Category: taxation

A life on the commons.

The message of common land.

I am far from certain but I have this notion in my head that ‘Common Land’ is an English thing. Here’s a Wikipedia extract:

Common land is land owned collectively by a number of persons, or by one person, but over which other people have certain traditional rights, such as to allow their livestock to graze upon it, to collect firewood, or to cut turf for fuel.[1]

A person who has a right in, or over, common land jointly with another or others is called a commoner.[2]

This article deals mainly with common land in England, Wales and Scotland. Although the extent is much reduced due to enclosure of common land from the millions of acres that existed until the 17th century, a considerable amount of common land still exists, particularly in upland areas, and there are over 7,000 registered commons in England alone.[3][4]

Common land or former common land is usually referred to as a common; for instance, Clapham Common or Mungrisdale Common.

Despite the idea of common land having an English ‘ring’ to it common land is also found in the USA. Back to that Wikipedia reference:

Common land, an English development, was used in many former British colonies, for example in Ireland and the United States. The North American colonies adopted the English laws in establishing their own commons. A famous example is the New Haven Green in New Haven, Connecticut.

When I was living in Devon it was not unusual to take a walk with Pharaoh on some very famous open access land: Dartmoor.

Dartmoor: English countryside at its best.

So where the devil am I going with today’s post?

Last Thursday week, the 12th, I published my review of George Monbiot’s valuable book Out Of The Wreckage.

This book struck me as the most important book I have ever read in my lifetime. Why? Because it gets to the heart of what is happening today. But it offers even more than that. For instead of a shrug of the shoulders or eyes turned skywards from a friend when one mutters about the fact that we are living in ‘interesting times’, George Monbiot offers hope and guidance.

The day after I published my review George Monbiot published an article in The Guardian newspaper that threw more light on the commons philosophy and why, as in his book, he “offers hope and guidance”.

It is republished here with Mr. Monbiot’s generous permission. Yes, the focus is on British politics but GM’s core message applies equally to the USA and other countries.

ooOOoo

Labouratory

13th October 2017

We should use the political space being opened by the Labour resurgence to develop a new, participatory economy

By George Monbiot, published in the Guardian 11th October 2017

We are still living in the long 20th Century. We are stuck with its redundant technologies: the internal combustion engine; thermal power plants; factory farms. We are stuck with its redundant politics: unfair electoral systems; their capture by funders and lobbyists; the failure to temper representation with real participation.

And we are stuck with its redundant economics: neoliberalism, and the Keynesianism still proposed by its opponents. While the latter system worked very well for 30 years or more, it is hard to see how it can take us through this century, not least because the growth it seeks to sustain smacks headlong into the environmental crisis.

Sustained economic growth on a planet that is not growing means crashing through environmental limits: this is what we are witnessing, worldwide, today. A recent paper in Nature puts our current chances of keeping global heating to less than 1.5°C of at just 1%, and less than 2° at only 5%. Why? Because while the carbon intensity of economic activity is expected to decline by 1.9% a year, global per capita GDP is expected to grow by 1.8%. Almost all investment in renewables and efficiency is cancelled out. GDP, the index that was supposed to measure our prosperity, instead measures our progress towards ruin.

But the great rupture that began in 2008 offers a chance to change all this. The challenge now is to ensure that the new political movements threatening established power in Britain and elsewhere create the space not for old ideas (such as 20th Century Keynesianism) but for a new politics, built on new economic and social foundations.

There may be a case for one last hurrah for the old model: a technological shift that resembles the Second World War’s military Keynesianism. In 1941, the US turned the entire civilian economy around on a dime: within months, car manufacturers were producing planes, tanks and ammunition. A determined government could do something similar in response to climate breakdown: a sudden transformation, replacing our fossil economy. But having effected such a conversion, it should, I believe, then begin the switch to a different economic model.

The new approach could start with the idea of private sufficiency and public luxury. There is not enough physical or environmental space for everyone to enjoy private luxury: if everyone in London acquired a tennis court, a swimming pool, a garden and a private art collection, the city would cover England. Private luxury shuts down space, creating deprivation. But magnificent public amenities – wonderful parks and playgrounds, public sports centres and swimming pools, galleries, allotments and public transport networks – create more space for everyone, at a fraction of the cost.

Wherever possible, I believe such assets should be owned and managed by neither state nor market, but by communities, in the form of commons. A commons in its true form is a non-capitalist system, in which a resource is controlled in perpetuity by a community, for the shared and equal benefit of its members. A possible model is the commons transition plan commissioned by the Flemish city of Ghent.

Land value taxation also has transformative potential. It can keep the income currently siphoned out of our pockets in the form of rent – then out of the country and into tax havens – within our hands. It can reduce land values, bringing down house prices. While local and national government should use some of the money to fund public services, the residue can be returned to communities.

Couple this with a community right to buy, enabling communities to use this money to acquire their own land, with local commons trusts that possess powers to assemble building sites, and with a new right for prospective buyers and tenants to plan their own estates, and exciting things begin to happen. This could be a formula for meeting housing need, delivering public luxury and greatly enhancing the sense of community, self-reliance and taking back control. It helps to create what I call the Politics of Belonging.

But it doesn’t stop there. The rents accruing to commons trusts could be used to create a local version of the citizens’ wealth funds (modelled on the sovereign wealth funds in Alaska and Norway) proposed by Angela Cummine and Stewart Lansley. The gain from such funds could be distributed in the form of a local basic income.

And the money the government still invests? To the greatest extent possible, I believe it should be controlled by participatory budgeting. In the Brazilian city of Porto Allegre, the infrastructure budget is allocated by the people: around 50,000 citizens typically participate. The results – better water, sanitation, health, schools and nurseries – have been so spectacular that large numbers of people now lobby the city council to raise their taxes. When you control the budget, you can see the point of public investment.

In countries like the UK, we could not only adopt this model, but extend it beyond the local infrastructure budget to other forms of local and even national spending. The principle of subsidiarity – devolving powers to the smallest political unit that can reasonably discharge them – makes such wider democratic control more feasible.

All this would be framed within a system such as Kate Raworth’s doughnut economics which, instead of seeking to maximise growth, sets a lower bound of wellbeing below which no one should fall, and an upper bound of environmental limits, that economic life should not transgress. A participatory economics could be accompanied by participatory politics, involving radical devolution and a fine-grained democratic control over the decisions affecting our lives – but I will leave that for another column.

Who could lead this global shift? It could be the UK Labour Party. It is actively seeking new ideas. It knows that the bigger the change it offers, the greater the commitment of the volunteers on which its insurgency relies: the Big Organising model that transformed Labour’s fortunes at the last election requires a big political offer. (This is why Ed Miliband’s attempts to create a grassroots uprising failed).

Could Labour be the party that brings the long 20th Century to an end? I believe, despite its Keynesian heritage, it could. Now, more than at any other time in the past few decades, it has a chance to change the world.

http://www.monbiot.com

ooOOoo

Muddy rambles by Dartmoor Cross on Dartmoor.

The above photo was first seen on the South Downs Walking website.

All of you and all of your dogs have a wonderful weekend.

Never taking democracy for granted!

Cold-water shower time again!

All you good people who stick with this blog know that the majority of the posts are to do with dogs or cats in one form or another.

Yet, I am cognizant of the fact that no one can completely hide, metaphorically speaking, in the warm fur of our favourite dog or cat and let the rest of the world go tits up. From time to time I read an article or an essay that touches on something fundamentally important to a civil society and am compelled to share same with you.

That was the case on July 5th when I published a post called The Implications of Inequality.

OK – moving on!

Regulars know that I am a great admirer of the writings of essayist George Monbiot. He is a very regular contributor to The Guardian newspaper. Just a few days ago, Mr. Monbiot published an essay that really does need to be read as widely as possible. It is called Missing Link and is republished here with George Monbiot’s very kind permission.

ooOOoo

Missing Link

21st July 2017
How a secretive network built around a Nobel prizewinner set out to curtail our freedoms

By George Monbiot, published in the Guardian 19th July 2017

It’s the missing chapter: a key to understanding the politics of the past half century. To read Nancy MacLean’s new book Democracy in Chains: the deep history of the radical right’s stealth plan for America is to see what was previously invisible.

The history professor’s work on the subject began by accident. In 2013 she stumbled across a deserted clapboard house on the campus of George Mason University in Virginia. It was stuffed with the unsorted archives of a man who had died that year, whose name is probably unfamiliar to you: James McGill Buchanan. She writes that the first thing she picked up was a stack of confidential letters concerning millions of dollars transferred to the university by the billionaire Charles Koch.

Her discoveries in that house of horrors reveal how Buchanan, in collaboration with business tycoons and the institutes they founded, developed a hidden programme for suppressing democracy on behalf of the very rich. The programme is now reshaping politics, and not just in the US.

Buchanan was strongly influenced by both the neoliberalism of Friedrich Hayek and Ludwig von Mises and the property supremacism of John C Calhoun, who argued, in the first half of the 19th century, that freedom consists of the absolute right to use your property – including your slaves – however you may wish. Any institution that impinges on this right is an agent of oppression, exploiting men of property on behalf of the undeserving masses.

James Buchanan brought these influences together to create what he called “public choice theory”. He argued that a society could not be considered free unless every citizen has the right to veto its decisions. What he meant by this was that no one should be taxed against their will. But the rich were being exploited by people who use their votes to demand money that others have earned, through involuntary taxes to support public spending and welfare. Allowing workers to form trade unions and imposing graduated income taxes are forms of “differential or discriminatory legislation” against the owners of capital.

Any clash between what he called “freedom” (allowing the rich to do as they wished) and democracy should be resolved in favour of freedom. In his book The Limits of Liberty, he noted that “despotism may be the only organisational alternative to the political structure that we observe.” Despotism in defence of freedom.

His prescription was what he called a “constitutional revolution”: creating irrevocable restraints to limit democratic choice. Sponsored throughout his working life by wealthy foundations, billionaires and corporations, he develop both a theoretical account of what this constitutional revolution would look like and a strategy for implementing it.

He explained how attempts to desegregate schooling in the American South could be frustrated by setting up a network of state-sponsored private schools. It was he who first proposed the privatisation of universities and the imposition of full tuition fees on students: his original purpose was to crush student activism. He urged the privatisation of Social Security and of many other functions of the state. He sought to break the links between people and government and demolish trust in public institutions. He aimed, in short, to save capitalism from democracy.

In 1980, he was able to put the programme into action. He was invited to Chile, where he helped the Pinochet dictatorship to write a new constitution, which, partly through the clever devices Buchanan proposed, has proved impossible to reverse in its entirety. Amid the torture and killings, he advised the government to extend its programmes of privatisation, austerity, monetary restraint, deregulation and the destruction of trade unions: a package that helped trigger economic collapse in 1982.

None of this troubled the Swedish Academy, that, through his devotee at Stockholm University, Assar Lindbeck, in 1986 awarded James Buchanan the Nobel Memorial Prize for economics. It is one of several decisions that have turned this prize toxic.

But his power really began to be felt when Charles Koch, currently the seventh richest man in the US, decided that Buchanan held the key to the transformation he sought. Koch saw even such ideologues as Milton Friedman and Alan Greenspan as “sellouts”, as they sought to improve the efficiency of government rather than destroying it altogether. But Buchanan took it all the way.

MacLean says that Charles Koch poured millions into Buchanan’s work at George Mason University, whose law and economics departments look as much like corporate-funded thinktanks as they do academic faculties. He employed the economist to select the revolutionary “cadre” that would implement his programme (Murray Rothbard, at the Cato Institute that Koch founded, had urged the billionaire to study Lenin’s techniques and apply them to the libertarian cause). Between them, they began to develop a programme for changing the rules.

The papers Nancy Maclean discovered show that Buchanan saw stealth as crucial. He told his collaborators that “conspiratorial secrecy is at all times essential.” Instead of revealing their ultimate destination, they would proceed by incremental steps. For example, in seeking to destroy the Social Security system, they would claim to be saving it, arguing that it would fail without a series of radical “reforms”. (The same argument is used by those attacking the NHS over here). Gradually they would build a “counter-intelligentsia”, allied to a “vast network of political power” that would eventually become the new establishment.

Through the network of thinktanks that Koch and other billionaires have sponsored, through their transformation of the Republican Party, and the hundreds of millions they have poured into state congressional and judicial races, through the mass colonisation of Trump’s administration by members of this network and lethally effective campaigns against everything from public health to action on climate change, it would be fair to say that Buchanan’s vision is maturing in the USA.

But not just there. Reading this book felt like a demisting of the window through which I see British politics. The bonfire of regulations highlighted by the Grenfell Tower disaster, the destruction of state architecture through austerity, the budgeting rules, the dismantling of public services, tuition fees and the control of schools: all these measures follow Buchanan’s programme to the letter. I wonder how many people are aware that David Cameron’s free schools project originated with an attempt to hamper racial desegregation in the American South.

In one respect, Buchanan was right: there is an inherent conflict between what he called “economic freedom” and political liberty. Complete freedom for billionaires means poverty, insecurity, pollution and collapsing public services for everyone else. Because we will not vote for this, it can be delivered only through deception and authoritarian control. The choice we face is between unfettered capitalism and democracy. You cannot have both.

Buchanan’s programme amounts to a prescription for totalitarian capitalism. And his disciples have only begun to implement it. But at least, thanks to Maclean’s discoveries, we can now apprehend the agenda. One of the first rules of politics is know your enemy. We’re getting there.

http://www.monbiot.com

ooOOoo

I found it very difficult to write these closing thoughts; as is obvious as you read this sentence!

Looking up quotations online under the headings of fairness or equality brought up many that could have worked here. Yet they seemed too trite, too obvious, too remote from the reality of what Mr. Monbiot describes here today.

So let me leave you with this: US income inequality is the highest it’s been since 1928. (Source: Pew Research.) But worse than that, US wealth inequality is even greater than income inequality. (Source: Pew Research.) (I’m certain that this is not exclusive to the USA.)

That is wrong! Plain and Simple!

The implications of inequality

What on earth has inequality to do with dogs!

A fair question one might think. Because this blog is primarily about what we humans should be learning from our dogs. Well, I do see a connection, a message of learning for us. Stay with me for a while.

But first, here’s how I open up Chapter 18 Sharing in my book – Learning from Dogs.

Here’s a silly story that made me laugh when I first came across it.

A man in a casino walks past three men and a dog playing poker.
“Wow!” he says, “That’s a very clever dog.“
“He’s not that clever,” replies one of the other players.
“Every time he gets a good hand he wags his tail.“

This clever dog couldn’t hide his happiness and had to share it by wagging his tail. OK, it was a little bit of fictional fun but we all recognise that inherent quality in our dogs, how they share so much of themselves in such an easy and natural fashion.

Now if one was being pedantic one would say that sharing is not the same as equality. Yet I see them as two separate seats in life’s common carriage.

Many lovers of dogs know that when they lived a life in the wild, slowly evolving from the grey wolf, they replicated, naturally, the pack characteristics of wolves. As in the pack size was around 25 to 30 animals. Yes, there was a hierarchy in the pack but that really only presented itself in the status of three animals: the female ‘alpha’ dog; the male ‘beta’ dog; the ‘omega’ dog that could be of either gender. Ninety percent of the pack were animals on equal standing. If only that was how we humans lived.

A few days ago there was an essay published on The Conversation blogsite under the title of Why poverty is not a personal choice, but a reflection of society.

It opened with this photograph.

A homeless camp in Los Angeles, where homelessness has risen 23 percent in the past year, in May 2017. AP Photo/Richard Vogel

Let me emphasize this: “A homeless camp in Los Angeles, where homelessness has risen 23 percent in the past year, in May 2017.”

Here are two small extracts from that article:

Research Investigator of Psychiatry, Public Health, and Poverty Solutions, University of Michigan


As someone who studies poverty solutions and social and health inequalities, I am convinced by the academic literature that the biggest reason for poverty is how a society is structured. Without structural changes, it may be very difficult if not impossible to eliminate disparities and poverty.


About 13.5 percent of Americans are living in poverty. Many of these people do not have insurance, and efforts to help them gain insurance, be it through Medicaid or private insurance, have been stymied. Medicaid provides insurance for the disabled, people in nursing homes and the poor.

Four states recently asked the Centers for Medicare and Medicaid Services for permission to require Medicaid recipients in their states who are not disabled or elderly to work.

This request is reflective of the fact that many Americans believe that poverty is, by and large, the result of laziness, immorality and irresponsibility.

In yesterday’s post celebrating July 4th, where I shared that lovely picture sent to me by Neil Kelly from my Devon days, there was an exchange of comments between me and author Colin Chappell. Colin is the author of the book Who Said I Was Up For Adoption.

First, in response to Colin saying “That pic really says it all doesn’t it!”, I replied:

No question. Indeed, one might ‘read’ that picture at many levels. From the level of providing a smile for the day all the way through to a very profound observation on life itself.

Colin then replied to me:

I ‘ll go straight for the profound perspective! As I recently noted on another blog, I cannot recall anybody from history who became famous for their material possessions. In fact, I recently read an article written after an individual had surveyed a few thousand gravestones… and they drew the same conclusion. There was not a single epitaph which alluded to a material possession. Dogs know all that intuitively, so why does our superior (?) mind have trouble grasping such a simple perspective?

I then responded by saying that I thought it would make a fabulous introduction to today’s post. The heart of which I am now coming to.

Here in our local city, Grants Pass, there is a Freethinkers and Humanists group. They meet once a month. Jerry Reed from that group some time ago recommended to me reading the book The Spirit Level authored by Richard Wilkinson and Kate Pickett.

Jerry and I were exchanging emails in the last couple of days and he reminded me of that book.

There it was sitting on my bookshelf with a bookmark in at page 62. For reasons that escape me, I had become distracted and forgotten to stay with the book. Despite me being very interested in the proposition.

I said as much in an email reply to Jerry. He then replied to my email with this:

Hey, that happens to me a lot too, very frequently. So, I frequently settle for a video that might capture the essence of the book in considerably less time, while also maintaining my attention much better.

So, if you want a video about what Wilkinson has to say, here’s the one I recommend:

Here is that video. It is a little under 17 minutes long. Please watch it.

Published on Oct 24, 2011

http://www.ted.com We feel instinctively that societies with huge income gaps are somehow going wrong. Richard Wilkinson charts the hard data on economic inequality, and shows what gets worse when rich and poor are too far apart: real effects on health, lifespan, even such basic values as trust.

I haven’t got anything profound to say by way of closing today’s post.

But what I will say is that if our societies, especially in certain countries not a million miles from home, more closely emulated the sharing and caring that we see in our dogs then that really would be wonderful.

Image seen on this website: http://enlightendogs.com/about/testimonials-2/

Up, Up And Away?

It is very hard to avoid hyperbole when one speaks of global warming.

I am indebted to The Nation magazine, May 8/15 Issue, in which is included a feature article authored by Bill McKibben. My sub-heading is much of what Bill wrote in his first line.

It is hard to avoid hyperbole when you talk about global warming. It is, after all, the biggest 
thing humans have ever done, and by a very large margin.

A few sentences later, Bill offers this:

In the drought-stricken territories around the Sahara, we’ve helped kick off what The New York Times called “one of the biggest humanitarian disasters since World War II.” We’ve melted ice at the poles at a record pace, because our emissions trap extra heat from the sun that’s equivalent to 400,000 Hiroshima-size explosions a day.

Yet what scares me, scares me beyond comprehension, is the almost universal disregard being shown by Governments and those with power and influence right across the world to what in anyone’s language is the most pressing catastrophe heading down the tracks. Not next year; not tomorrow, but now!

Or in Mr. McKibben’s words, once more from that Nation article:

But as scientists have finally begun to realize, there’s nothing rational about the world we currently inhabit. We’re not having an argument about climate change, to be swayed by more studies and journal articles and symposia. That argument is long since won, but the fight is mostly lost—the fight about the money and power that’s kept us from taking action and that is now being used to shut down large parts of the scientific enterprise. As Trump budget chief Mick Mulvaney said in March, “We’re not spending money on that anymore. We consider that to be a waste of your money to go out and do that.” In a case this extreme, scientists have little choice but to be citizens as well. And given their credibility, it will matter: 76 percent of Americans trust scientists to act in the public interest, compared with 27 percent who think the same thing about elected officials.

Whatever your response is to what I have already presented, the one thing that I do know is that you have been aware of humanity’s effect on our atmosphere for many, many years. Indeed, Bill McKibben wrote his first book twenty-eight years ago!

His 1989 book The End of Nature is regarded as the first book for a general audience about climate change, and has appeared in 24 languages; he’s gone on to write a dozen more books.

But I would be the first to acknowledge that back in 1989 while I did become aware of Bill McKibben and did purchase and read that book of his, I didn’t see the effects he prophesied. In addition, I didn’t understand the mechanisms that would bring those effects into place.

Now, today, it’s very difficult to deny that global weather systems are behaving in ways that most do not understand albeit we do understand how those weather changes are affecting our lives.

One person who did, and still does even more, understand the physics involved in our changing weather, is Patrice Ayme. For some nineteen years after Bill McKibben’s first book, Patrice published a post on his blog. I have been following Patrice’s blog for some years and while I would be the first to stick my hand in the air and declare that some of his posts are a little beyond me, there’s no question of the integrity of his writings and his bravery in spelling out the truth of these present times. (OK, the truth a la Monsieur Aymes but I would place a decent bet of PA being closer to the core truth of many issues than Joe Public.)

I am indebted to Patrice for granting me permission to republish that post. Please read it. Don’t be put off by terms that may not be familiar to you. Read it to the end – the message is very clear.

ooOOoo

Applying Equipartition Of Energy To Climate Change PREDICTS WILD WEATHER.

By Patrice Ayme, March 8th, 2008.

Lately, the world weather has been especially perplexing, influenced by the cold ocean temperatures of a La Niña current in the equatorial Pacific. For Earth’s land areas, 2007 was the warmest year on record.

This year, record cold is more the norm. Global land-surface temperatures so far are below the 20th-century mean for the first time since 1982, according to the National Climatic Data Center. Last month in China, snowstorms stranded millions of people, while in Mumbai, officials reported the coldest day in 46 years.

Yet, England basked in its fourth-warmest January since 1914, the British Met Office reported. The crocus and narcissus at the U.K.’s Royal Botanical Gardens at Kew flowered a week earlier than last year — 11 days ahead of their average for the decade and weeks ahead of their pattern in the 1980s. In Prague, New Year’s Day was the warmest since 1775.

“It is difficult to judge the significance of what we are seeing this year,” said Kew researcher Sandra Bell. “Is it a glitch or is it the beginning of something more sinister and alarming?”” (Robert Lee Hotz, Wall Street Journal, March 8, 2008).

Many scientists have pondered this question, as if they did not know the answer, but it is a straightforward application of thermodynamics.

A basic theorem of equilibrium thermodynamics, the EQUIPARTITION OF ENERGY theorem, says that the same amount of energy should be present in all degrees of freedom into which energy can spill.

(How does one demonstrate this theorem? Basically, heat is agitation, kinetic energy at the scale of atoms and molecules. This agitation can spill in a more organized manner, in great ensembles, such as vast low and high pressure systems, or large scale dynamics. See the note on entropy and negative temperatures.)

In the case of meteorology, this implies, oversimplifying a bit, that only one-third of the energy should go into heat (and everybody focuses on the augmentation of temperature). Now, of course, since the energy enters the system as heat, non equilibrium thermodynamics imposes more than one-third of the energy will be heat.

As time goes by, though, the other two degrees of freedom, potential energy (represented as the geometry of gradients of pressures, high and low pressure systems, hurricanes) and dynamics (wind speed and vast movements of air masses of varying temperatures and/or pressure; and the same for sea currents) will also store energy.

Thus the new heat created in the lower atmosphere by the increased CO2 greenhouse will be transformed in all sorts of weather weirdness: heat, cold, high and low pressures, wind, and big moves of big things. Big things such as vast re-arrangements of low and high pressure systems, as observed in the Northern Hemisphere, or the re-arrangement of sea currents as apparently also observed, and certainly as it is expected. Since it happened in the past (flash ice age of the Younger Dryas over Europe, 18,000 years ago).

As cold and warm air masses get thrown about, the variability of temperatures will augment all over.

In other words, record snow and cold in the Alps and record warmth simultaneously in England is a manifestation of the equipartition of energy theorem applied to the greenhouse warming we are experiencing. It is not mysterious at all, and brutal variations such as these, including sudden cold episodes, are to be expected, as more and more energy gets stuffed in the planetary climate, and yanks it away from its previous equilibrium.

Wind speed augmentations have already had a spectacular effect: by shaking the waters of the Austral ocean with increasingly violent waves, carbon dioxyde is being removed as if out of a shaken carbonated drink. Thus the Austral ocean is now a net emitter of CO2 (other oceans absorb CO2, and transform it into carbonic acid).

Hence the observed variations are the beginning of something more sinister and alarming. Climate change is changing speed. Up, up, and away.

Patrice Ayme
Patriceayme.com
Patriceayme.wordpress.com.

Note on entropy: Some may object that transforming heat into collective behavior of vast masses of air or sea violates the Second Law Of Thermodynamics, namely that entropy augments always, in any natural process. Well, first of all, the genius of the genus Homo, not to say of all of life itself, rests on local violations of the Second Law. Secondly, the most recent physics recognizes that fundamental considerations allow systems where increased energy lead to increased order (such a system is said to be in a negative temperature state).

Even more revealingly, a massive greenhouse on planet Earth would lead, as happened in the past, to a much more uniform heat, all around the planet, that is, a more ordered state. Meanwhile, the transition to the present order of a temperate climate to the completely different order of an over-heated Earth will bring complete disorder, as observed.

ooOOoo

Going to leave you with a picture taken from weather.com

An emaciated polar bear is seen on a small sheet of ice in this image taken in August in Svalbard, north of mainland Norway. (Kerstin Langenberger)

Please, please, please: make a difference! Environmentally, domestically and politically, please make a difference.

Economic marginalisation.

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.

So returning to economics.

Quite recently there was an essay published on The Conversation blogsite written by Professor Andrew Cumbers of the University of Glasgow.

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.

Here is Professor Cumbers’s essay as published by The Conversation blogsite and republished here within the terms of The Conversation.

ooOOoo

New index of economic marginalisation helps explain Trump, Brexit and alt.right

January 12, 2017 10.03am EST

Author:
image-20170111-4585-12s1o8d
“My fellow disenfranchised Americans …” EPA

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.

The index

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.

 Economic Democracy Index, figures from 2013. Andrew Cumbers
Economic Democracy Index, figures from 2013. Andrew Cumbers

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 activists in Budapest, Hungary, February 2016. EPA
Far right activists in Budapest, Hungary, February 2016. EPA

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.

ooOOoo

 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.

Oh, and we will be back to dogs tomorrow! 😉

Private power.

The power of corporations must never be permitted to override democratic choice.

The main thrust in yesterday’s post was a plea by , 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.

ooOOoo

The Golden Arches Theory of Decline

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.

Corporations, released from democratic constraints, drive us towards climate breakdown, an urgent threat to global peace. McDonald’s has done more than its fair share: beef production is among the most powerful causes of climate change.

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.

http://www.monbiot.com

ooOOoo

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.

It’s as simple as that!

Brexit – now what happens?

Here’s what is going to happen.

In the run-up to the EU referendum by the UK this Brit was tempted several times to offer an opinion on what I thought was the best decision. But I resisted. (I was qualified to vote as an overseas voter and had voted for Remain.)

My resistance was because it seemed inappropriate to pass any form of opinion before the die had been cast, so to speak. I hadn’t been living in the country for over eight years and, inevitably, was out of touch with feelings.

The Conversation blogsite yesterday had a series of articles on the aftermath of the Brexit decision but the one that seemed most useful to share with you all was an article by Gavin Barrett,  a Professor of European Constitutional and Economic Law at University College in Dublin. For many readers, including me, both within and without the UK this seemed a valuable primer.

ooOOoo

Britain votes to leave the EU, Cameron quits – here’s what happens next

June 23, 2016 11.41pm EDT

image-20160624-30267-wvhvty
Leave ahead. Anthony Devlin / PA Wire

Author

Interconnections Three

Is there a case for optimism? You bet there is!

To be honest, at a personal level I just don’t know the answer to that question. It seems to depend on the mood that Jean and I are in at any particular time. All I can fall back on is that well-used saying from me: “Never underestimate the power of unintended consequences”.

In other words, we shouldn’t underestimate the strength of millions of good people when their demands start reaching out to those in power. (And whatever your reaction to this post, please don’t miss watching the inspirational Al Gore speech towards the end of this post.)

Recently over on the Grist site there was an article about the critical changes that each and every one of us should be making. I want to share it with you in full.

ooOOoo

Want to fight climate change? Here are the 7 critical life changes you should make

We live in interesting times!

The impending ‘banquet of consequences’.

The Welcome page of this blog includes this:

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[1]. The founder of the company, David Kauders, published[2] 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[3] 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[4] that, “the inequality gap is toxic, dangerous.” Then there was the news in 2015[5] 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!


[1] My relationship was terminated when I became a resident of the United Staes in 2011.
[2] 2011, Sparkling Books.
[3] http://www.usgovernmentdebt.us offers on the 14th November, 2014 that the Federal Debt of the United States was about $18,006,100,032,000.
[4] In his book Capital in the Twenty-First Century (Belknap Press, 2014).
[5] http://www.marketwatch.com/story/capitalism-is-killing-americas-morals-our-future-2015-05-22.

Yes, these are indeed very interesting times!

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.

ooOOoo

Satyajit Das: Age of Stagnation or Something Worse?

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.

One Offs

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.

Reckoning Postponed

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.

ooOOoo

henrifredericamiel148210Very interesting times indeed!

In defence of sovereignty and democracy.

The challenges facing the European Union ripple out across the whole of the free world.

I note that this is the second Friday where there is an abrupt change from the run of posts during the previous few days. For last Friday I republished a George Monbiot article on Rigging the Market and today there is another Monbiot article that I want to share with you; shared with you with the kind permission of Mr. Monbiot.

Unlike last Friday’s Monbiot article that clearly had global implications, at first sight this article about the European Union has no relevance to those of us not living with EU boundaries. But that would be wrong. For the importance of protecting a country’s sovereignty and the democratic processes within that country is supreme across all democratically elected governments.

ooOOoo

The Lesser Evil