Land of apathy and stagnation

10 12 2011

Politicians usually try and offer hope to their voters. Mostly this is done by promising a rising standard of living and the hope that todays children will enjoy a better life than their parents did.

In British politics, Harold Macmillan told the nation they “had never had it so good”. Harold Wilson sought to introduce a new era of technological advancement in British industry. Margaret Thatcher promised to make the country great again and Tony Blair declared that class was a thing of the past in his new and prosperous Britain.

Harold Macmillan, the first Prime Minister after WWII
to speak of a prosperous future for all.

A lot of what they promised was fantasy but the thing they all had in common was a vision of a better tomorrow. Now in the 21st century, those at the top of the British government have no such lofty ambitions.

Chancellor of the Exchequer George Osbourne recently delivered a statement to parliament in which he had to admit that relentlessly cutting public spending in a stagnant economy had disastrous consequences. Undeterred he merely insisted that the country would just have to put up with more austerity so he could prove that his numbers will add up eventually, he hopes.

A clear contender for the worst Chancellor of the Exchequer in British history

The language he used was one of a doctor talking at a badly injured patient at the start of a long and traumatic recovery.

“What we offer is a government that has a plan to deal with our nation’s debts to keep rates low; a government determined to support businesses and support jobs; a government committed to take Britain safely through the storm. Leadership for tough times – that’s what we offer. “

In the same week the Institute for Fiscal Studies released a report that said the average worker would be worse off in 2016 than he or she was 14 years earlier. With wages stagnating and inflation and unemployment rising the future they described is far from an optimistic one. Nobody in government came out to say that this was shocking, if fact everybody seemed to shrug their shoulders and accept this as unavoidable fact.

David Cameron, George Osbourne and Nick Clegg cannot consider an alternative to the status quo, a better way of managing the economy simply does not exist in their narrow tunnel vision. They are merely middle mangers thrust into the top boardroom with only the ambition to ensure they leave the place in the same shit state they found it in. This isn’t really a personal failure on their part, its more a fact that their big ambitions in life were reached 18 months ago in the 2010 general election.

Clegg, Cameron and Osbourne all began their careers in politics fresh out of university.

They are part of the most common species that exists in politics now, that of the career politician. Elected representatives used to be lawyers, economists, businessmen or trade unionists. Today after graduating from Oxbridge with a degree in philosophy, politics and economics they take internships in a chosen political party. From there they move through the ranks until they reach the top or even an office in Whitehall.

Get elected, get into government and then stay in government. Sometimes this means compromising on almost everything, something Nick Clegg has discovered all too well. He thought he was doing well to be leader of the third biggest party in the country. When his words of change and a departure from the “same old politics” won his party a seat in government he couldn’t believe his luck.

This came at a price though, he promised his party would not raise student tuition fees, until they did. From there he has compiled enough examples of compromise to write a management textbook on making concessions in negotiation. His is a cautionary tale of a politician who never really expected he would be Deputy Prime Minister, when found he was, his top priority became to stay in the lofty office he had clawed so hard to get into.

The British economy is in the early part of its great lost decade. The most these empty suits can do is try and come up with a list of suspects to blame for longest economic stagnation in recent history.


Rise of the technocrats

27 11 2011

‘Plan A’ didn’t work in the eurozone. When the interest rates on Greek, Portuguese and Irish debt reached an unsustainable level, bailouts and tough new rules were imposed. These unruly junior members of the euro project would be taught lessons in fiscal management. The official prediction was that austerity and reform of these economies would bring interest rates down and growth, eventually.

The aim was also to stop the rot, the small countries could be bailed out, if Italy or Spain needed the same treatment the Euro would find itself on a slippery slope. Greece was the first to fail, massive cuts in public spending meant the economy followed the course of economic law rather than the prayers of the men at the European Central Bank.

The bailouts failed again and again leaving Greece staring into the abyss of default. It was said there could never be a ‘Plan B’, but then Greece defaulted on half of its debt. Prime Minister George Papandreou’s government agreed to a new set of measures to deal with the other half, but this time he announced he would go to the people and get their approval in a referendum.

This was too much, for those at the top of Europe do not believe the people have the capacity to choose their own future. Papandreou was forced out and former European Central Bank vice-president Lucas Papademos imposed on the Greeks as a better alternative.

George Papandreou sealed his own fate when he insisted the Greek people should have a say the future direction of their nation.

Then the Italian’s found they couldn’t force through their new austerity drive alongside the theatre spectacle that is Silvio Berlusconi. Europe needed someone who could bring this to Italy, former European commissioner Mario Monti was chosen as a man who could get the job done.

From their lofty offices in Frankfurt and Brussels, the captains of the European project simply don’t believe the people have the ability to make rational decisions. This is not a new development, democracy has long been an obstacle in Europe.

Ireland has a constitution that is the odd one out in Europe. Drafted in 1937 without any idea that the country would be part of a continental block, it requires any international treaty to be ratified by the people.

Twice this has been a problem. In 2001 the Irish rejected the Nice treaty, Brussels said try again, a year later they got the right result. Then in 2005 the French and Dutch rejected a European constitution, undeterred the bureaucrats made a few cosmetic changes and rebranded it a treaty. This time only the Irish electorate stood in the way. Again they rejected it in 2008, so again they were told to go back to the people until they got the right answer.

Campaign posters from the Lisbon Treaty referendum in Ireland.

This is no way to run a ‘democracy’, for a while it can be expected that people will apathetically accept the technocrats thinly veiled claim that only they know best. However, this time their big idea is austerity. When that doesn’t work they say we need more austerity, when it still doesn’t work they say we need austerity for 10 or 20 years.

Eventually the people will realise these people have no clue about how to solve this crisis, only delusions. They created the time bomb of the eurozone, dreamt up a totally inadequate response to the inevitable implosion and then scratched their heads in utter astonishment when their remedies didn’t work.

The problem is that this disillusionment with mainstream politics can manifest itself in ugly ways. Brussels can impose as many technocrats as it wants but at some point elections will have to be held. In the vacuum that is created, nationalism can take over. They once said Greece could never default on it’s debts, now they say it’s inconceivable that the eurozone could end, until it does.

My day at Occupy London

22 11 2011

The makeshift village that sprung up in the most unlikely of places is starting to sprawl out, true to its organic origin. Squeezed between financial offices, high end shops and one of the most iconic cathedrals in the world sits a ragtag collection tents. The makeshift village that sprung up in the most unlikely of places is starting to sprawl out across the city and elsewhere, true to its organic origin. They refuse to move until something changes, but what?

The Occupy movement has sprung up in cities around the world. It’s an intriguing idea that seems to have sprung out of nowhere but no one knows how to react to it, the protesters most of all I found.

The first thing you notice when you walk around the tent village outside St Paul’s cathedral is how many different political circles all sit together. In one corner the Socialist Worker’s Party and the Socialist Party, are busy getting the same message across but in two separate and competing publications. Round the corner you find Buddhists are maintaining a mediative session. Anarchists mingle in the camp while the hippies all strive to keep the village going with a working kitchen, community spaces and even a tent university. It’s like an uninvited Glastonbury.

It all very much feels like a coalition of forces that have been protesting on various issues for years. So while it seems like an unexpected explosion of protest, in reality its more a coming together of campaign weary groups with a new lease of life. From the green movement to the anti-war campaigners to the old socialists, the aftermath of the financial crisis has given them all a common cause with which to rally round.

So what’s the problem and what’s the plan? I decided to take a trip to the latest occupation in the city, the empty UBS offices near Liverpool Street station. It had only been entered and took over a couple of days previously so I expected some kind of police presence. I had been told at St Paul’s that the police would still be manning the street but I could still easily get inside. When I arrived the street was deserted, the police presumably being back at the station having tea and biscuits.

The opening of the ‘Bank of Ideas’ inside a disused UBS bank office

The building has been set up as an area of discussion, the so called ‘Bank of Ideas’. A steady trickle of people was filing in and out of the building that had obviously not been used for years. Listening into the conversations going on I was quickly surprised how the civil these recent strangers were with one another. I had no idea about the sign language that has spread along with the spirit of Occupy, at first I thought a large number of wacky kids TV presenters must have been involved in the movement. Eventually I worked out that waving hands up is to agree, down to disagree and putting your hand (like in school) means give me the floor.

On the first floor one group were discussing tips on how to occupy (or squat) in other buildings within the confines of the law, another on how to co-ordinate the protest movements throughout Britain and Ireland. Very much a practical ‘how to’ guide on protest.

Downstairs another discussion centered on what happens when the occupations are forced out. This was too much for one woman who complained it was too negative and drifted off eventually to question a documentary filmmaker on whether he was there on behalf of the police.

By this time I started to worry about the lack of discussion on exactly what the issues at stake were. All of them were there with grievances about some part of the economic system, but not once all day did I hear the word ‘economics’.

Every discussion I heard centered on growing and keeping the protest movement rolling forward, an admirable aim but to what end? A great day of action was mentioned a couple of times with the belief that the government would have to listen if there were enough numbers. Inevitably somebody brought up the one million strong anti-war demonstration before the Iraq war that had zero effect.

Perhaps avoiding discussion of exactly what is wrong with current economic policy is the best way of not getting bogged down in debate, especially with so many diverse groups of people involved. However, in its place a vacuum is created that reverts to type, repeated demonstrations and occupations with a them and us downbeat tone.

Thats not to say that the Occupy movement can be dismissed. It’s messy, divided and unorganised but then it’s only a few weeks old. In that short time it has attracted a lot of publicity and solidarity from people who believe there is something rotten in the world, but they cannot say exactly what. It has a genuine warmth and goodwill around it, but still feels a long way from influencing the levers of power.

This is an effort to change the dynamics of one of the most abstract academic studies there is. Economics is not a sexy medium. But without talking about it in radical ways, any movement is setting itself up to be pigeon holed as just another hopelessly naive spasm of discontent.

Taking the politics out of war

12 11 2011

The 11th hour of the 11th day of the 11th month has just passed. That is the moment in 1918 when the German surrender was received and over four years of slaughter finally came to an end. It became known as Armistice Day.

The day became a remembrance day for the thousands of men who went to war and never came back. A day to remember why all the young men had disappeared and also the needless horror of it all.

The Battle of the Somme, where it became routine for tens of thousands of men to die in a single day.

However, the day has changed in its meaning over the years. After World War II the date became a remembrance day for all those you went to fight for their nation and died. It became the central way for society to acknowledge the cost of war.

Today, far from the terrible wars in Europe, the western world is enjoying one of its most peaceful times in recent history. The last veteran from World War I died earlier this year and the veterans from the second world war are fast disappearing, along with those who lived through that horrific episode of history.

These wars are fading from personal memory into history books. The next generation are not going to have the opportunity as I did to have their granddad give them a first hand account of that moment in history.

Nevertheless Armistice Day is still given huge publicity in todays world but not in the way it used to be. We all rightly remember the history behind the date and some of us observe the traditional two minutes silence for the dead. However, something fundamental about the day has changed though. It is no longer just about remembering a terrible slaughter, today patriotism has entered the mix and a useful tool it has become.

Without our tangible connections to the great wars of the twentieth century we now remember the deaths from our more recent military escapades. Celebrities pose on billboards to show their support for the troops. To appear on British television without a poppy is seen as snub to all those who perished. The world football governing body tried to stop the English national team from wearing an embroidered poppy on their shirt as they said this was a political statement, to howls of indignation from David Cameron.

Actress Helen Mirren lends her support to the British Legion charity.

But here is the distinction, we all want to believe that those who died in war, died for a reason, that their sacrifice meant something to our modern way of life. In effect, the belief that all war is necessary, but it’s not. A soldier who died on the beaches of Normandy had a part to play in the downfall of a vicious dictatorship. Can the same be said of the millions who were cut down by machine gun fire in Flanders fields so that ‘Field Marshall Haig could move his drinks cabinet six inches closer to Berlin’ as it is put in the excellent Blackadder Goes Forth comedy.

Are we remembering that these men are sent to their deaths in either Belgium or Afghanistan by ignorant politicians and generals more interested in national prestige than the lives of their own young men. Or are we showing solidarity with the difficult job todays troops have in our modern wars.

The meaning of the poppy is becoming politicised and for the politicians this is a triumph. For to question the war is to question those who serve their country on the battlefield. A large part of this problem is that the armed forces today do not feel valued because nobody cares about Afghanistan, the war is of no consequence to us at home. Only our politicians and generals who do not want to be ones to admit defeat in a stupid and unwinnable war, believe this is a fight worth having.

So we need a day like Armistice Day, where the military gets acknowledgment from society for their actions. Then we move on to thinking about Christmas and the shockingly low salaries our “heroes” is again overlooked. The unemployed veterans who after leaving the military can’t find work in our depressed economies is ignored and those who commit suicide after their return from the front, never to be included as a casualty of war, is barely recognised.

The entrepreneur and the gambler

10 10 2011

The passing of Steve Jobs was a sad moment for genuine ingenuity in the world. He was a billionaire that made his money from being a bog standard capitalist, in the sense that he created goods which huge swathes of people wanted to buy. So successful did he become, he even inadvertently gave rise to another breed of customer who became hysterically loyal to his company’s brand. You can easily make cigarettes addictive but a true genius makes a computer brand addictive.

Steve Jobs really began to see his own personal success at a time when the tax burden he and other mega rich individuals faced was being forced lower and lower. So much so that the third richest man in the world, Warren Buffet, recently pointed out the insanity of taxing his secretary more than him. This was because politicians became convinced that it was not just bad to tax rich people, it was even immoral.

There is reasoning behind this and for a politician Steve Jobs is the ideal example to provide. The theory goes like this, if Steve’s taxes had been double what he paid, he may never have brought us the something like the iPod. The fact that he did, meant that he was a wealth creator, Apple products multiplied and boomed around that time creating thousands of jobs.

So to take more tax from Steve Jobs, Lloyd Blankfein (CEO of Goldman Sachs) or the derivatives trader at JP Morgan is a like tying a weight around their brilliant minds. This is how the Occupy Wall Street movement is being dismissed by the big media and what
Paul Krugman calls the Very Serious People.

This simplistic idea says that Steve Jobs and the whizz kids on Wall Street have something in common beyond wealth. What is the difference between Steve Jobs and Lloyd Blankfein? Well one creates and one bets.

In real economic terms, Steve Jobs created things. They weren’t even unique products he could slap a patent on and sit back and watch the monopoly money roll in. There were plenty of MP3 players on the market but the iPod was the sleekest, best designed and most easy to use by a couple of light years. (I single out the iPod merely because it represents the advantage all Apple products have over most of their rivals)

Lloyd Blankfein bet money that a certain price of a good, stock or mathematical equation would rise (or fall). He and the rest of his species on Wall Street genuinely see themselves as being akin to the Steve Jobs of the world, but they don’t actually make anything that you can touch.

For an industry that doesn’t make anything the financial sector talks about ‘innovation’ an awful lot. When they talk about innovation, to them this means coming up with a piece of abstract maths. This allows you to bet money on another bet which relates to another bet, also based itself on a bet, none of which have to exist in the real world, except the original bet.

Spot the difference?

Your not supposed to understand how this works, the maths geniuses who come up with this stuff used to build supersonic jets or sent rockets into space. There is just far too much money to be made betting on a bet these days.

Yet if the giant betting shops in Wall Street and the City of London had to pay a little more tax and be properly regulated, the world would end up like East Berlin we are told. People with business ideas would simply give up and sit at home in their pants eating pizza all day, rather than become millionaires.

Steve Jobs said it better than I ever could:

“Being the richest man in the cemetery doesn’t matter to me …. Going to bed at night saying we’ve done something wonderful… that’s what matters to me.”

Blair: What the middle east needs is more blood and chaos

11 09 2011

The front page of The Times newspaper in Britain this week featured an interview with Tony Blair who again called for effort to be put behind regime change in Iran. This has been a long running narrative for the former Prime Minister who is part of an established political school of thought in the west that believes much of the trouble in that part of the world originates in Tehran.

It’s a simplistic world view for a man who was famously uninterested in the complexities of issues he faced in office. Civil servants who worked under Blair later said that Tony would be highly enthusiastic for the big idea, but when they tried to discuss detail with him his eyes would glaze over.

This sums up how a politician like Blair comes to believe in bogeymen. He is happiest when you can boil a narrative like the modern middle east down to goodies and baddies. Some baddies come and go but the overarching baddie has always been Iran, mostly because it has dared to defy western foreign policy for so long.

So Blair and The Times, not convinced we heard it the first, second or third time (or even at the Chilcot Iraq inquiry, where Blair managed to wander off on a tangent to pontificate on the wrong subject) set about telling us how evil the Iranians are. When they are not supporting terrorism they are building a nuclear bomb. Tony says Afghanistan and Iraq would be a peaceful as Norfolk if it were not for those meddling mullahs.

The hypocrisy is mind boggling, although this is Blair of course. Western military and intelligence agencies have an absolute right to choose sides in these countries respective civil wars but neighbouring Iran does not. Of course nobody should be interfering in the affairs of sovereign nations but Blair’s insistence to the contrary is straight from the imperialism of the Victorian British empire.

Iran also must be stopped from building a bomb but this is about as far as Blair complex point goes. No mention that Iran is a nation surrounded by nuclear armed neighbours with Israel to the west, Russia to its north and that byword for instability, Pakistan to its east. The fact that Iran has not invaded another country for over 300 years also has no significance for Tony.

Why are the rantings of a bored, overpaid and disgraced former politician worth commenting on then? The answer to this lies in the fact that Blair’s idea of “liberal interventionism” is alive and well.

Iraq gave this idea a bad name through the lies, blood and chaos surrounding that country over the last decade. Libya now provides an example where the west “got it right”. This will be the overwhelming narrative for the political establishment and the media when the next big adventure presents itself.

The relatively swift victory of the Libyan rebels against Colonel Gadaffi gave the
‘liberal interventionists’ a success story, to be expoited at a later date.

It is a dangerous idea as it seeks to convince us that the problem with Iraq was not the outright lies or the criminal aggression against another nation. It was more a question of strategy. The next time politicians wish to get all macho with their generals a few points will be observed.

First get the UN on board, even if it is just to agree that the biscuit supplies of said nation must be protected. Once you have this you can do whatever you like biscuit related or not.

Only use air power and then insist there will be no “boots on the ground”, then deploy those boots on the ground and call them “advisors”, then hope the media buy it, which they probably will.

Finally, jump into bed with those elements on the side you chose in the civil war and make sure any previous western business related deals are kept. If the nation is a major oil producer then oil deals, but if the western powers intervene in a nation whose most significant export is asparagus, then of course vegetable export deals.

Its not that meddling in the affairs of independent nations is wrong, its just a question of perception. Libya was easy, they may start to believe that Iran could also be done with such minimal effort. There will be blood, but then again they are unlikely to get any on their suits when directing the war from a press conference in London.

Crony capitalism in action

25 06 2011

Capitalism is a system whereby wealth can be distributed through an economic system by means of private entities competing for profit. In theory it is an efficient system of managing the flow of money through an economy, except if it subject to bias. When those at the top of the system interfere in the workings of capitalism, because of the narrow interests of one group, it becomes something different. Its called the highly inefficient system known as crony capitalism.

This is the background that has to kept in mind when understanding the crisis in the Greek economy today. ‘The Troika’, the high priests of European finance (the ECB, the IMF and the European Commission) are obstructing Greece from following the rules of capitalism. The Greek economy is drowning in a sea of debt that has been rolled up like a carpet over the years. They need to default on their loans and then start again, free from the burden of debt. Anybody who is owed money from the collapse will have to form an orderly queue and they will get whatever is leftover from the mess.

The Greek government has now had more stringent austerity measures rammed down their throat, images such as this will be repeated many times in the coming months and years ahead.

If your local baker starts selling mouldy cream cakes, his revenues then fall off a cliff and he borrows more and more to keep the bakery open, he will go bankrupt. The above is the set of rules set out to deal with aftermath of the bakers (or a country’s economic) failure.

But that is not acceptable to the archbishops of finance, because many of the mega banks in the world are exposed. However, it is not true to say that those dastardly Greeks took advantage of their international financiers. In fact they couldn’t have done it without them, as we discovered when the ‘creative accounting’ services offered by Goldman Sachs exposed how the Greek government and international finance have conspired to hide the true level of Greek debt.

In this story, nobody is truly innocent. The big banks have a lot of money sunk into the Greek economy, and they want it back, with interest. They do not care who pays, whether its Greek, German or French taxpayers.

The financial masters of the universe have a simple argument which they are willing to defend at all costs. Basically they bet a lot of money on a horse that came 12th in a race. Now they are back in the betting shop banging their fist on the counter demanding their winnings. Nobody told them the horse had one leg shorter than the other, in fact the horse was supposed to have bionic super legs, its not their fault.

The major banks deemed the horse in the foreground of this image their best chance,
it has now had the audacity to come last in the race

So our wise elected officials should tell them where to go right? The financial masters have an answer to that of course. If anybody defaults, the ATM’s could freeze, the world economy could suddenly grind to halt. The politicians buy this because that is what nearly came to pass after the collapse of Lehman Brothers in 2008.

To avoid disaster the politicians had to subsidise the banking systems so that they could continue to operate. This is where the cronies come in, banking is a now a publicly underpinned business given special treatment, in a similar way to farming.

European farmers are protected from the wrath of capitalism by public subsides, basically so that there is food on the shelves in the shops. Now bankers operate without fear of failure, safe in the knowledge, that if governments ever get tough with them, all they need do is begin prophesying armageddon.

An Irish dole queue, ordinary citizens must line up for their social welfare payments,
the ‘bankers dole’ is a much more civilized affair, usually drawn down over coffee and biscuits in government buildings.

This is what Germany tried to do with the latest Greek bailout when they tried to impose losses on the banks involved. But the bankers steadfastly refused, warning the sky would fall in if such a thing happens. The politicians backed down and now the banks can make ‘voluntary’ losses, what moron would voluntarily lose money?

So ordinary Greeks are not allowed capitalism, they are in need, but the high priests of finance in Frankfurt, Paris, London, New York and Brussels are deemed more worthy. Go to the back of the line and wait patiently, or the four horsemen will come riding over the hill.

Interestingly, the Irish bank AIB defaulted last week and nothing happened. The ATM’s kept working, the grass kept growing and the sun rose the next day. Remember, the emperor is stark bollock naked.