For the third day running, transport and communications in the south of Peru have been paralized owing to a blockade of the Panamerican highway between Lima and Arequipa by approximately 6,000 "informal" miners protesting against government decrees declaring their activities illegal.
My personal stake in this issue is that I was supposed to travel to Lima tonight and had already bought my ticket. This can be postponed and is no big deal, supposing the strike is lifted in the next couple of days. Over time and repeated visits to Peru, I've come to understand that holding strikes and blocking roads can be an understandable, even necessary, response to the inability of groups of citizens to have their legitimate issues considered through normal institutional, democratic channels. However, such strikes and the way they are resolved also represent the inability of the State to exert authority (except in disastrously heavy-handed ways; viz, the tragedy at Bagua in 2009) and to act as a just, independent guarantor of the "public good". Rather, it seems that the State is merely a passive conduit for conflicting private interest, with the most powerful at any one time prevailing. While the government gave the Conga mining project conditional approval
in spite of what seems to be the opposition of most of Cajamarca, here
the Prime Minister hurriedly offered to modify its edicts to give the
miners two more years to "formalize" their activities -- still not good
enough for the miners to lift their strike.
The arguments behind the current miners' strike are considerably more dubious than in some other cases where citizen groups have opposed the (perceived) loss of their territory or livelihoods. Informal mining is undertaken by between 500,000 (official sources) and 1 millon (the miners' estimate) Peruvians, so is a significant source of employment and income. However, the uncontrolled use of mercury is severely damaging to the environment and has resulted in significant pollution of waterways in the areas where it is prevalent, including some leading into Lake Titicaca. It's likely that the majority of the population in districts affected by informal mining would not support its continuation. In addition, the untaxed income from informal mining is rather high, with a gram of gold (a conservative minimum collected per day) worth S/. 70, more than what is earned by the majority of workers in farming, commerce or services whose livelihoods are currently being put on hold.
The surprise manner in which the highways were seized meant that many vehicles were on the road and have been trapped at the various blockade points. Around 2,500 bus passengers are stuck between Kilometres 590 and 640 on the Panamericana and are suffering hunger, thirst, heat and cold. Already one elderly man has died from a heart attack due to the long distance he had to walk from the blockade in the sun. La Republica reports that the mayor of the district of Ocoña has declared a state of emergency, with agriculture and commerce paralized and a growing shortage of food, medicines, gas and petrol.
With tensions running high on all sides, tomorrow will surely produce some kind of (hopefully peaceful) solution.
Showing posts with label Politics. Show all posts
Showing posts with label Politics. Show all posts
Friday, May 11, 2012
Tuesday, March 20, 2012
The Chinese Factory
One of the interesting things that appeared early in the new year was this report from the New York Times on the reasons Apple makes its products in China. (Some further background: this long report on working conditions in the factories of Apple's suppliers, and this follow-up report).
The NYT article and some discussions of it have concluded that making things in China is not about worker wages, but about workforce flexibility, readiness and 'appropriate' skill levels:
“[Foxconn] could hire 3,000 people overnight,” said Jennifer Rigoni, who was Apple’s worldwide supply demand manager until 2010, but declined to discuss specifics of her work. “What U.S. plant can find 3,000 people overnight and convince them to live in dorms?”
This is disingenuous. The reason you can have an army of workers practically on site ready to leap out of bed at midnight and start making i-Pads is because they'll put up with it for what they get paid. In the end, this comes back to cost. There are actually plenty of Americans prepared to live in barracks and jump to attention when needed. However, I'm guessing that Apple or other companies wouldn't be prepared to offer the same pay, benefits and pensions that one receives in the military.
It's also worth deconstructing the ahistorical statement that "if it weren't for the factory jobs, they'd all be unemployed and even poorer" This [long] piece by John Bellamy Foster and Robert W McChesney on global stagnation and China argues that the "floating population" which does the majority of the most menial and hazardous work in Chinese factories was created by a complex process of proletarianisation during the post-Mao reform period, including the disestablishment of state-owned enterprises and (sometimes illegal) land privatization. The authors argue that this has created a reserve army of labour and enabled superexplotation. They cite figures showing rapidly increasing inequality in China and a steep drop in consumption, and particularly wages, as a share of GDP.
Then, just to complicate matters, you can read this news item on an announced wage rise by Foxconn and evolving labour market dynamics in China, with people now apparently more reluctant to migrate to the coast, forcing factories to relocate to the interior; and the Chinese administration desperate to increase the GDP share of consumption to counteract depressed export markets.
Could it be that the theorised capitalist development pathway of modernisation, labour absorbtion, and Kuznet's U-shaped curves is actually happening in China? Will the contradictions of capitalist production necessitate a Fordist solution? It's worth noting that the Foxconn factory workers' reported new wage of $400 per month is about 50 percent more than the minimum wage in Peru, which for many workers in the formal economy is the standard wage. Will China become a middle class country even more rapidly than its southeast Asian neighbours? Will low-wage manufacturing eventually move to non-oil producing African countries, repeating the cycle?
Of course, no one knows. But one thing is for sure: in earlier cycles of capitalist development, improvement n wages, working conditions and labour rights didn't just happen automatically: they had to be fought for in distinct political struggles. So, it's always relevant to do what is possible to support these struggles, even if it is just putting consumer pressure on companies like Apple.
The NYT article and some discussions of it have concluded that making things in China is not about worker wages, but about workforce flexibility, readiness and 'appropriate' skill levels:
“[Foxconn] could hire 3,000 people overnight,” said Jennifer Rigoni, who was Apple’s worldwide supply demand manager until 2010, but declined to discuss specifics of her work. “What U.S. plant can find 3,000 people overnight and convince them to live in dorms?”
This is disingenuous. The reason you can have an army of workers practically on site ready to leap out of bed at midnight and start making i-Pads is because they'll put up with it for what they get paid. In the end, this comes back to cost. There are actually plenty of Americans prepared to live in barracks and jump to attention when needed. However, I'm guessing that Apple or other companies wouldn't be prepared to offer the same pay, benefits and pensions that one receives in the military.
It's also worth deconstructing the ahistorical statement that "if it weren't for the factory jobs, they'd all be unemployed and even poorer" This [long] piece by John Bellamy Foster and Robert W McChesney on global stagnation and China argues that the "floating population" which does the majority of the most menial and hazardous work in Chinese factories was created by a complex process of proletarianisation during the post-Mao reform period, including the disestablishment of state-owned enterprises and (sometimes illegal) land privatization. The authors argue that this has created a reserve army of labour and enabled superexplotation. They cite figures showing rapidly increasing inequality in China and a steep drop in consumption, and particularly wages, as a share of GDP.
Then, just to complicate matters, you can read this news item on an announced wage rise by Foxconn and evolving labour market dynamics in China, with people now apparently more reluctant to migrate to the coast, forcing factories to relocate to the interior; and the Chinese administration desperate to increase the GDP share of consumption to counteract depressed export markets.
Could it be that the theorised capitalist development pathway of modernisation, labour absorbtion, and Kuznet's U-shaped curves is actually happening in China? Will the contradictions of capitalist production necessitate a Fordist solution? It's worth noting that the Foxconn factory workers' reported new wage of $400 per month is about 50 percent more than the minimum wage in Peru, which for many workers in the formal economy is the standard wage. Will China become a middle class country even more rapidly than its southeast Asian neighbours? Will low-wage manufacturing eventually move to non-oil producing African countries, repeating the cycle?
Of course, no one knows. But one thing is for sure: in earlier cycles of capitalist development, improvement n wages, working conditions and labour rights didn't just happen automatically: they had to be fought for in distinct political struggles. So, it's always relevant to do what is possible to support these struggles, even if it is just putting consumer pressure on companies like Apple.
Thursday, March 15, 2012
Thinking Alike
I doubt that Danyl McLachlan reads this blog let alone takes any inspiration from it. Most likely, the similarity of his latest satire to the analogy at the end of my previous post is a case of independently arriving at the same view of the relationship between the government's stated priorities and what it is actually doing.
Sunday, March 11, 2012
Joining the Dots in New Zealand
I'll outsource comment on the latest welfare reform news to Gordon Campbell. who once again makes the point that:
...welfare is not the root cause of the problem. Blaming the welfare system for the current existence of poverty is like seeing the incidence of Third World diseases in this country, and blaming it on the existence of hospitals. Similarly, the social safety net does not cause people to live in poverty and be out of work – it is an effect, not a cause. And the current state of the welfare rolls is precisely what you would expect to find when the jobs market is barely off its sick bed after the global recession.
Also, Danyl Mclachlan, who puts things into context with posts and home made charts here, here and here
Meanwhile, ongoing cuts to the public service are now seeing some push back, while so far they haven't really even achieved their stated objective.
The welfare reforms and public service cuts have this much in common: they have been presented as being about economics, but really they are about ideology. As Campbell and many other commentators have noted, increased burden on the welfare system is a result of economic conditions, not a cause. Similarly, so-called reforms of the public service bear little relation to any of the big challenges facing New Zealand.
The claim that it's about "moving resources from the back office to the front line" is misleading. (It would be interesting to do a discourse analysis of what is actually being signified by "back office" and "front line", but that's for another post.) The main point is, there just aren't that many resources to move to the front line. Public servants are a small part of the workforce, and the bureaucracy makes up a tiny fraction of the costs of public services. In another moment, I'll try to put together a summary of this book chapter on the history of the public sector workforce in New Zealand.
It's not very surprising that few savings have been achieved through the job cuts to date, since, as I've argued before, you could disestablish the entire bureaucracy and all its functions, and you still wouldn't save very much.
A friend of mine who is a self-styled centrist argues that it's a question of swings and roundabouts. Centre-left governments, he says, will by inclination tend to expand government functions, implementing ambitious new programmes and being reluctant to diestablish any existing ones. Centre-right governments will tend to be more sceptical, trimming and making efficiencies. If you accept that argument, you might expect a rightist government to maybe be a bit stingier with their departments' and ministries' budgets. They might reorganize a bit and make some changes where there's evidence the benefits will outweigh the costs. You wouldn't, however, expect them to respond to a range of serious economic, social and environmental challenges by making the elimination of public service jobs one of their most important policy platforms.
Then, it's hard to find rational arguments for beating up on welfare recipients during a recession, either.
I've been trying to come up with an analogy for this approach. The best I could do so far is that it's like repsonding to the discovery that your house has some serious leaks by deciding to clean out your cupboards.
...welfare is not the root cause of the problem. Blaming the welfare system for the current existence of poverty is like seeing the incidence of Third World diseases in this country, and blaming it on the existence of hospitals. Similarly, the social safety net does not cause people to live in poverty and be out of work – it is an effect, not a cause. And the current state of the welfare rolls is precisely what you would expect to find when the jobs market is barely off its sick bed after the global recession.
Also, Danyl Mclachlan, who puts things into context with posts and home made charts here, here and here
Meanwhile, ongoing cuts to the public service are now seeing some push back, while so far they haven't really even achieved their stated objective.
The welfare reforms and public service cuts have this much in common: they have been presented as being about economics, but really they are about ideology. As Campbell and many other commentators have noted, increased burden on the welfare system is a result of economic conditions, not a cause. Similarly, so-called reforms of the public service bear little relation to any of the big challenges facing New Zealand.
The claim that it's about "moving resources from the back office to the front line" is misleading. (It would be interesting to do a discourse analysis of what is actually being signified by "back office" and "front line", but that's for another post.) The main point is, there just aren't that many resources to move to the front line. Public servants are a small part of the workforce, and the bureaucracy makes up a tiny fraction of the costs of public services. In another moment, I'll try to put together a summary of this book chapter on the history of the public sector workforce in New Zealand.
It's not very surprising that few savings have been achieved through the job cuts to date, since, as I've argued before, you could disestablish the entire bureaucracy and all its functions, and you still wouldn't save very much.
A friend of mine who is a self-styled centrist argues that it's a question of swings and roundabouts. Centre-left governments, he says, will by inclination tend to expand government functions, implementing ambitious new programmes and being reluctant to diestablish any existing ones. Centre-right governments will tend to be more sceptical, trimming and making efficiencies. If you accept that argument, you might expect a rightist government to maybe be a bit stingier with their departments' and ministries' budgets. They might reorganize a bit and make some changes where there's evidence the benefits will outweigh the costs. You wouldn't, however, expect them to respond to a range of serious economic, social and environmental challenges by making the elimination of public service jobs one of their most important policy platforms.
Then, it's hard to find rational arguments for beating up on welfare recipients during a recession, either.
I've been trying to come up with an analogy for this approach. The best I could do so far is that it's like repsonding to the discovery that your house has some serious leaks by deciding to clean out your cupboards.
Friday, March 02, 2012
New Blog Reading
My new favourite blog is The Realignment Project, which presents a progressive, social democatic vision (In the US context) that is both broad and detailed. Its co-founders are Steven Attewell and Daraka Larimore-Hall, two PhD students at the University of California Santa Barbara who are also active in the Democractic Party.
Their discussion of inequality is a good starting point, but I particularly like their posts on the politics or urban design and transport, such as High-Speed Rail in an Age of Ideology and Public Sector Aesthetics - Why They Matter.
Their discussion of inequality is a good starting point, but I particularly like their posts on the politics or urban design and transport, such as High-Speed Rail in an Age of Ideology and Public Sector Aesthetics - Why They Matter.
Wednesday, February 22, 2012
The Continuance of History
A really useful summary piece on the growing interest by mainstream thinkers in burgeoning inequality and the contradictions of global capitalism. There are some good contributions in the comments section as well.
Saturday, February 18, 2012
Inequality and Social Values
An interesting debate has been playing out in the wake of Charles Murray's recent book which laments the decline of traditional values in white working class Americans over the past 30 years. Although Murray apparently has no real analysis of howor why this has happened, the answer is, naturally, reduced welfare entitlements.
I recommend reading this detailed and careful take-down by prominent conservative and former George W Bush speechwriter David Frum. Frum is especially critical of Murray's failure to take seriously the links between social changes and declining economic opportunities for the working class.
New York Times columnist David Brooks isn't happy with Murray's critics, who he accuses of "crude 1970s economic determinism". Brooks cites what he claims is overlooked sociological and psychological research showing how the environment in which people live and grow up create feedback loops which affect their behaviour.
I'm far from being a dogmatic materialist (although I believe there's usually a materialist story to be told). I think that social and cultural forces have real effects and are not just the epiphenomena of economic struggles. In fact, even most people who openly call themselves Marxists accept something similar these days. You can agree that sociological and psychological factors are important and still insist on seeing them in the context of change in the wider political economy.
So, you might think that Brooks isn't really disagreeing with anyone. But in one sentence he recognizes that "no matter how social disorganization got started, once it starts, it takes on a momentum of its own. People who grow up in disrupted communities are more likely to lead disrupted lives as adults, magnifying disorder from one generation to the next". A couple of paragraphs later he's saying: "I don’t care how many factory jobs have been lost, it still doesn’t make sense to drop out of high school." In other words, he would really like to put the blame on "poor decisions" and to join Murray in telling the working class to buck themselves up.
What's at work here is what I call the conservative's individual/group conflation. Conservatives like to point to examples of people pulling themselves up by their bootstraps as evidence that environment is not destiny. They accuse liberals (in the American sense) of belittling personal responsibility and they stress that with discipline and determination anyone can beat the odds. Yet most thinking liberals agree that personal responsibility is important and recognise that people are able to respond creatively to their circumstances, at an individual level. What they doubt is that a whole group which is systematically disdvantaged can all beat the odds -- otherwise they wouldn't be "odds". Disadvantaged groups will, on average, have poorer outcomes. And economic circumstances -- both absolute and relative -- are a pretty big part of what determines disadvantage.
As Frum notes, if you're honestly interested in a loss of social cohesion from 1960-2010, you also have to ask why various favoured indicators of "values" improved from 1910-1960, during a period of growing economic equality.
I recommend reading this detailed and careful take-down by prominent conservative and former George W Bush speechwriter David Frum. Frum is especially critical of Murray's failure to take seriously the links between social changes and declining economic opportunities for the working class.
New York Times columnist David Brooks isn't happy with Murray's critics, who he accuses of "crude 1970s economic determinism". Brooks cites what he claims is overlooked sociological and psychological research showing how the environment in which people live and grow up create feedback loops which affect their behaviour.
I'm far from being a dogmatic materialist (although I believe there's usually a materialist story to be told). I think that social and cultural forces have real effects and are not just the epiphenomena of economic struggles. In fact, even most people who openly call themselves Marxists accept something similar these days. You can agree that sociological and psychological factors are important and still insist on seeing them in the context of change in the wider political economy.
So, you might think that Brooks isn't really disagreeing with anyone. But in one sentence he recognizes that "no matter how social disorganization got started, once it starts, it takes on a momentum of its own. People who grow up in disrupted communities are more likely to lead disrupted lives as adults, magnifying disorder from one generation to the next". A couple of paragraphs later he's saying: "I don’t care how many factory jobs have been lost, it still doesn’t make sense to drop out of high school." In other words, he would really like to put the blame on "poor decisions" and to join Murray in telling the working class to buck themselves up.
What's at work here is what I call the conservative's individual/group conflation. Conservatives like to point to examples of people pulling themselves up by their bootstraps as evidence that environment is not destiny. They accuse liberals (in the American sense) of belittling personal responsibility and they stress that with discipline and determination anyone can beat the odds. Yet most thinking liberals agree that personal responsibility is important and recognise that people are able to respond creatively to their circumstances, at an individual level. What they doubt is that a whole group which is systematically disdvantaged can all beat the odds -- otherwise they wouldn't be "odds". Disadvantaged groups will, on average, have poorer outcomes. And economic circumstances -- both absolute and relative -- are a pretty big part of what determines disadvantage.
As Frum notes, if you're honestly interested in a loss of social cohesion from 1960-2010, you also have to ask why various favoured indicators of "values" improved from 1910-1960, during a period of growing economic equality.
Sunday, December 04, 2011
Just Follow Orders
Here's something that's worthy of support for a number of reasons: Law Enforcement Against Prohibition, an organisation of US law enforcement empoyees opposed to the war on drugs.
The opening section of the article tells the story of Bryan Gonzalez, a Border Control agent who lost his job after expressing opinions in favour of decriminalisation to a fellow official. His termination letter said he held “personal views that were contrary to core characteristics of Border Patrol Agents, which are patriotism, dedication and esprit de corps.”
Translation: "What we expect from you is blind loyalty, measured by the extent that you support obvious stupidity"
The opening section of the article tells the story of Bryan Gonzalez, a Border Control agent who lost his job after expressing opinions in favour of decriminalisation to a fellow official. His termination letter said he held “personal views that were contrary to core characteristics of Border Patrol Agents, which are patriotism, dedication and esprit de corps.”
Translation: "What we expect from you is blind loyalty, measured by the extent that you support obvious stupidity"
Wednesday, November 30, 2011
Election Reflections
In the end it was about half way between the worst-case and best-case scenarios. Probably towards the disappointing end overall, but once the special votes are counted there's even a slim possibility that the Maori Party may end up holding the balance of power.
The Guardian's sports pages have taken to running a post format called "five things we learned from..." after a round of matches. In that spirit, here's some thoughts on the elections in New Zealand.
People cared less this time (but why?)
After special votes are included, participation of registered voters will be something like 72 percent, compared to 80 percent in 2005 and 79 percent in 2008. That's apparently the lowest turnout since the 1880s. There is plenty of speculation about the reasons for this relative apathy. Hopefully, some of the questions will be answered by some basic research. Some of it could be done fairly easily with summary data from the Census and Electoral Roll. Were the non-voters and the non-registered mainly young people, first time voters, those in particular geographical locations or socioeconomic strata? Or were they spread fairly evenly through demographic groups and classes?
Other questions would require more detailed research with a sample group. Were those who stayed away complacent National supporters? Left-leaning voters who felt it was a foregone conclusion? People generally happy with the state of things? Or the marginalised who felt that no party or politican spoke for them?
The polls were wrong (or were they...?)
A series of polls in the last week of the campaign gave National an average 52 percent of the vote. That was at least 4 points too high, and nobody picked the surge of support to NZ First (except perhaps the last Roy Morgan poll). On the other hand, the polls average was pretty close to the share gained by Labour, the Greens, ACT and the Maori Party. How badly wrong you think the polls were kind of depends onyour interpretation of the result. How much of the shift to NZ First was from strategic voting by Labour and Greens supporters wanting to get another opposition party over the threshold (worse for the polls); and how much was from soft National supporters having last-minute qualms about an absolute majority (which would suggest the polls were closer to being accurate).
Someone needs to make the Winston Peters movie
This would be an epic Godfather-esque tale of vengeance. Returning from three years in the wilderness after being hounded out by a broad coalition of media and politicians, Peters has once again outmanouvered his enemies. I'd love to be a fly on the wall to see the respective expressions if Peters and Rodney Hide pass in a corridor somewhere.
The liberal right continues to flirt with oxymoron status
The long journey of ACT from a right-libertarian vehicle to a party for angry white men reached tis concluson with the vesting of its electoral hopes in noted social conservative John Banks, who during the campaign smacked down his nominal leader's musings on cannabis law reform. In the aftermath of an election in which the party vote shrank to around 1 percent, Banks has been openly musing about merging ACT with the paleoconservative New Zealand Conservative Party.
My political education has advanced considerably since then, but what I wrote in a post six years ago still holds:
...across-the-board libertarian principles only seem to survive in universities, pubs and other theoretical settings...there's a mysterious process by which those who have to actually make policy see their social liberalism...rapidly eroded.
I have a partial theory on why right liberalism tends to collapse under the weight of its own contradictions. The profound inequalities created or exacerbated by right-wing economics in the real world ultimately have to be explained by blaming their victims. This leads inexorably back to tough-on-crime social conservatism, until this overshadows everything else.
Some people really don't want to let FPP go
I have been astounded by the range of people, from Guyon Espiner on election night to John Key afterwards, who expressed puzzlement and dismay that after such a "resounding victory" by National, they only had a narrow majority. Either these people don't understand MMP, or, more likely, they prefer not to. Forty-eight percent is indeed a high number for any individual party, but nearly all of the remaining votes went to parties that broadly oppose National's programme (including, in theory, one of their likely coalition partners, the Maori party). Under a proportional system (news flash: we had a referndum on this and decided to keep it), the biggest player doesn't get to wield absolute power.
Some of this attitude is also coming from people on the left worried about Labor's position. Some sites have shown maps of New Zealand by electorate with only a few red dots in a "sea of blue". This does not refer to the electorate results (Labour actually won 21 electorates, with a couple of others still in play), but to the party vote in each electorate. There have been laments that even in strongholds in Wellington, Christchurch and Dunedin, Labour "lost" the party vote to National. However, in most of those places, the Labour and Green party votes together easily exceeded National's. Granted the current high-tide position of National, the results need to be interpreted in the context of two strong parties on the left, one on the right.
More on that in another post.
The Guardian's sports pages have taken to running a post format called "five things we learned from..." after a round of matches. In that spirit, here's some thoughts on the elections in New Zealand.
People cared less this time (but why?)
After special votes are included, participation of registered voters will be something like 72 percent, compared to 80 percent in 2005 and 79 percent in 2008. That's apparently the lowest turnout since the 1880s. There is plenty of speculation about the reasons for this relative apathy. Hopefully, some of the questions will be answered by some basic research. Some of it could be done fairly easily with summary data from the Census and Electoral Roll. Were the non-voters and the non-registered mainly young people, first time voters, those in particular geographical locations or socioeconomic strata? Or were they spread fairly evenly through demographic groups and classes?
Other questions would require more detailed research with a sample group. Were those who stayed away complacent National supporters? Left-leaning voters who felt it was a foregone conclusion? People generally happy with the state of things? Or the marginalised who felt that no party or politican spoke for them?
The polls were wrong (or were they...?)
A series of polls in the last week of the campaign gave National an average 52 percent of the vote. That was at least 4 points too high, and nobody picked the surge of support to NZ First (except perhaps the last Roy Morgan poll). On the other hand, the polls average was pretty close to the share gained by Labour, the Greens, ACT and the Maori Party. How badly wrong you think the polls were kind of depends onyour interpretation of the result. How much of the shift to NZ First was from strategic voting by Labour and Greens supporters wanting to get another opposition party over the threshold (worse for the polls); and how much was from soft National supporters having last-minute qualms about an absolute majority (which would suggest the polls were closer to being accurate).
Someone needs to make the Winston Peters movie
This would be an epic Godfather-esque tale of vengeance. Returning from three years in the wilderness after being hounded out by a broad coalition of media and politicians, Peters has once again outmanouvered his enemies. I'd love to be a fly on the wall to see the respective expressions if Peters and Rodney Hide pass in a corridor somewhere.
The liberal right continues to flirt with oxymoron status
The long journey of ACT from a right-libertarian vehicle to a party for angry white men reached tis concluson with the vesting of its electoral hopes in noted social conservative John Banks, who during the campaign smacked down his nominal leader's musings on cannabis law reform. In the aftermath of an election in which the party vote shrank to around 1 percent, Banks has been openly musing about merging ACT with the paleoconservative New Zealand Conservative Party.
My political education has advanced considerably since then, but what I wrote in a post six years ago still holds:
...across-the-board libertarian principles only seem to survive in universities, pubs and other theoretical settings...there's a mysterious process by which those who have to actually make policy see their social liberalism...rapidly eroded.
I have a partial theory on why right liberalism tends to collapse under the weight of its own contradictions. The profound inequalities created or exacerbated by right-wing economics in the real world ultimately have to be explained by blaming their victims. This leads inexorably back to tough-on-crime social conservatism, until this overshadows everything else.
Some people really don't want to let FPP go
I have been astounded by the range of people, from Guyon Espiner on election night to John Key afterwards, who expressed puzzlement and dismay that after such a "resounding victory" by National, they only had a narrow majority. Either these people don't understand MMP, or, more likely, they prefer not to. Forty-eight percent is indeed a high number for any individual party, but nearly all of the remaining votes went to parties that broadly oppose National's programme (including, in theory, one of their likely coalition partners, the Maori party). Under a proportional system (news flash: we had a referndum on this and decided to keep it), the biggest player doesn't get to wield absolute power.
Some of this attitude is also coming from people on the left worried about Labor's position. Some sites have shown maps of New Zealand by electorate with only a few red dots in a "sea of blue". This does not refer to the electorate results (Labour actually won 21 electorates, with a couple of others still in play), but to the party vote in each electorate. There have been laments that even in strongholds in Wellington, Christchurch and Dunedin, Labour "lost" the party vote to National. However, in most of those places, the Labour and Green party votes together easily exceeded National's. Granted the current high-tide position of National, the results need to be interpreted in the context of two strong parties on the left, one on the right.
More on that in another post.
Friday, November 25, 2011
What's At Stake in the New Zealand Election
It should come as no surprise to anyone that I'd prefer to see some kind of left-liberal governmment in New Zealand. In an ideal world, it would:
1) Pursue energy, transport, and environmental policies that not only make New Zealand a more pleasant place to live in, but also help prepare for the inexorable increase in the price of oil over the coming years
2) Make a serious and constant commitment to reducing inequalities, as far as necessary through taxation and social services, but as much as possible through employment and wages
3) Wrestle with how best to manage New Zealand's place in the international economy, exploring different options but maintaining 2) as a constant point of reference
4) Explain its policies in a way that respects the public's intelligence. Be prepared to change its mind and admit it was wrong. Respect the various democratic processes and make more information publicly available.*
But that's not going to happen. Instead, tomorrow's elections offer only best and worst-case scenarios among a generally unappetising range of possible outcomes.
Best case scenario
National fails to win an outright majority. ACT and United Future lose their respective electorate seats. National forms a minority government and is forced to rely on the Maori Party plus perhaps some kind of abstension from the Greens in return for a few policy wins. Individual items of legislation require support from one or more of the other parties. Any asset sales are greatly scaled down and/or delayed. Welfare policy gets a little more emphasis on Whanau Ora and a little less on bashing beneficiaries..
Worst case scenario**
National wins an outright majority, either alone or in tandem with ACT. Midway through the term they take a more ideological turn, perhaps associated with John Key stepping down, with cover provided by a second global recession triggered by chaos in Europe There are deeper and more rapid cuts in, or privatisation of, public services, with little mercy for anything that can be portrayed as involving minority interests or bureaucrats. Various labour and environmental protections are discarded as "unaffordable". Scapegoating of the marginalised intensifies.
I guess by aroound 9:00 pm tomorrow night we should have an idea which way it's likely to go.
* And it should give everyone a pony.
** In the event of a global meltdown, the best case scenario could easily turn into the worst case scenario, especially if the Government calls a snap election, arguing that being forced to relie on minor parties prevents it from "taking the necessary actions".
1) Pursue energy, transport, and environmental policies that not only make New Zealand a more pleasant place to live in, but also help prepare for the inexorable increase in the price of oil over the coming years
2) Make a serious and constant commitment to reducing inequalities, as far as necessary through taxation and social services, but as much as possible through employment and wages
3) Wrestle with how best to manage New Zealand's place in the international economy, exploring different options but maintaining 2) as a constant point of reference
4) Explain its policies in a way that respects the public's intelligence. Be prepared to change its mind and admit it was wrong. Respect the various democratic processes and make more information publicly available.*
But that's not going to happen. Instead, tomorrow's elections offer only best and worst-case scenarios among a generally unappetising range of possible outcomes.
Best case scenario
National fails to win an outright majority. ACT and United Future lose their respective electorate seats. National forms a minority government and is forced to rely on the Maori Party plus perhaps some kind of abstension from the Greens in return for a few policy wins. Individual items of legislation require support from one or more of the other parties. Any asset sales are greatly scaled down and/or delayed. Welfare policy gets a little more emphasis on Whanau Ora and a little less on bashing beneficiaries..
Worst case scenario**
National wins an outright majority, either alone or in tandem with ACT. Midway through the term they take a more ideological turn, perhaps associated with John Key stepping down, with cover provided by a second global recession triggered by chaos in Europe There are deeper and more rapid cuts in, or privatisation of, public services, with little mercy for anything that can be portrayed as involving minority interests or bureaucrats. Various labour and environmental protections are discarded as "unaffordable". Scapegoating of the marginalised intensifies.
I guess by aroound 9:00 pm tomorrow night we should have an idea which way it's likely to go.
* And it should give everyone a pony.
** In the event of a global meltdown, the best case scenario could easily turn into the worst case scenario, especially if the Government calls a snap election, arguing that being forced to relie on minor parties prevents it from "taking the necessary actions".
Wednesday, November 23, 2011
Paradoxes of Neoliberalism, New Zealand Style, No. 2
With No. 1 possibly being this one.
So, apparently the State can do little right because, apart from it being hobbled by self-interest, central planning is always inferior to the distributed intelligence of the market. Lots of individuals taking small, local decisions will allocate resources more efficiently than bureaucrats.
If this is true, then why do the likes of the Business Roundtable and their political spokespersons insist on the need for an electoral system that will provide "strong government" that can "take the necessary decisions"?
So, apparently the State can do little right because, apart from it being hobbled by self-interest, central planning is always inferior to the distributed intelligence of the market. Lots of individuals taking small, local decisions will allocate resources more efficiently than bureaucrats.
If this is true, then why do the likes of the Business Roundtable and their political spokespersons insist on the need for an electoral system that will provide "strong government" that can "take the necessary decisions"?
Electoral Propaganda Grammar Fail
Today I received a National Party flyer in my mailbox which claimed that "Labour = Less Jobs".
Because "jobs" is a nebulous, non-discrete thing that really depends on how you look at it, kind of like "security", "growth" or "ultra-fast broadband".
Because "jobs" is a nebulous, non-discrete thing that really depends on how you look at it, kind of like "security", "growth" or "ultra-fast broadband".
Friday, November 18, 2011
Beyond a Joke
It's good that Danyl Mclaughlan is still finding new absurdist takes on New Zealand politics, because recent events seem to have spiralled well beyond the bounds of satire.
When politicans organise a media circus to document their deliberate manipulation of electoral voting, and a recording is (apparently inadvertently) made of their conversation, you'd think there'd be at least a prima facie case that the contents of the recording are in the public interest.
As many have noted, outraged claims of personal privacy are extremely ironic coming from the leader of a government that urgently pushed through legislation to retroactively legalise covert videotaping on private property. Comparisons to News of the World phone hacking victims and parents of suicidal teenager journey further into the bizarre.
Then, when the police are involved (because they have "spare time") and start seeking to search the premises of news organisations, it truly gets surreal. When Hugo Chavez decided not to renew the licence of a TV channel that had repeatedly called for his overthrow, international watchdogs worried about " freedom of the press". Our supposedy transparent demoncracy merits at least some of the same scrutiny.
When politicans organise a media circus to document their deliberate manipulation of electoral voting, and a recording is (apparently inadvertently) made of their conversation, you'd think there'd be at least a prima facie case that the contents of the recording are in the public interest.
As many have noted, outraged claims of personal privacy are extremely ironic coming from the leader of a government that urgently pushed through legislation to retroactively legalise covert videotaping on private property. Comparisons to News of the World phone hacking victims and parents of suicidal teenager journey further into the bizarre.
Then, when the police are involved (because they have "spare time") and start seeking to search the premises of news organisations, it truly gets surreal. When Hugo Chavez decided not to renew the licence of a TV channel that had repeatedly called for his overthrow, international watchdogs worried about " freedom of the press". Our supposedy transparent demoncracy merits at least some of the same scrutiny.
Saturday, October 08, 2011
Progress, Inequality, Etc
You can't keep updating a single post, so I'm ending the previous one while continuing to be preoccupied with the same broad set of themes. These link-heavy posts are kind of like my public filing system.
I don't want to be all Crooked Timber all of the time, as the posters there would say, but a couple of the recent post-plus-comment debates there cover off, and make largely redundant, my personal musings.
There's this one on whether, stagnant median incomes aside, things have really got better in the last 30 years. To be brief, I'd say that the basics of life -- housing, food, education and health -- have become more costly and less secure, even for the upper middle; but once you get past that threshold it's easier to have and do a variety of things.
This one on the fraught questionof how to balance concerns about short-term economic stimulus, long-term environmental sustainability, global poverty, and developed-country inequality.
Elsewhere, the morphing of Occupy Wall Street into We Are the 99 Percent suggests that this might be one protest movement with a good enough marketing pitch to gather momentum.
Also, Arthur Goldhammer criticisizes a"Randian" depiction of Steve Jobs:
To say this is to take nothing away from Steve Jobs, who was brilliant at what he did. But what he did was essentially to package the genius of tens of thousands of others, who worked not for extraordinary shares of immense profits or for rock-star celebrity but for love of the work itself. When the technologies are in place, it is inevitable that a Jobs will come along and find the key to commoditizing them, but creation of the technologies is a long, slow, and above all social process, which owes more to the actions of a far-sighted state and to basic research pursued in universities and private labs than to the genius of any entrepreneur.
For some light relief, ther's an interesting thread on Public Address discussing the implications of the Voluntary Student Membership bill likely to pass Parliament.
I don't want to be all Crooked Timber all of the time, as the posters there would say, but a couple of the recent post-plus-comment debates there cover off, and make largely redundant, my personal musings.
There's this one on whether, stagnant median incomes aside, things have really got better in the last 30 years. To be brief, I'd say that the basics of life -- housing, food, education and health -- have become more costly and less secure, even for the upper middle; but once you get past that threshold it's easier to have and do a variety of things.
This one on the fraught questionof how to balance concerns about short-term economic stimulus, long-term environmental sustainability, global poverty, and developed-country inequality.
Elsewhere, the morphing of Occupy Wall Street into We Are the 99 Percent suggests that this might be one protest movement with a good enough marketing pitch to gather momentum.
Also, Arthur Goldhammer criticisizes a"Randian" depiction of Steve Jobs:
To say this is to take nothing away from Steve Jobs, who was brilliant at what he did. But what he did was essentially to package the genius of tens of thousands of others, who worked not for extraordinary shares of immense profits or for rock-star celebrity but for love of the work itself. When the technologies are in place, it is inevitable that a Jobs will come along and find the key to commoditizing them, but creation of the technologies is a long, slow, and above all social process, which owes more to the actions of a far-sighted state and to basic research pursued in universities and private labs than to the genius of any entrepreneur.
For some light relief, ther's an interesting thread on Public Address discussing the implications of the Voluntary Student Membership bill likely to pass Parliament.
Saturday, September 03, 2011
Developed Country Political Economy Rolling Links Edition 5 September 2011
NB: This is a progressively updated post. I've added the date to the post title to dentify the current version.
Recently, I've been reading a lot of versions of a similar general narrative which ties together changes in the political economy of the developed countries (especially the English-speaking ones) over the past 30 years. This time period has seen the wealthiest few percent of society recieve the great majority of gains from increased productivity and economic growth; middle class incomes stagnate; inequality consequently increase; and historical social compacts fray and start to fall apart. The share of GDP going to wages and salaries has fallen, and the the finance sector has become more important and powerful.
A lot of the story is summed up, for the United States at least, by this graphic in the New York Times showing the relationship between productivity and wage increases, income gains for the different groups in society, share of income held by the top 1%, and household debt. These trends are divided up into two periods: the"Great Prosperity" from 1947-79, and the neoliberal era from 1980-2009.
There's a lot of debate about the causes of these changes, their significance, and what to do about them. Paul Krugman in particular has written a lot about the relationship between deregulated finance, economic instability and inequality, as well as the strange and changing social attitudes that accompany the reappearance of plutocracy. But there are lots of other angles too, including thoughts about the consequences this maldistribution will have as resource shortages start to bite. A personal interest is in how the rich countries are increasingly starting to suffer from afflictions historically associated with the Third World. In a way, we're all becoming banana republics. I've made this into a rolling update post, so I can gradually incorporate the best discussions.
Recently, I've been reading a lot of versions of a similar general narrative which ties together changes in the political economy of the developed countries (especially the English-speaking ones) over the past 30 years. This time period has seen the wealthiest few percent of society recieve the great majority of gains from increased productivity and economic growth; middle class incomes stagnate; inequality consequently increase; and historical social compacts fray and start to fall apart. The share of GDP going to wages and salaries has fallen, and the the finance sector has become more important and powerful.
A lot of the story is summed up, for the United States at least, by this graphic in the New York Times showing the relationship between productivity and wage increases, income gains for the different groups in society, share of income held by the top 1%, and household debt. These trends are divided up into two periods: the"Great Prosperity" from 1947-79, and the neoliberal era from 1980-2009.
There's a lot of debate about the causes of these changes, their significance, and what to do about them. Paul Krugman in particular has written a lot about the relationship between deregulated finance, economic instability and inequality, as well as the strange and changing social attitudes that accompany the reappearance of plutocracy. But there are lots of other angles too, including thoughts about the consequences this maldistribution will have as resource shortages start to bite. A personal interest is in how the rich countries are increasingly starting to suffer from afflictions historically associated with the Third World. In a way, we're all becoming banana republics. I've made this into a rolling update post, so I can gradually incorporate the best discussions.
Saturday, August 27, 2011
Links Ahoy: Welfare, Obama, Italy, Chile and Travel
Danyl McLachlan's satire sums up the latest welfare reform proposals. It suggests not much has changed since I wrote this.
Timothy Egan tracks the downgrade of Obama's promise of "hope and audacity".
Gordon Campbell is doing regular background pieces on the politics and economy of all the different countries involved in the Rugby World Cup. This one on Italy is especially interesting for its coverage of a failed scheme to address youth unemployment.
Two local Chilean acquaintances recently described for me the current social movements driven by protests about education. In what they describe as "the most neoliberal country in the world", much of the education system is run on a for-profit basis, resulting in a two-tier system of enormous inequities. The Guardian adds more background and profiles the leader of the protests: 23, beautiful, terrifyingly articulate, and a communist (if she didn't exist Isabel Allende would have had to invent her).
On a lighter note, these are pretty accurate observations on travelling from Ben Groundwater. I liked this one:
10. No one cares what happened while you were overseas
This is a little surprise waiting for you when you come home. All those amazing experiences you had on the road? No one wants to hear about them. No one wants to look at your photos. No one wants to see your souvenirs.
Timothy Egan tracks the downgrade of Obama's promise of "hope and audacity".
Gordon Campbell is doing regular background pieces on the politics and economy of all the different countries involved in the Rugby World Cup. This one on Italy is especially interesting for its coverage of a failed scheme to address youth unemployment.
Two local Chilean acquaintances recently described for me the current social movements driven by protests about education. In what they describe as "the most neoliberal country in the world", much of the education system is run on a for-profit basis, resulting in a two-tier system of enormous inequities. The Guardian adds more background and profiles the leader of the protests: 23, beautiful, terrifyingly articulate, and a communist (if she didn't exist Isabel Allende would have had to invent her).
On a lighter note, these are pretty accurate observations on travelling from Ben Groundwater. I liked this one:
10. No one cares what happened while you were overseas
This is a little surprise waiting for you when you come home. All those amazing experiences you had on the road? No one wants to hear about them. No one wants to look at your photos. No one wants to see your souvenirs.
Saturday, August 20, 2011
The Return of the Welfare Working Group: This Time It's Personal
Is the National Party really planning to make beneficiary-bashing a prime election issue? And are New Zealanders going to make this popular? Are we so small-minded that we will happily be distracted from our many big problems by a proposal to micromanage the lives of a couple of thousand teenagers?
As usual Gordon Campbell has great coverage and arguments, but even conservative business columnist Fran O' Sullivan is fair-minded enough to point out what the problem is (a clue: it's to do with jobs). Danyl McLaughlan and Russell Brown have the centrist liberal angle.
As usual Gordon Campbell has great coverage and arguments, but even conservative business columnist Fran O' Sullivan is fair-minded enough to point out what the problem is (a clue: it's to do with jobs). Danyl McLaughlan and Russell Brown have the centrist liberal angle.
Wednesday, August 17, 2011
This Is the Kind of Thing That Makes Me Angry
Stuff reports that Restaurant Brands, which controls the Starbucks, KFC and Pizza Hut outlets in New Zealand, has no plans to pay Christchurch workers for their rostered hours for Monday 15 August when snow prevented business operation. Neither were they paid when a similar situation occurred on Monday 25 July. Instead, they will be expected to take a day of annual leave (assuming they are permanent employees and are eligible for it).
So, you're a fast-food worker, paid low wages even by the standards of our low-wage society. You work under difficult conditions and will often not know from week to week exactly when or how many hours you'll work. Most likely, you will occasionally have to perform miracles when faced with a rush period or short staffing. Then, through no fault of your own, you lose maybe 20 percent of your weekly wage because of the weather.
When an act of God like a snow storm makes economic activity stall, everyone is affected. Yet here we see the people with the least buffer against such events being expected to absorb all the consequences.
It's not as if we're talking about small independent businesses that have taken risks to provide employment. This is a large, powerful conglomerate that profits from economies of scale and an industrialised supply chain. Restaurant Brands is perfectly capable of telling all the respective owner-operators or franchise holders that it will absorb the costs of paying the rostered hours of snow-bound employees. In fact, you'd think that anyone with half a functioning public relations department would have done this already.
Such a situation is even more ironic in a community already beaten down by other natural disasters. In February, John Key said that getting Christchurch back on its feet wasn't Christchurch's struggle, it was New Zealand's struggle. I guess such theoretical solidarity didn't include large corporations.
Meanwhile, there's a lot of focus on the largely punitive measures aimed at young people as part of “welfare reform”. The message that is being delivered is clear: lots of responsibility for vulnerable young people; none at all for the rich and powerful.
UPDATE: Restaurant Brands has said it will pay snowed-bound staff after all. A small victory for decency and an indication that public shaming still has some power. Also, congratulations to the likes of Cookie Time who were doing this in the first place.
So, you're a fast-food worker, paid low wages even by the standards of our low-wage society. You work under difficult conditions and will often not know from week to week exactly when or how many hours you'll work. Most likely, you will occasionally have to perform miracles when faced with a rush period or short staffing. Then, through no fault of your own, you lose maybe 20 percent of your weekly wage because of the weather.
When an act of God like a snow storm makes economic activity stall, everyone is affected. Yet here we see the people with the least buffer against such events being expected to absorb all the consequences.
It's not as if we're talking about small independent businesses that have taken risks to provide employment. This is a large, powerful conglomerate that profits from economies of scale and an industrialised supply chain. Restaurant Brands is perfectly capable of telling all the respective owner-operators or franchise holders that it will absorb the costs of paying the rostered hours of snow-bound employees. In fact, you'd think that anyone with half a functioning public relations department would have done this already.
Such a situation is even more ironic in a community already beaten down by other natural disasters. In February, John Key said that getting Christchurch back on its feet wasn't Christchurch's struggle, it was New Zealand's struggle. I guess such theoretical solidarity didn't include large corporations.
Meanwhile, there's a lot of focus on the largely punitive measures aimed at young people as part of “welfare reform”. The message that is being delivered is clear: lots of responsibility for vulnerable young people; none at all for the rich and powerful.
UPDATE: Restaurant Brands has said it will pay snowed-bound staff after all. A small victory for decency and an indication that public shaming still has some power. Also, congratulations to the likes of Cookie Time who were doing this in the first place.
Sunday, August 14, 2011
But the Market Says
These are strange times for those who grew up ingesting the certainties of the 1980s and 1990s that it's impossible to argue with "the market".
First we see even the National and ACT parties agreeing to an enquiry into the price of milk. Then there's the furore over the price charged by Adidas for the All Blacks replica jersey.
I have no desire to buy an All Blacks jersey (despite enjoying rugby and supporting the All Blacks). However, I do think there's something wrong here. The dynamic is pretty close to what I think Naomi Klein was criticising in No Logo.
To begin with, we have a symbol that gains its value from popular culture, in this case New Zealanders' long history of dedication to playing and supporting rugby. The All Blacks are just the flagship for a culture which has its roots in provinces, clubs and schools and is based on the mostly unpaid commitment of ordinary people.
This cultural capital is then appropriated, commodified and privatized, in the form of the New Zealand Rugby Union giving exclusive rights to a multinational company to produce the "official" jersey. This is then sold back to the people who care about it. And precisely because its value is most salient here in New Zealand, the prices demanded are notably higher than overseas. New Zealand has been taken off allowable destinations of international websites that have the jersey much cheaper, seemingly at the request of Adidas.
Finally, it's worth noting that this whole process has its material basis elsewhere, since the jerseys are undoubtedly made in China and do not provide any local manufacturing employment.
This highly socially-constructed process is then presented as the market at work, a simple case of supply and demand, typified by the comment from Riche McCaw's [reported] girlfriend Nicola Grigg: "why the hell should Adidas change its prices". However, now we have Rebel Sports general manager talking about being "morally sensible" and Prime Minister John Key opining that "[Adidas] needs to determine whether their actions are in the best interest of the country". It's enough to make a time-traveller from the 1990s do a double take.
First we see even the National and ACT parties agreeing to an enquiry into the price of milk. Then there's the furore over the price charged by Adidas for the All Blacks replica jersey.
I have no desire to buy an All Blacks jersey (despite enjoying rugby and supporting the All Blacks). However, I do think there's something wrong here. The dynamic is pretty close to what I think Naomi Klein was criticising in No Logo.
To begin with, we have a symbol that gains its value from popular culture, in this case New Zealanders' long history of dedication to playing and supporting rugby. The All Blacks are just the flagship for a culture which has its roots in provinces, clubs and schools and is based on the mostly unpaid commitment of ordinary people.
This cultural capital is then appropriated, commodified and privatized, in the form of the New Zealand Rugby Union giving exclusive rights to a multinational company to produce the "official" jersey. This is then sold back to the people who care about it. And precisely because its value is most salient here in New Zealand, the prices demanded are notably higher than overseas. New Zealand has been taken off allowable destinations of international websites that have the jersey much cheaper, seemingly at the request of Adidas.
Finally, it's worth noting that this whole process has its material basis elsewhere, since the jerseys are undoubtedly made in China and do not provide any local manufacturing employment.
This highly socially-constructed process is then presented as the market at work, a simple case of supply and demand, typified by the comment from Riche McCaw's [reported] girlfriend Nicola Grigg: "why the hell should Adidas change its prices". However, now we have Rebel Sports general manager talking about being "morally sensible" and Prime Minister John Key opining that "[Adidas] needs to determine whether their actions are in the best interest of the country". It's enough to make a time-traveller from the 1990s do a double take.
Saturday, August 13, 2011
It's the Politics, Stupid
The mainstream media infrequently acknowledges that the various economic and financial "crises" around the world relate to political choices rather than unstoppable economic forces of nature (category error intended) that no one can control.
No where is this more true than in the furore over the US debt ceiling. What has been presented as "partisan bickering" over an absolutely necessary reckoning with out-of-control debt and deficits was in reality a cynical act of blackmail by the Republican Party, which took advantage of what had always been a routine legislative process to advance their agendas (mainly cutting government programmes for the poor and middle class and ensuring rich people don't pay any more taxes). Obama has aided and abetted this by consistently acting as if the deficit is the biggest problem, while meanwhile, millions of people are unemployed.
The depiction of the United States as an economic basket case propped up by China is muddled and mostly wrong. There's a good piece pulling apart all the misinformation from Dean Baker and David Rosnick at the Centre for Economic and Policy Research: 7 Things You Need to Know About the National Debt, Deficits and the Dollar (see the press release for a potted version).
The only areas where the US has genuine sustainability issues are in the long-term with health care costs -- a massive issue for both the public and private sector. However, the sabotage by the Republicans may make short-term instability a self-fulfilling prophecy. (And these are some of the same people who decried as "unpatriotic" those who argued against invading Iraq!).
The downgrading of US debt by Standard & Poors also has political aspects. At least this is getting widespread push back. Numerous people have pointed out the ridiculousness of taking Standard & Poors seriously about anything, let alone sovereign debt. More here and, amusingly, here. Even a Reuters-circulated piece mercilessly mocks S&P. Note that in New Zealand, the Government defended their most recent Budget by boasting that "Phil Goff might not like it, but Standard and Poor's does". Hmm.
Krugman and others tear out their hair at the narrative that recent stock market panics are the result of fears about public debt. If so, why did the interest rates for 10-year US Treasury bonds go down following the downgrade? A more plausible story is that the markets are reacting rationally to the ongoing stupidity: the demand for austerity will hurt the economy, which in turn will fuel calls for more austerity, and so forth.
Why are these perverse and self-defeating choices being made? As always, an interesting question to ask is: cui bono? Krugman (again) analyses the terms of the interests of rentiers:
[The] only real beneficiaries of Pain Caucus policies...are the rentiers: bankers and wealthy individuals with lots of bonds in their portfolios.
And that explains why creditor interests bulk so large in policy; not only is this the class that makes big campaign contributions, it’s the class that has personal access to policy makers — many of whom go to work for these people when they exit government through the revolving door. The process of influence doesn’t have to involve raw corruption (although that happens, too). All it requires is the tendency to assume that what’s good for the people you hang out with, the people who seem so impressive in meetings — hey, they’re rich, they’re smart, and they have great tailors — must be good for the economy as a whole.
But the reality is just the opposite: creditor-friendly policies are crippling the economy. This is a negative-sum game, in which the attempt to protect the rentiers from any losses is inflicting much larger losses on everyone else.
There's more here and here, and some interesting debate from The Economist website here.
No where is this more true than in the furore over the US debt ceiling. What has been presented as "partisan bickering" over an absolutely necessary reckoning with out-of-control debt and deficits was in reality a cynical act of blackmail by the Republican Party, which took advantage of what had always been a routine legislative process to advance their agendas (mainly cutting government programmes for the poor and middle class and ensuring rich people don't pay any more taxes). Obama has aided and abetted this by consistently acting as if the deficit is the biggest problem, while meanwhile, millions of people are unemployed.
The depiction of the United States as an economic basket case propped up by China is muddled and mostly wrong. There's a good piece pulling apart all the misinformation from Dean Baker and David Rosnick at the Centre for Economic and Policy Research: 7 Things You Need to Know About the National Debt, Deficits and the Dollar (see the press release for a potted version).
The only areas where the US has genuine sustainability issues are in the long-term with health care costs -- a massive issue for both the public and private sector. However, the sabotage by the Republicans may make short-term instability a self-fulfilling prophecy. (And these are some of the same people who decried as "unpatriotic" those who argued against invading Iraq!).
The downgrading of US debt by Standard & Poors also has political aspects. At least this is getting widespread push back. Numerous people have pointed out the ridiculousness of taking Standard & Poors seriously about anything, let alone sovereign debt. More here and, amusingly, here. Even a Reuters-circulated piece mercilessly mocks S&P. Note that in New Zealand, the Government defended their most recent Budget by boasting that "Phil Goff might not like it, but Standard and Poor's does". Hmm.
Krugman and others tear out their hair at the narrative that recent stock market panics are the result of fears about public debt. If so, why did the interest rates for 10-year US Treasury bonds go down following the downgrade? A more plausible story is that the markets are reacting rationally to the ongoing stupidity: the demand for austerity will hurt the economy, which in turn will fuel calls for more austerity, and so forth.
Why are these perverse and self-defeating choices being made? As always, an interesting question to ask is: cui bono? Krugman (again) analyses the terms of the interests of rentiers:
[The] only real beneficiaries of Pain Caucus policies...are the rentiers: bankers and wealthy individuals with lots of bonds in their portfolios.
And that explains why creditor interests bulk so large in policy; not only is this the class that makes big campaign contributions, it’s the class that has personal access to policy makers — many of whom go to work for these people when they exit government through the revolving door. The process of influence doesn’t have to involve raw corruption (although that happens, too). All it requires is the tendency to assume that what’s good for the people you hang out with, the people who seem so impressive in meetings — hey, they’re rich, they’re smart, and they have great tailors — must be good for the economy as a whole.
But the reality is just the opposite: creditor-friendly policies are crippling the economy. This is a negative-sum game, in which the attempt to protect the rentiers from any losses is inflicting much larger losses on everyone else.
There's more here and here, and some interesting debate from The Economist website here.
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