  But technology has changed that.  Now more than ever a huge people have access to the Internet.  Indeed, a quick Google search reveals that of a world population of 6.85 billion people, just under 2 billion (29%) have internet access.  In North America that percentage is 77.4% (226 million) and in Europe the percentage is 58.4% (475 million).  I.e. nearly a billion people in just North America and Europe!

My point is that, in a manner never before experienced in human history, the vast majority of us have the ability to read, learn and muse about the critically important issues facing us today, coming to conclusions that carry political weight.  We have almost infinite choice as to where and how we form opinions.

Thus having access, via the internet, to the scribblings of so many wise people may end up giving democracy the boost it really needs in the face of overwhelming powerful plutocratic forces.

Here are just a couple of those wise voices.

Simon Johnson

I first came across him in an article in The Atlantic Magazine back in May 2009.  That article was called The Quiet Coup.  If you haven’t read it, go here.  It is introduced thus:

The crash has laid bare many unpleasant truths about the United States. One of the most alarming, says a former chief economist of the International Monetary Fund, is that the finance industry has effectively captured our government—a state of affairs that more typically describes emerging markets, and is at the center of many emerging-market crises. If the IMF’s staff could speak freely about the U.S., it would tell us what it tells all countries in this situation: recovery will fail unless we break the financial oligarchy that is blocking essential reform. And if we are to prevent a true depression, we’re running out of time.

Simon is also one of the lead writers for the Blog Baseline Scenario.  Have a read of a recent article about the appointment of Bill Daley as President Obama’s new chief of staff.  That article concludes thus:

Top executives at big U.S. banks want to be left alone during relatively good times – allowed to take whatever excessive risks they want, to juice their return on equity through massive leverage, to thus boost their pay and enhance their status around the world.  But at a moment of severe financial crisis, they also want someone in the White House who will whisper at just the right moment: “Mr. President, if you let this bank fail, it will trigger a worldwide financial panic and another Great Depression.  This will be worse than what happened after Lehman Brothers failed.”

Let’s be honest.  With the appointment of Bill Daley, the big banks have won completely this round of boom-bust-bailout.  The risk inherent to our financial system is now higher than it was in the early/mid-2000s.  We are set up for another illusory financial expansion and another debilitating crisis.

Bill Daley will get it done.

Now let’s turn to that other writer, Patrice Ayme.

That name is a nom-de-plume but so what!  Having read Patrice for some time now and corresponded via email from time to time, I have to tell you this is one giant of an intellectual thinker.  Take this Post from example: Pluto Lie #1: Glass Beads Matter More It’s a beautifully written article but not something that you should try a skim read through; it deserves a really focussed mind on the words and the meanings expressed. Here’s a flavour:

Abstract: An American historian paid by the hyper rich, exhumed again the old fallacy that material riches matter more than anything else. He points at recent electronic gadgetry, and attributes it to Reagan. This article of faith in Reagan and American plutocracy amusingly gives, obviously without knowing, prominence to recent French and German governmental research, which allowed to make such gadgets.

I skewer this lamentable, not to say corrupt, piece of dismal propaganda which was published all over the American media, for Christmas. I use the occasion to give a new metric to evaluate riches over the last 100,000 years, explain why the USA does not use the metric system, and what European kings were really about.

Too great a disparity of riches is another name for plutocracy.  Indeed, money is power, and thus, too much money is too much power.

Here is how Patrice’s article closes (but it would be so much better if you read the article in its entirety):

Morality? Europeans Kings of old could live long, and lived strong.The best of them were working relentlessly, brandishing whatever it took to stabilize the situation ethically, politically, and civilizationally. They were incredibly brutal. They would die, and kill, just over the length of hair (kings and prospective kings wore it long, religious wore it nought). Even small children, if viewed as potential kings, would be presented with the scissors and the sword (if they did not go for the former, they would get the later).

So of course, kings of old would have made it to today’s highest class. Kings were often the richest people around, and they got there, or stayed there, by killing, in the name of new, and higher principles. This only happened because their subordinates agreed to strive towards the same new and higher principles. Hanson misses completely the spiritual dimension of the kings of old. Kings of old led an ethical revolution, which was their reason for being in power, and why people elected them (or elected to follow them).

Kings of old lived very comfortably by their metrics, with residences all around Europe, and wives, concubines, nobles under oaths to serve them (to death). Some, such as Charlemagne, were very healthy into old age. What’s more fun than to make war for decades, mostly winning, as Charlemagne did?

Dr. Victor Davis Hanson, a classicist and military historian, is a senior fellow at the Hoover Institution and a recipient of the 2007 National Humanities Medal.

That appurtenance, too, tells volumes. Hanson has tales to tell, and they sing of American plutocracy. It remains to be seen if history will sing along. Two things, though: history does not tell lies, and human beings are not reducible to gadget loving midgets.

So to repeat my point.  Whether or not one choses to agree with the likes of Simon Johnson and Patrice Ayme there is no doubt that in my mind it will be writers like these that, through the better education of millions of citizens, will not only preserve democracy in so many countries but will ensure that the age before us will be fairer and more just.

Change can be achieved by the threat of tomorrow being the same

even quicker than by the hope of tomorrow being different! C. Graham-Leigh.

A questionnaire on the European Union

A guest post from Chris Snuggs, a long-term supporter and author on Learning from Dogs.

Chris Snuggs

EU QUESTIONNAIRE    –    C Snuggs, 26 November, 2010

This questionnaire is designed to test your knowledge and opinions of the EU. Your answers will be collated and go towards the production of a report to present to your MEP (Member of the European Parliament)– if you can find him or her. Please give your opinion by ticking either T (true) or F (false) for each proposition.
a

THE EURO
1    Greece falsified its statistics in order to “qualify” for entry to the euro.
2    EU leaders KNEW this (like almost everyone else), but ignored it.
3    The EU’s OWN economists had told them that Greece and others could not live in the Eurozone alongside Germany.
4    Ergo, the EU elite connived in a LIE about the finances of Greece and the future of the euro..
5    Once Greece was in the Eurozone it spent money wildly and wastefully with many people retiring at 50, a bloated and overpaid civil service, civil servants who often didn’t bother to turn up, pensions bequeathed to relatives and so on.
6    The EU elite knew all this but DID NOTHING EFFECTIVE about it.
7    Now European taxpayers are having to pay BILLIONS to bail out feckless countries that vastly overspent.
8    The EU elite that lied and ignored these deep problems have been utterly incompetent guardians’ of EU taxpayers’ money. More than incompetent, they have been party to DEFRAUDING many millions of taxpayers for their own ambitions and political ends.
9    The VAST payouts of taxpayers’ money to bail out Greece, Ireland and soon Belgium, Portugal, Spain and Italy DO NOTHING TO FIX THE UNDERLYING PROBLEMS as highlighted in 3 above. This policy therefore represents an appalling further waste of money and merely postpones difficult decisions that EU leaders must make, and should in fact have made YEARS ago.
10    According to the EU’s OWN RULES it is ILLEGAL to “bail out” a bankrupt country. Despite this, the EU countries have bailed out Greece and now Ireland. Mr Van Rompuy was charged with finding a way that this could be done legally. Frau Merkel has suggested that the Lisbon Treaty be amended to allow bailouts to be done legally. How she proposes to amend this Treaty without the consent of member countries is a mystery.
11    The EU elite, knowingly having illegally bailed out Greece and now Ireland should be arrested en masse for illegal use of public money. The EU is very strong on law, except apparently for itself when it suits it.

EU FINANCE, SPENDING & REMUNERATION
12    The EU has failed to get its accounts signed off for the nth year in succession; NO PRIVATE CONCERN COULD GET AWAY WITH THIS.
13    At this time of economic crisis the EU wants to spend SIX BILLION EUROS on a new diplomatic service, including the placing of FORTY-SIX “diplomats” on Barbados and over FIFTY on Madagascar.
14    The number of EU citizens demanding this vast expenditure must be microscopic; though nobody knows for sure since the EU would never dream of asking its paymasters their opinion.
15    Europe is going through the worst period of financial chaos since WWII. Jobs are being lost almost everywhere; many EU countries are technically bankrupt; people’s living standards and public services are being drastically cut, except it seems in the EU in Brussels.
16    The EU has just won a court case against the people that finance it, the national governments. As a consequence, EU workers will receive a payrise backdated to last year with interest of 3.7% at a time of desperate economic hardship for many millions of EU citizens.
17    The head of the vast new “diplomatic” organisation is a Brit who has NEVER BEEN ELECTED to any post of significance and earns more than TWICE as much as ANY European leader, plus very considerable expenses. She is far from unique in the EU circle of the elite.
18    EU workers receive extraordinary perks (benefits) and also pay around 8% income tax. Very few of their electors (who pay their wages) benefit from anything like this sort of remuneration.
19    Peter Mandelson RESIGNED from his post as Commissioner to become an English Lord. Since his ludicrous remuneration for this was LOWER than his EU income the EU is paying him around £62,000 of taxpayers’ money for FOUR years to make up the difference, EVEN THOUGH HE RESIGNED.
20    The above-mentioned practice amounts to institutionalised THEFT of taxpayers’ money.
21    The EU has just created an English-language website to inform us of how wonderful they are. In other words, WE are paying to have EU PROPAGANDA shoved down our throats.
22    The EU paying some 300,000€ for a dogs’ home in Poland at a time when millions of people in Europe are suffering real economic hardship is just one example of frivelous use of taxpayers’ money.

THE RATIONALE OF THE EU
23    Mr van Rompuy, unelected “President” from a failing and disintegrating state (is this the reason for his obsession?), has said that “The nation states are dead.” He and the EU elite seek the creation of a European “superstate” controlled from Brussels.
24    Mr Van Rompuy has presumably informed President Sarkozy, Chancellor Merkel and other EU leaders personally that their states “are dead”. Their reactions have not been published so far.
25    This agenda was denied by the EU elite for many decades, which of course represents yet another LIE.
26    This unelected “President” earns more than any national leader in the EU. This is to give the impression that he is more important, since clearly the more money you are paid the more important you must be.

MEPs & DEMOCRACY
27    MEPs have just demanded a near 6% increase in the EU budget.
28    In this they are certainly not reflecting the wishes of the majority of their electors.
29    Many turn up in Brussels, sign on to qualify for their attendance allowance and then go away.
30    I do not know of any other profession where you get paid a vast salary and expenses and then EXTRA MONEY just for attending a meeting.
31    Most people haven’t got the foggiest idea who is supposed to be “representing” them in Brussels.
32    The EU as it stands is a top-down decision-making organisation whose leaders have a degree of self-righteousness (“Only we know what is good for you.”) that has to be suffered to be believed.
33    MEPs do not take their electors wishes into account.
34    The EU hates referendums since they give an opportunity to the people to express their opinion and actually make a decision. Naturally they can’t be trusted with decisions.
35    When a referendum goes against the EU the usual reaction is to oblige the country involved to do it again and again till the “right” answer is produced. In this the EU is a laughing stock, but the elite do not care as long as they get their way
36    MEPs periodically flog up and down from Brussels to Strasbourg. Sitting in Strasbourg is supposed to be some sort of symbol, but I don’t know of any voters who were asked if they wanted to pay through the nose for a symbol at vast expense, not least in carbon emissions.

CONCLUSIONS
37    The modern world is characterized by greed, arrogance and incompetence. These are qualities that the EU elite has demonstrated in abundance.
38    The EU elite has totally and utterly FAILED the people of Europe and is not fit for purpose.
39    Most people believe in cooperation within Europe, but not in a European superstate ruled from Brussels, a country both disintegrating and vastly endebted.
40    The EU elite has completely destroyed the faith that many ordinary people had in the EU as primarily a “common market”.

My overall reaction to the EU elite and its management of the EU is as follows. (Please tick ONE box.)
A) In general I am very pleased with the EU leadership.
B) I am quite pleased, even if some things could be improved.
C) I don’t care much either way. They can get on with it as far as I’m concerned.
D) I am not very pleased with the way the EU is run.
E) I am very dissatisfied indeed about the way that my money is being spent.
F) It is such a corrupt, wasteful and undemocratic shambles that we have to abolish it up and start again. My country is certainly better off outside the EU AS IT IS CURRENTLY RUN. I am profoundly disappointed.
F) I am disgusted at the EU elite’s arrogance, incompetence, dishonesty and venality.

[NB.  If after reading the above, you really would like to submit your answers to the above questions to your local MP or MEP, then Chris has a form you may use that may be downloaded from here. Ed]

By Chris Snuggs

 

More on Them and Us

Will Hutton’s book continues to impress me; greatly.

On 28tTh October, I wrote an article about Will Hutton‘s impressive book, Them and Us.  I had got to page 120 or thereabouts and could resist no longer the urge of reading the book to the end before commenting on Learning from Dogs.

Now I am reading through page 260 and, again, find myself incapable of waiting until the book is completed before offering further thoughts!

Despite being very optimistic about the long-term future, I sense that the period that we have been in since 2008 may turn out to be one of the darkest in recent history – I touched on this aspect in a recent post called Faith in a (new) future.

One of the things that strikes me is the complete lack of openness from the British Government about the likely growth scenarios over the next decade.  Here was how the latest ‘growth’ figures were presented a couple of weeks ago, “The economy grew by 0.8% in the three months to September – double the rate that had been predicted by analysts.”

UK output increases by 0.8 per cent 4Q 2010

But here’s Will Hutton,

Britain is going to be much poorer than it anticipated just a few years ago.

and a couple of sentences later talking about economists Carmen Reinhart and Ken Rogoff,

They paint a sober picture of prolonged loss of output, high unemployment and depressed asset prices, and warn that there is no precedent for what happens after the kind of global crisis through which we have just lived. (My italics)

Hutton says that growth would need to accelerate to 3.25 per cent in order for output to reach its predicted level if the recession had not taken place.

He then says that a more plausible scenario if growth remains at 2.75 per cent (average level in recent years leading up to the credit crunch) “then it might never recover sufficiently to converge with the old trajectory.”

Hutton continues,

However, even that may be optimistic.  The reality is that between the economic growth troughs of 1991 and 2009, growth in Britain actually averaged just over 2 per cent.

That would lead to a cumulative loss of output of more than £5 trillion!

It could be even worse.  The economics team at Barclays believe that is it perfectly plausible for growth to average just 1.75 per cent for the first half of the current decade.

And all of this before the huge budget cuts announced by the UK Coalition Government start to bite!

So the reality is that we are a long way away from any form of real recovery, despite what the politicians are saying!

What is so impressive about the book is that Will Hutton is meticulous in his research (there are 23 pages of referenced notes at the end of the book) and from Chapter 9 starts setting out how Britain “has the opportunity to put things right fast.”  So this is a book from a well-respected author that sets out carefully and logically the cause of the recession and then presents some powerful options for change.

The bottom line is that Britain has to be a much more fairer society. Not just Britain.  Here’s an extract from a recent posting on Tom Engelhardt’s Blog. Tom is the author of the book, The American Way of War.

I’m no expert on elections, but sometimes all you need is a little common sense.  So let’s start with a simple principle: what goes up must come down.

For at least 30 years now, what’s gone up is income disparity in this country.  Paul Krugman called this period “the Great Divergence.” After all, between 1980 and 2005, “more than 80% of total increase in Americans’ income went to the top 1%” of Americans in terms of wealth, and today that 1% controls 24% of the nation’s income.  Or put another way, after three decades of ”trickle-down” economics, what’s gone up are the bank accounts of the rich.

In 2009, for instance, as Americans generally scrambled and suffered, lost jobs, watched pensions, IRAs, or savings shrink and houses go into foreclosure, millionaires actually increased.  According to the latest figures, the combined wealth of the 400 richest Americans (all billionaires) has risen by 8% this year, even as, in the second quarter of 2010, the net worth of American households plunged 2.8%

Change is definitely overdue.

By Paul Handover

And a reply to Patrice Ayme

This is a guest post from an old regular (as in frequency, not age!) contributor to Learning from Dogs, Chris Snuggs.  He has written in response to the guest post from Patrice himself that was published on the 31st October.

Patrice AYME – WOW!

First, an amazing post – lots to talk about. Secondly, (get the bad news out of the way first) the fact that you warmed to Brown when he became Prime Minister worries me, principally because the man was at best totally incompetent and at worst a moron, having totally messed up almost every aspect of British life one can think of but in particular the economy. It is only the fact that we started out from a better position that prevented (or prevents) us from “doing a Greece”. The waste and delusions were humungous; the basic management skills non-existent. I note that Mr Brown is going to make a speech in the House of Commons soon; I wonder if he is going to apologize for the appalling shambles he left behind or whether he is going to accuse the new government of not spending enough. His finest hour came when “saving the world” by encouraging governments everywhere to borrow vast amounts of money to save money. Had the overall consequences of his previous policies not been so disastrous this could almost have been funny. Well, it was funny for the banks, who of course were laughing all the way not only to the bank but at it.

CHINA: I’ve been to China – (wonderful people) the problem (if there is one) is not their economy per se but the fact that it is a dictatorship. There have been and indeed are worse dictatorships, but it is one nonetheless. As their economic power increases so does their sabre-rattling. Have there ever been any cases where mighty economic power has not been followed by territorial expansion? Patrice will know this; his overview of history in these matters is extraordinary. N° 1 Satan the USA may be, but without their umbrella free, democratic Taiwan would most likely already have been invaded by mainland China.

The YANKS? Humans are – in my humble opinion – often extremely conservative. Americans have been used for decades if not centuries to believing that their country is “the greatest in the world”. (they are not the only guilty ones, the French and Chinese run them close). It is going to take them some time to realize the junk value of that particular belief. While they are slowly internalising it we should be patient, remembering that they did save us from Hitler and/or Stalin. No doubt of course for their own selfish reasons, they did the same in Kosovo, too, (the Europeans – except those anti-European, Anglo-Saxon Brits of course – having done SFA) though I’m still trying to work out why – perhaps EXXON had geological surveys indicating vast oilfields around Pristina?

To save the US it will take someone with a lot more steel than Obama; that is the problem, and WHERE is this person coming from?

FRANCE: If there is any country mired in self-delusion apart from the USA it seems to me to be France ….. I am NOT anti-French – far from it. I lived and worked there for ten years ….. however, Patrice’s observation that most French people understand the need for change but most also support the strikes is revealing. This is the crux – they cannot make up their minds what they want – for too many in positions of power the status quo is too good – a bit like in the USA with the plutocrats. Thus they stagger about getting into a worse and worse situation, much like Britain did under Gordon Brownosaurus.  The STATE in France is TOO BIG and SELF-IMPORTANT. Sarko realizes this, but his attempts to rein it in (forced by budget constraints) have been feeble and in any case the inertial resistance is stupendous. The phrase “reality-check” comes to mind.

THE EU: As for “STATE TOO BIG”, the EU is overreaching itself, having just committed to spending over €5 BILLION on a fatuous new diplomatic service run by a nonentity earning TWICE as much as the British and French leaders and which will give the EU FORTY-SIX “diplomats” on the island of Barbados. Nothing against the Barbadians – jolly good chaps and chapesses – but are they REALLY that important to the EU taxpayer? We’ll also have over 50 in that economic colossus of the universe, Madagascar. Meanwhile in Brussels, a new building is to be leased at a cost of a piffling £10,000,000 a year. It is said by the great and good in Brussels that this new diplomatic service is needed to “compete with the Chinese and Indians”.  Absolute rubbish of course. The idea that a black-African country will trade with the EU and not the Chinese just because we have fifty odd “diplomats” in a spanking new building downtown is ludicrous. What the Africans want is good value (i.e. cheap) and reliability. Europe is getting past the stage of being able to offer much of those, bogged down as it is by 100,000 pages of European Law and mindless regulations designed à la française to improve the lot of “workers” but which in fact gradually destroy all their jobs.

I personally think the EU is doomed; destroyed by greed, arrogance and self-delusion. The British are already very anti-EU, NOT because we are anti-European; we are just anti venality, greed and overweeing self-delusion. However, in true EU spirit, we are denied the referendum we were promised on the Lisbon Treaty. Anyway, in the EU if you vote “No” in a referendum you just keep getting referenda over and over again until you say “Yes”, so what is the point?

EU TREATIES? A tremendous FARCE of course. Did you know that it is ILLEGAL for members states to bail each other out? But what happened with Greece? And now they have a NEW cunning plot to bail out the next failing economies: Spain, Italy, Portugal and Ireland must already be licking their lips at the thought of getting free German money. So, bailouts are ILLEGAL, but not apparently if we actually want to do it. So they are only illegal in THEORY then? So it seems. Now Frau Merkel and the usual stitch-up-the-rest suspects (France) have worked out their plan there remains the niggling little detail about it being ILLEGAL. So what is the solution? The humungously-overpaid and fatuous EU President (has he got his presidential jet yet?) has been asked to look at the problem and “see if he can find a way to bail the countries out legally.”

Of course, despite spending thousands of man-hours on the problem he won’t find a way that will stand up in court so the increasingly-fragile and erratic Frau Merkel is talking about “amendments to the Lisbon Treaty”. More hilarity – this took ten years to thrash out, agree and pass and yet she wants to muck about with it already. I find all this both hilarious and criminally venal, treating the European taxpayer with contempt. How do they get away with it? VOTER INERTIA – the same problem as in the USA, where they have a POOR choice of parties and lurch from one dinosaur to the other without ever seeming to explore alternatives. EUROPE? Do YOU know who your MEP is? Does he or she LISTEN to what you say? With Europe in the midst of the biggest financial crisis since WWII when EVERYONE in the real world (not Wayne Rooney of course) is cutting back, jobs are going, projects abandoned the MEPs voted for a 6% INCREASE in their budget. One wonders who their PR people are, but in truth they don’t have to bother much about PR since their accountability is about zero.

The EU initiatives are INSANE – power-mad. It is so transparent as to be laughable. As the British learned from “Yes Minister”, the bigger your budget the more important you must be and therefore the more you must pay yourself. This is the rational for EU top-brass being paid double what NATIONAL LEADERS get.  (Oh, and for the “inconvenience” of living abroad of course, even though they get a whole raft of vast expenses including free schooling for their kids). Cameron knows it, but the Brits are so used to being slagged off by the Continent (especially statist France, which is always very glad to get its bills paid by someone else  – will the Germans bail out France when their economy collapses?) that Cameron has to tread a tricky line. At heart, the Brits are FREE MARKETERS and NOT willing to be an outpost of The United States of Europe, which is of course what they want over the Channel. France wants that because it believes it can control it;, they could be deluding themselves – monsters one creates often become uncontrollable. And the Germans of course are kept on a leash because France still plays on German guilt for WWII, but is that ploy now looking a bit sick? It certainly can’t last for ever so milk it while you can, eh?

THE EURO: The recent EU jolly came up with a plan to “save the euro”; they were all happy as sandboys about this, but do they REALLY believe that Greece can EVER repay its debt without MORE vast donations from Germany? Do they think Germany will continue to bail out the feckless Mediterranean countries (plus Ireland …)? Some of these countries shouldn’t BE in the euro, unless of course the EU can control their economies. AHA, THERE WE HAVE IT! That is the agenda of course … more central control = more power and in particular more “harmonisation” of taxation. Don’t you just love that word; it sounds so PC. ‘harmony’ = balance, peace, contentment ….. all the right marketing vibes … but what it means of course is “harmonisation” UPWARDS to match the preposterous tax levels in Germany and France. The Germans are so efficient that they seem to get by with such high taxes, but they are crippling France. Despite their fatuous 35 hour week  – introduced to create more employment (why didn’t they make it 10 hours per week – surely that would have created even MORE employment?) – their unemployment rate is still way above the average, and this for DECADES.

Well Patrice, I agree with much of your analysis of the USA, but I suspect Yanks will be up in arms. (the “greatest country in the world” syndrome). I am reminded of the importance of education; is it SO difficult to learn from the past? Apparently so – humans are so deep-rooted in the immediate present and so few take a long-term view, especially in our “democratic” systems of government where Obama has only been going for two years yet is effectively starting the next election campaign. And as we know, British politicians will do and say anything to gain power and having done so very often ignore much of what they promised. I myself do not remember the British Labour Party promising to ruin the country in 1997, yet that is what they have done in many areas.

Where I disagree is with the impression I have from your post that Europe is doing much better than the USA. I don’t think we are. I think we are in a tremendous mess and have NOT yet understood what faces us – see strikes in France for a start. One bright light? the economic performance of Germany, the only “serious country in Europe – apart from those magnificent Scandinavians of course. Another bright light? The performance so far of the British Coalition, at least having the courage not to take the easy but long-term catastrophic path of “Spend, spend, spend” so honed and perfected by the previous bunch of charlatans.

By Chris Snuggs

A reflection from Patrice Ayme

Intelligence at the core of humanism – Patrice Ayme

This is a full copy of a recent post from Patrice Ayme published on Learning from Dogs with Patrice’s written permission.

I am bound to say that many of the arguments set forth in much of Patrice’s writings stretch my brain cells but that is not the point.  The point is that all right-minded (not in a political sense, you will grant me!) citizens of the free world need the expressions of thoughtful people in order to make the best decisions they can; for themselves, their families and the wider community.  For me that is why Patrice should be read.

Here is the article from Patrice Ayme published on his Blog on the 22nd October. (It’s long – but it’s a Sunday so think of it as your Sunday newspaper, settle down in an easy chair and get stuck in!)

Krugman, or Crudeman?

By Patrice Ayme

HIGH DEBT = HIGH PLUTOCRACY.

Abstract: President Obama has been getting atrocious economic and financial advice, all across the spectrum, from Summers to Krugman.

This abominable advice reinforced the plutocracy, with tax cuts, and a giant spigot of money creation directed at giant banks and their demons. While the banks are getting nearly all the money, the rest of the economy has been weltering. The government is obsessed with throwing money at bank holding companies to save its friends, while accusing everybody else.

The main architect of this quiet coup, Summers, and his demoncrats and democrats, is supposedly on his way out (see Note1). That may be just a ruse to escape the sword of justice and positive change.

Another Reagan adviser posing as a democrat, and a progressive, Paul Krugman, has been more in evidence recently, as some of his advice has obviously gained traction.

Krugman’s advice: accusing China, with GUSTO (while sparing the American plutocracy of much blame), and augmenting government spending, BLINDLY. It does not matter if said spending is on foolish things: just spend. Keynes, the Jesus Christ of Krugman’s religion, said so, so it ought to be right. A detail: said augmented spending goes through… the friendly giant banks. Friendly to them oligarchs (see Rahm Emanuel’s 17 millions from one bank).

After accusing China, whatever China does, Krugman has also targeted European austerity programs, from Ireland to Lithuania, blaming them for the difficulties of the USA.

Krugman’s latest attacks are against the British government austerity program (some of which was started by Labor before the election in Spring, so there is real tripartisan support for it).

China and Europe are trying hard, in many ways, to change their economies and societies for the best, though, whilst the USA is just forking more money to its greedy plutocrats, calling thatdismal masquerade “recovery and reinvestment“ (a lot of these huge transfers of money go through hermetic notions such as “Quantitative Easing”, or buying toxic garbage from the banks, as if it were worth anything: it’s done through the banks… the private banks).

Let me repeat slowly. The advice of Krugman is dressed in leftist garb, but it is nothing of the sort. It’s like getting currency advice from Soros: dangerous at any speed.

The policies Krugman promotes, such as Quantitative Easing 2 (flushing the biggest banks with money), and xenophobia, are deeply pro-plutocratic (unsurprisingly Soros advises QE2 too).

This essay will rectify some of Krugman’s massive disinformation. Whether he is fully conscious of it, or not, is irrelevant: Krugman gives bad advice to the government of the USA. The USA needs to engage in Colbertism, as Europe and China are doing, and the defense department of the USA does.

Sending more money on the ravenous world manipulating financiers, as Krugman suggests to do even more of, in practice, amounts to feeding more poison to the victim, throwing more gasoline on the fire, breeding more black mambas inside the house, while screaming that more insanity will bring strength. And lying about other countries, from China to Great Britain, does not help. It’s internationalism at its worst.

***

***

DEBASING CHINA:

According to Krugman, China is bad, Europe is bad, whilst the hard working USA is good, as it tries single handedly to pull the entire world economy out of the slump it itself created. But the USA’s goodness is not quite enough to master the foreign devils. So sad. This is apparently Krugman’s latest New Trade Theory: USA sinks, because big bad aliens did it.

Nothing to do with reaganomics, Obama’s admiration for Reagan, Clinton’s dismal selling of democracy and the future to plutocracy, and Krugman’s work for Reagan, hand in hand with Summers. This is all the past, we don’t need to ruminate it. Krugman would rather talk about…1937. (Not to tell us about American plutocracy supporting Hitler, while undermining democracy, as what was going on then, but to talk about FDR overenthusiastic support of… interest rates!)

One has to know that Krugman is viewed as one of the authors of“New Trade Theory”, NTT, a sophistry which basically boiled down to claiming that trade is good, no matter what. NTT did not work for the common folk, thus apparently Paul Krugman is now down to trading insults with reality, in the apparent hope that this will distract enough simple common folks. Thus New Trade Theory has revealed its true nature: adding insult to injury.

New Trade Theory faltered by ignoring the enormous leverage American plutocracy would get by going global, while no legal strings were attached, and conspiring with local dictators (the later a good source of Bill Clinton’s prodigious income). Plutocracy could drive at any speed, carry whatever cargo it wanted, including the most precious good: people’s employment.

The result is the unfolding economic and social disaster in the USA (and a lot of the world). Krugman may be trying to change his spots to cleanse his soul. And Krugman liberally attacks all foreigners, all over, most of the time, thus diverting attention to the root cause of the problem, already clear with his old boss, Reagan.

Last week Krugman was furious because China had lifted its short term interest rates up to 2.5%. That should lift the Chinese currency, which is one of the obsession of Krugman. So Krugman gets what he wanted, but that makes him even angrier (because, as expected, it changes nothing).

Meanwhile the dollar of the USA is returning a colossal .18% on short term maturities (Fed Funds rate). Yes that is about zero percent. Yes, that is about 13 times LESS than the return on the Chinese currency! In other words the USA is trying to lower the dollar as much as possible (Obama said he wanted to double USA exports in the next five years. But he forgot the slight detail that the USA is becoming a banana republic. I cannot believe he will find so many bananas to sell, even if they come super cheap, not everybody wants to splurge and become obese on American bananas).

So Krugman accuses China to debase its currency, but the USA is debasing the US dollar thirteen times more (this, what I just uttered, is a parody of what plutocratic economists call a model, full of sophisticated mathematics, the sort of things Krugman claims he does. but it’s little more than smoke and mirrors, and silly graphs which mean nothing, except that plutocracy is hiding behind them).

In truth China has something like four giant infrastructure projects running concurrently, in education, trains, biology, clean energy, etc. China builds universities, and China builds Airbuses (yes, from the company headquartered in Toulouse). Just the Chinese High Speed Rail infrastructure project amounts to 500 billion dollars or so (it uses basic European HSR technology).

China has even offered to finance and build the High Speed Rail in California. That is because all the American money goes to American plutocrats, and none is left for mundane activities. As Stiglitz pointed out a few days ago:

“The US Federal Reserve may make funds available to banks at close to zero interest rates, but if the banks make those funds available to small and medium-sized enterprises at all, it is at a much higher rate.”

The banks keep the money, making risk free profits, feeding their bonuses, and their power.

And don’t worry: Silicon Valley plutocrats use private planes, and do not want to see 250 mph trains in their backyards, for many reasons, so it will not happen, for a long time (except if American sheep wake up and turn into combative Europeans, which is unlikely, because they have been brainwashed into believe that it is cool to be as cool and politically minded as barnacles).

***

WRONG IS WRONG:

Krugman, Stiglitz, and also myself, would be viewed, by many as critics from the left. As the last British election unfolded, I was more in support of Mr. Brown, who had long aggravated me, but changed his spots, once he became Prime Minister. However, I hold that the truth is the truth. It is not because one overall disapproves of the general drift of the new PM, Cameron, that one should then support invented data inimical to Cameron. But that is what Krugman has been doing.

When the sheep invents data to support its cause, it invites the wolf to do the same, and the wolf will do it better, with more drastic consequences for the sheep.

In a remarkably misleading editorial, Krugman says the following (see full quotes in the notes):

1) “Fiscal austerity is the fad of 2010. That fad is fading, but the damage is done.” (False: successful Europeans nations, such as Sweden and Germany, have been at austerity for arguably 20 years. Let alone France in the 1930s…)

2) Krugman asserts that austerity does not rest on careful analysis(False: not only it rests on careful analysis, all the way from the High Middle Ages, but austerity rests on careful experience: Europe is made of more than 30 nations, and some went austere, and came out ahead, while the profligate ones are down in the dumps.)

3) Krugman claims that austerity has been justified by the hope of gaining confidence. (False: Europeans and Chinese don’t give primacy to market and business confidence, due to the fact that there, in China and Europe, the state rules, rather than the plutocracy. In the EU around half of the economy is state.)

4) Krugman claims that “The sensible thing, then, is to devise a plan for putting the nation’s fiscal house in order, while waiting until a solid economic recovery is under way before wielding the ax. But trendy fashion, almost by definition, isn’t sensible — and the British government seems determined to ignore the lessons of history.“

(False: the sensible thing to do is to do what has worked several times in Europe, let alone China: re-establish fiscal, economic and social order, FIRST. Don’t wait for plutocracy to toll for thee. There is no evidence that the other way around ever worked.)

-So what history is Krugman alluding to? Just the relevant, but specious case of the 1937 USA, when FDR squeezed “liquidity” (that is, money creation by private banks, in financial jargon) too early, reverting a nascent recovery of the PRIVATE economy.- This a special case, irrelevant to the present Europe and China. And, of course, irrelevant to the present USA where short term interest rates have long been put at zero by the government (and other rates have been made very low, by same government, to HUGE opportunity cost for the rest of society)-

5) Krugman compare incomparables by claiming that “Both the new British budget announced on Wednesday and the rhetoric that accompanied the announcement might have come straight from the desk of Andrew Mellon, the Treasury secretary who told President Herbert Hoover to fight the Depression by liquidating the farmers, liquidating the workers, and driving down wages.”Krugman confuses here the private sector in the USA in 1931, with the public sector in Great Britain in 2011. So many words, so many ideas, so many concepts, so many years! It can all go zoom zoom in one’s head!

6) Krugman then observes that Great Britain’s debt is below “historical average”. He disingenuously forgets to say that historically average debt, contracted in World War One was what the boom of the 1920s was engineered to fix (causing Great depression II). And that historically average debt, furthered by World War Two, and the USA financially perfidious behavior, ruined Great Britain durably thereafter. As a good American patriot, Krugman wants Great Britain to be historically indebted, so it can keep on being the USA’s poodle. Fortunately the present British government has no docile canine temperament, and has figured out American perfidy.

7) Sanctimoniously, Krugman gives the usual preaching about learning from history. But the preceding shows that as he threatens Great Britain with Japan’s fate, he forgets that Japan has a total state debt above 200% of GDP, nearly double that of Greece (itself much larger than Britain’s). Among dozens of other important facts he conveniently forgets to mention as true.

Paul Krugman forgets to say that, overall, the British government spending will keep on augmenting. UK government spending is planned to be UP by 6% in nominal terms by 2014. (Down 3% in real terms with inflation taken into account.) So much for the gloom and doom. Oh, wait…

Why so many spectacular cuts while spending increases? Because the payment of the interest on the British government debt is exploding, and the government has to budget it. It is pretty telling that Krugman does not mention the rotting elephant in the bathroom: what a jolly sight, what a happy surprise!

The problem of exploding interest is not exclusive to Great Britain. In France the entire national income tax is used to pay for the interest on the national debt. French national debt is still augmenting as more debt is piled up to pay for retirees, some retiring at 54 (as in the railways, as if we were still in the age of steam and coal). 10% of the French retirement is paid through more national debt.

***

KRUGMAN IS RIGHT (OF THE PLUTOCRATS), EXCEPT FOR ALL THE FACTS:

I reacted to Krugman’s “British Fashion Victims” with the following reply that the honorable Krugman and his New York Times had the kindness to publish:

In truth, Europe knows what it is doing, and Krugman, with all due respect, does not know enough about what he is talking about, to be cogent, as we will presently demonstrate by deconstructing most of his remarkably erroneous essay.

An example: Prime Minister Cameron program will reduce government employees by 490,000 (much of them through attrition, as employees retire with their expensive pensions). Krugman says that’s terrible, and it will depress the British economy.

However, Great Britain has six million civil servants in 2010. Proportionally to the population, it is as if the USA had 30 millioncivil servants (the UK has a bit more than 60.5 million citizens, the USA a bit more than 310 millions).

But how many civil servants do the USA have? Krugman forgot to point that number out. The USA has 18 millions employed in government, three times as much as in Great Britain. Three times as much, for five times as big a population. Thus, to have the same relative number of civil servants as the USA, PM Cameron would need to fire more than two million British civil servants.

Thus the situation is much different from what Krugman depicts it to be. Different times, different countries, different situations.

Krugman compares Prime Minister Cameron in 2011 to Hoover in 1931. In truth, by letting banks close, Hoover was destroying the private economy. Cameron and his government are cutting what they view as government fat. Education and defense are basically untouched. Nationalized health care is left completely untouched (as promised in the campaign).

Cameron’s and Clegg’s idea is to increase high technology plus innovation. Tories and Liberals are singing the praises of Airbus (a major employer in the UK, as it builds there Airbus’ wings). This is very far from what the Americans expected, as it behooves them that Britain would be anti-European, that is, against itself. The British government wants to make economies by sharing aircraft carriers with France. What is there not to like in this no non sense approach to the real European economy?

Indeed, the analysis in Britain is that the UK has fallen behind France and Germany in high technology industry (after centuries of leading, or being equal), and that this is the root of Great Britain’s doom, should it be not fixed immediately. The aim is to do whatever it takes to catch up in industrial high technology. This is a major insight of Tories and Liberals. It is of course a major rapprochement with the main line of France, first, and Germany, second.

This line of progress was the line of the Franks: instead of enslaving men, let technology do the work… And let’s keep the government small. After five hard centuries of using that method to pull out of the Dark Ages imposed by the Christian obscurantism and fascist theocracy, by the year 1000 CE, the Franks (basically the present Eurozone) had achieved the world’s highest GDP per head.

So it is not surprising that Europe is going back to the tried and true. All of Europe is reigning in state spending. Even Norway (which is more than twice richer, per head, than the USA). Even Sweden, the temple of social democracy, richer per capita than France, or Germany.

Even in Germany, the world number one exporter (even beating sneaky China, most of the time).

In France, more than 10% of the present retirement spending is paid by further borrowing by the state. This is unsustainable, thus unacceptable. Most of the French population (more than 60%) believe that it is unacceptable (while, paradoxically a majority supports the strikers according to the sacred French principle that loud protests are the only religion worth having… as long as it does not interfere with the All Saints vacation).

And the stingy Europeans are right. Those who have borrowed money are owned by those who lent it to them. The last time there was really major borrowing in Europe, it came to be called serfdom. This is indeed what happened in the High Middle Ages.

The debt had to be piled up, then, because the Imperium Francorum was invaded from all directions. First Charles Martel nationalized the church, to pay for the army. But that was not enough.

The terrible Muslim invasions were very expensive to fight as the attacking fascists had harnessed the resources of more than half, and the richest half, of the Roman empire to feed and equip their jihadist armies.

Thus, although the Franks had outlawed slavery, overspending, caused in great part by the necessity of rising the greatest armies since the heydays of imperial Rome, and the cost of reconstruction once the ravaging Muslim armies had been pushed out, brought them right back down into a system where the average person was indebted… And being indebted means being indebted to the rich.

The first European Prime Minister who came to understand that government spending had to be cut down was the Swedish PM, and he was a Social-Democrat. Social democrats had put in place the all controlling Swedish nanny state. That Swedish PM, as progressive a liberal as they come, embarked on a savage austerity program who made him very hated.

At the time, the Swedish economy was collapsing, so there was no choice. The PM started very crafty changes, replacing a lot of costly central state functions by cheaper local citizen initiatives, for example in health care ( midwives and other non MD medical personnel were allowed to make a lot of medical procedures, and lots of health care is conducted on the phone, making Sweden the best health care system, even ahead of the 2% of GDP costlier French health care, which is more gold plated).

Now, but for oil rich Norway, Sweden is doing better economically and socially than all other European countries. And Sweden is in the EU, and it has no oil. The Swedes are proselytizing, and the rest of the 26 EU countries are inspired by it.

In general, Scandinavia has long cracked down on the imperial state. Scandinavian politicians pay for all their private expenses, and do not fly business on flights less than 3.5 hours. One is far from the Imperial Roman state based in Washington, with a First Man (“Princeps”) and a “First Lady” who make Nero and Caligula look like misers, relatively speaking.

***

IMPERIAL USA, DOWN THE PLUTOCRATIC ROAD: I SELL, THEREFORE I RULE:

Why does this all mean? Trying to boost the economy through throwing money at the people was done during the worst centuries of Rome. It led to success only in the sense that the fascist imperial degeneracy kept on going.

Of course, some will say that those days are back. Imperial Rome was at its most grotesque when the Praetorian Guard put the imperial throne for auction. Yesterday, Barack Obama came to the San Francisco Bay Area. Plutocrats paid $30,400 per person to come to events where the president was acting up. Two months old plutocratic babies paid their $30,400. Then, to have your photograph taken with the president, it would cost you another $6,500.

Yes, $30,400 is more than half the average family income in the USA. And yes, Barack Obama visited several plutocratic homes. Meanwhile the Praetorian Guard is building bases as if it were going to stay a century in Afghanistan. Never mind what Obama says, he will do as the plutocrats say. As long as they pay. A Silicon Valley plutocrat spent more than 100 million dollars of her money to be elected governor.

***

LEVERAGING STATE SPENDING FOR THE TECHNOLOGICAL ADVANCEMENT OF THE ECONOMY:

I am as progressive as they come. I am for central state spending in health, education, etc. I believe in Colbertism, the invention, earlier, by King Henri IV, of the high technology, legislated advancing economy to provide every family with a hen in the pot, at least once a week, as he put it.

However, this government investing in a valuable future works better when the spending is similar to what is done with money creation through private banks (the fractional reserve money creation system). The state brings in 10%, of the money, the privates do the rest. So the privates leverage on public money. For example in Europe, 250 mph, High Speed Rail is financed and built by private companies, leveraging governmental input. The USA used to do this, for example when railroads were built in the USA in the 19C. But for that government has to have available money to spend. This is highly relevant: 1.2 million construction workers are idle, and they could be put to work on conventional railroads, making them faster, safer, more efficient. But of course that cannot happen as long as the money goes to the corruptocrats and other plutocrats.

To borrow for current spending is unacceptable, in a family, but even more in a country: a family can die, and escape debt that way, but not a country…without great mayhem. Actually this is exactly how debt leads to war.

Cautious spending, investment spending, is the way to go. Unfortunately, Obama’s spending, deluded by Reagan advisers, and their plutocratic masters, has been neither. What British PM Cameron is doing is risky, but it may well work. What has been done under Obama, so far, cannot work.

***

Patrice Ayme

***

Note 1: STIMULATING PLUTOCRACY, NOT JOBS: First there was Larry Summers, who used to be a Reagan economic adviser, at the inception of the plan to put the plutocracy in power much more than it already was (“trickle-down economics”). Summers advised to write as many big checks to the banks as needed, to save their owners and managers.

TARP was put in evidence, but was only a small part of the (on-going) support to the giant banks and their giant owners. A grandly called “stimulus” was also put in evidence. But it was nothing of the sort. More than half of it was made of tax cuts (yes, a la Reagan!), and most of the rest compensated for the states’ financial collapse. A tiny proportion went to creating jobs (mostly of the menial, non multiplying type, such as improving trails in the middle of national lands).

This meant that money creation was mostly directed at Wall Street. Money was created, to serve Wall Street, not industry. In 2 years Obama stimulated jobs for 50 billion dollars (the trails above, and a few potholes), while Wall Street, in bonuses alone, distributed to itself 300 billion dollars. The source of the money is the same: taxpayers. To create these 300 billion dollars of bonuses, about four trillion dollars were spent.

How? Through Quantitative Easing. Basically the government lent short at zero interest to the giant banks, which were then allowed to reinvest with the government on so called longer maturities, at much higher interest. Many other tricks were used, such as having nationalized companies (FHA, Fannie Mae, Freddie Mac) buy at outrageous prices worthless mish mash of over-valued mortgages. said nationalized companies are broke.

The other of ex-twenty something Reagan adviser, Summers’ alter ego, at least in the Reagan White House, was Paul Krugman. He seems to be listened to recently (considering the USA’s aggressive dollar devaluation, and all azimuths attacks against other countries).

***

Note 2: HOW THE QUR’AN CREATED MIDDLE AGE SERFDOM: One way the Franks beat the Muslim armies, aside from sheer intelligence, was with very heavy cavalry, and its giant armored horses. The cost was tremendous, but a cavalry charge by European knights would go through Muslim horse like a hot knife into butter. More generally a highly specialized military aristocracy, training itself from early childhood was created (under Charles Martel). But it put all of Western Europe in debt. On the positive side, the savages from the north (Vikings), from the east (various types of Huns), and the south (Muslims), were thereafter domesticated, once their armies had been defeated and chased out (which took more than 12 centuries in the case of Europe itself, and various Muslim theocracies).

Note 3: American ignorance is an astounding marvel: The other day, Fox News’ Neal Cavuto, one of Fox’s stars, who thinks he is a business genius, was interviewing a BRITISH European Member of Parliament in Strasbourg, France (the Euro parliament sits in Strasbourg, part time).

As he interviewed the British European MP, Cavuto idiotically insisted, again and again, that “Great Britain had to be happy not being part of that club“. Meaning that Great Britain had to be happy not being in the European UNION. First, the EU is not a club, but an Union.

Secondly Cavuto was interviewing a British Euro MP, knowing very well that the gentleman was British, and a Euro MP, but apparently, Cavuto was congenitally incapable of drawing the conclusion that this meant that Great Britain was part of the European Union.

This is the degree of ignorance of Americans about Europe, in full evidence. And it’s not just Fox’s Cavuto: Krugman and Stiglitz, and smart, for American economists, are both deeply ignorant of European politics, history and economics, to the point that the advice they give about Europe reminds of the advice of Huns about Ukraine.

(Stiglitz, as Krugman has long been anti-European; in the last few days, Stiglitz wrote an essay in the Financial Times along the lines I have long held, of doing what one could call an investment stimulus… by opposition to a current account debt pile up, advocated before. So some are learning… Hopefully such knowledge can reach Obama…)

***

Commodity trading

Something really disquieting about this.

I don’t know about you but I’m picking up more and more ‘vibes’ from all over the place that strongly suggest an increasing awareness of the need for real change in society.  Anyway, more of this another time.

My article today is base on an editorial in the Mole Valley Farmers Newsletter

 

MVF logo

 

for October 2010 (no. 557).  First some background to this organisation.

Mole Valley Farmers is described on their web site thus:

Mole Valley Farmers was started in 1960 by a small group of farmers around South Molton* who were concerned by the discriminatory practices and the large margins being taken by many of their input suppliers. From the outset it was decided to treat all members equally, subject only to quantity allowance and that the Company would operate on the minimum margin to allow continuity and growth. Today it remains one of a few true co-operatives in the supply industry.

Mole Valley Farmers consists of:

  • Nine branches in the south west supplying a vast range of goods to farmers and the public alike. These range from farm requirements to clothing, footwear, garden supplies, pet food and accessories, domestic goods and power tools
  • Our own feed mills for all animal feeds
  • Fertiliser blending plants
  • A specialist mineral plant
  • A quality farm building division

Of special importance are our farmer customers who purchase animal feed, fertilisers and minerals, all manufactured to a high specification by Mole Valley Farmers and delivered direct from point of manufacture to farm or to branches for collection in small lots.

* South Molton is in Devon, England about half-way between Barnstaple and Tiverton and the history of this interesting firm may be found here.

I have to declare a certain interest in that when I lived in Harberton, Devon for a number of years, we were non-farmer Members of Mole Valley Farmers for feed for our chickens and ducks and later on for Pharaoh.  So when I arrived to stay recently for a week with friends in Brixham, Devon,  my eye quickly picked up the familiar look of the MVF Newsletter lying on the table.

This is the editorial, reproduced in full with the kind permission of the Newsletter editor, from the pen of David Burke, Chairman of MVF.

Commodity trading

Until relatively recently, the price of food was set by the forces of supply and demand for the food itself, which worked reasonably well in developed countries able to purchase in times of shortage.  For the last century farmers have been able to reduce some of the market risk by forward selling crops to a trader in that market, at a price that fair to both parties.

This type of trading was tightly regulated and only those who were directly involved could participate and it worked well.  At some time in the mid-90s, Goldman Sachs, with other financial institutions, successfully lobbied for the regulations to be abolished.

Forward contracts became derivatives, which could be bought and sold repeatedly by traders, which enabled the financial institutions to become involved.  This type of investment really took off when the American and European pension market collapsed, together with that for normally traded derivatives like metals, prior to the recession, although actual food supply and demand remained relatively in balance.  Last year Goldman Sachs reportedly made £3.2bn profit from derivatives trading.

In spite of Russia’s grain export ban and some other weather affected harvests, both the EU commission and the International Grains Council report more than adequate reserves of grain to meet demand and that the carry-over stocks are likely to be the second highest for years.  The rumoured (but non-existent) wheat shortage that is driving up all feed prices, is entirely due to actions of the world’s principle investment bankers and their investors, which have serious implications throughout the globe.  Whilst few in the developed world mostly in the Northern Hemisphere, will go hungry, it is a growing tragedy for the poorer countries in the Southern Hemisphere where three-quarters of the world’s population live.  According to the Food and Agricultural Organisation, one third of the population lack food security and 792m people there are undernourished to varying degrees of starvation.  But most damning of all, some 12m children die annually of malnourishment.  Derivative speculation, which pushes up the cost of grains and in particular wheat, is responsible for food inflation that is proportionally greater for the impoverished nations.

Re-regulation of the basic food market to prevent a recurrence of the spikes of 2007 and 2010 would go some way to stabilising global food costs and help with developing nations, though without a great deal of pressure from compassionate people, this will be difficult, given the influence that the world’s richest investors have over governments.  Alternatively, primary food producers worldwide are paid a high enough price for their produce to enable them to invest in research and best practice, as well as in efficient equipment.  This concept received the approval of the European Parliament on 9th September and although they are considering legislation to ensure farmers receive a fairer share of the consumer price, it may be difficult to implement other than through a properly funded and regulated CAP.

Well said, Mr Burke.

NB.  The web links in Mr Burke’s article have been inserted by me, they were not in the original article.

By Paul Handover

No, it’s not only me!

The power of human networking.

My article published yesterday referred to a post on Baseline Scenario entitled After The Recession: What Next For The Fed? Do go across and read it.

I had been in a bit of a rant mood and contributed a comment to that Post.  I wrote:

I don’t have the knowledge to respond to Simon’s excellent Post in detail but his comments reinforce what feels like a constant throbbing in my mind – how can the citizens of so many countries have abdicated so much interest and concern in how they/we are governed. Wish I had even a clue as to the answer to that question.

Significant social unrest would be very scary – the ‘law’ of unintended consequences and all that – but there are times when I wonder if this, in the end, might be the only form of real progress for the hard-working, tax-paying majority.

End of rant! 😉

Interestingly, that stimulated some replies which were, in my opinion, worth sharing with you; kind reader of Learning from Dogs that you are!

Sir, you raise a sad but true point when you ask how a majority of us citizens, on a worldwide basis, could have lost true “by the people” control of our own governments.

For most of us the loss of healthy economic functioning has been the main consequence of this, something that has been very painful. But I also find myself reflecting on the unspeakable genocides in our collective human history. One gets an awful sense of how such things were permitted to arise…ZeroInMyOnes

And

Well spoken Paul Handover. The system cannot and will not be changed politically or judicially because the malevolent forces who conjured the system own and control both the political and judicial operations and operators. Those operators work to advance the interests of the predatorclass whose operations, operators, and structures are malevolent.

The people are the abused victims of predatorclass criminal enterprises bent on total control of the earths wealth and resources, and the enslavement or eradication of the rest of the population.

The peoples only hope for implementing the changes necessary to form a more perfect union is best described here:

(“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable rights, that among these are life, liberty and the pursuit of happiness. That to secure these rights, governments are instituted among men, deriving their just powers from the consent of the governed. That whenever any form of government becomes destructive to these ends, it is the right of the people to alter or to abolish it, and to institute new government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their safety and happiness.”) TonyForesta

And

Paul Handover, that was not a rant. You are simply talking common sense.

Scary is right. And it’s scarier by the day.

We have to try to work constructively for change. I keep urging people to check out the potential for an economy based not on constant growth, which is impossible on a finite planet, but on some sane principles of equity and sustainability.

If you go to http://www.steadystate.org and look at their position statement, you can see that people from all over the world are signing on–yes, just three or four people a day–but they are from every continent and just about every country.

Now, can you help this “go viral”? Carla

These are strong, powerful views.  I have joined Casse, the organisation referred to in Carla’s comment – see second Post from me today – and Tony’s comment motivated me to look up the history of the United States Declaration of Independence, the subject of a separate article on this Blog.

Powerful stuff!

By Paul Handover

Dogma, Lies and Truth ….

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