Predators and prey. The homeless and left-behind are at the bottom (“decomposers”). Most of everyone else is in the next layer up (“producers”). The rest, from the well-off to the wealthy, are “consumers.” Interesting how that language works, isn’t it? (source)
by Gaius Publius
A recent piece I did on the British Labour politician Tony Benn featured a speech that offered a “history of neoliberalism”(click here to read and listen). Near the beginning of the speech, Benn said, “This country and the world have been run by rich and powerful men from the beginning of time.” Consider that for a moment, what that means about the arc of human history.
Near the end of his short talk, referencing the Thatcher (and Reagan) counterrevolution against the great populist gains of the 19th and 20th centuries, he said that this is “what the whole [modern] crisis is about, the restoration of power to those who’ve always controlled the world, the people who own the land and the resources and all the rest of it.”
That radical re-transformation of the world back to control by its original and longtime owners, “rich and powerful men,” was begun in England by Margaret Thatcher and several deliberate policies. Benn (my emphasis): “So privatization is a deliberate policy, along with the destruction of local democracy and the destruction of the trade unions to restore power back to to where it was.”
Andrés Velasco, a former presidential candidate and finance minister of Chile, is Professor of Professional Practice in International Development at Columbia University’s School of International and Public Affairs. He has taught at Harvard University and New York University, and is the author of numerous studies on international economics and development.
SEP 30, 2015, Project Syndicate
SANTIAGO – Latin America has a new export: populist backlash. It first landed on the warm and receptive shores of the Mediterranean, nurturing support for Greece’s Syriza and Spain’s Podemos. Now it has reached the United Kingdom.
Corbynismo, the ideology of the long-marginalized British MP Jeremy Corbyn – who admired Venezuela’s late president, Hugo Chávez, thinks Vladimir Putin was justified in invading Ukraine, and now heads Britain’s venerable Labour Party – sounds familiar to anyone acquainted with Latin America. It calls for monetary financing of fiscal deficits (now called “people’s quantitative easing”), nationalization of industry (beginning with the railroads), and an end to competition and the private provision of public services. This is the stuff that former Prime Minister Tony Blair and his supporters thought – wrongly, it seems – they had consigned to the dustbin of history.
Of course, this new populism (Hillary Clinton’s Democratic rival Bernie Sanders is also a card-carrying member) has much fodder. As Martin Wolf has emphasized, the 2008-2009 financial crisis made voters understandably angry at “greedy plutocrats and their lackeys in politics and media.” Nobel Laureate Paul Krugman (who sometimes sounds like a Corbynista, but isn’t one) and Wolfgang Munchau stress that Europe’s moderate left lost popular support by being too ready to embrace the extreme version of fiscal austerity demanded by Germany and its orthodox allies. Den Rest des Beitrags lesen »
Researcher, Peterson Institute for International Economic
The public narrative on austerity is shaped by simple scatter plots purporting to portray the large negative impact of fiscal ‘austerity’ on economic growth. This column argues that, while recognising concerns about causality, economists should systematically explore correlations and multiple regressions, and test their robustness. The results reveal a mixed picture, lending partial support to the notion that fiscal choices and output growth are empirically associated.
The Global Crisis that began in 2008 has rekindled the debate on the impact of fiscal policy on economic growth. At the outset of the Crisis the focus was on whether fiscal stimulus boosts economic growth. Since 2011 or so, with the Crisis becoming more severe in some European countries and Greece in particular, the emphasis has shifted to whether fiscal adjustment should be seen as part of the emerging ‘consensus’ view (Baldwin and Giavazzi 2015) on the causes of the output loss. Several researchers have delved into the question using novel, sophisticated methods, but these have proved difficult to communicate to the public at large.1
As German Chancellor Angela Merkel is fond of repeating, the EU accounts for just 7% of the world’s population and a quarter of its gross domestic product (GDP) but as much as half of its welfare spending.
Her underlying message is that Europe spends too much on social policies and thus has no choice but to retrench.
Austerity is one reason for cuts, but other threats to the sustainability of the welfare state are more fundamental.
They include dealing with an ageing population and adapting to evolving societal expectations.
Intensifying competition from emerging markets has also seen globalisation become a threat, because the cost of welfare policies has undermined the competitiveness of companies.
However, as I and my colleagues argue in a new paper, it would be wrong to view the welfare state mainly as a burden and it is undeniable that welfare states encapsulate values that people across the EU cherish.
How much is spent on the welfare state?
Social expenditure per person in the EU in 2012 (the most recent year available, using a harmonised definition) was €7,600 (£5,540), but with a range from €18,900 (£13,800) in Luxembourg to just €927 (£675) in Bulgaria.The UK figure was €8,700 (£6,340). Den Rest des Beitrags lesen »
This is Part 3 of the “Relitigating 2010” series. It’s largely independent of Parts One and Two, although if you’ve literally only just starting reading about the issue, you might want to look at those ones first.
After a slight delay, this piece concludes my series on looking back on the 2010 bailout to see if things could have been done better. During that period, I’ve received a lot of interesting feedback on some of the points made, and it very much struck me that when I was responding to that feedback, there was always one common theme … see if you can spot it.
“The Greek banks didn’t have to be bailed out by borrowing money; they could have been recapitalised by the Greek government issuing new government bonds and giving them to the banks. This would have massively reduced the financing requirement you talk about in Part 2.”
Yes … but you have to remember that Trichet was in charge of the ECB at this point. Normally in a bank rescue, it’s not only orthodox to use newly created government bonds, it’s the sensible thing to do. (Banks don’t need cash, usually, so if you bail them out by issuing government bonds on the market and giving the cash to the banks, the first thing they will do with it is buy government bonds). But Euroland in 2010 was already at a point where the ECB was reluctant to accept Greek bond collateral. To have allowed the Greek government to first reduce its debt by defaulting, then blow it back out again by issuing around EUR50bn of new bonds to the banking system, would have required the co-operation of the ECB, which could not at all be relied upon. Den Rest des Beitrags lesen »
LONDON – Fiscal austerity has become such a staple of conventional wisdom in the United Kingdom that anyone in public life who challenges it is written off as a dangerous leftist. Jeremy Corbyn, the current favorite to become the next leader of Britain’s Labour Party, is the latest victim of this chorus of disparagement. Some of his positions are untenable. But his remarks on economic policy are not foolish, and deserve proper scrutiny.
Corbyn has proposed two alternatives to the UK’s current policy of austerity: a National Investment Bank, to be capitalized by canceling private-sector tax relief and subsidies; and what he calls “people’s quantitative easing” – in a nutshell, an infrastructure program that the government finances by borrowing money from the Bank of England. Den Rest des Beitrags lesen »
In this week’s Outside the Box we have a unique diagnosis of Europe’s ills from … a medical doctor. The author is Dr. Luc De Keyser, who currently serves as the chief medical information officer at Xperthis, the largest provider of hospital information systems solutions in Belgium. He has done pioneering work in multicenter clinical trials, medical ontologies, paleonutrition, and examining human conflict from an evolutionary perspective.
Dr. De Keyser (writing for Stratfor) is not sanguine about Europe’s future. There are times, he reminds us, when a doctor has to make the tough call and conclude that the patient’s case is simply without hope.It’s a painful diagnosis and not one that the doctor enjoys sharing with the patient. But at some point the patient must be told.
The fundamental obstacle to solving Europe’s problems, he asserts, is that Europe is simply too complex to fix in any straightforward or dependable way:
For such problems, there are no simple solutions. There aren’t even complicated solutions. There are only best-guess measures with no guarantees of success. The currency union’s underlying flaws, like so many other modern problems, are far too intricate and perplexing for our minds and institutions to cope with. Failing to admit to our own overconfidence in dealing with the bloc’s problems will only perpetuate the crisis playing out across Europe.
Our poor human brains, the good doctor says, simply aren’t built to cope with a sociopolitical entity as big and complex as Europe. One thing we not-so-evolved apes like to do is interpret information in a way that confirms our preconceived notions. This is called confirmation bias, and in simpler times it kept us out of harm’s way by encouraging preferences for things we knew to be safe. This is a limitation that afflicts economists right along with the rest of us. And so we see, for example, Wolfgang Schäuble, finance minister of Germany, and Yanis Varofakis, former finance minister of Greece, obstinately pushing diametrically opposed economic programs. Which is OK, says Dr. De Keyser, until people on both sides start to claim that adherence to the other guy’s economic school of thought is going to ruin the livelihoods of millions of people. Den Rest des Beitrags lesen »
ATHENS – Will Greece’s troubles destroy Europe’s currency union, or reveal how it should be saved?The recent controversial bailout deal – likened by some to the 1919 Versailles Treaty, with Greece in the role of Germany – offers the latest twist in the eurozone’s existential saga. The deal has caused a split in Syriza, Greece’s leftist governing party; opened a rift between Germany’s Chancellor Angela Merkel and her uncompromisingly tough finance minister, Wolfgang Schäuble; and spurred an effort by France to reassert itself within the Franco-German axis that has always been the “motor” of European integration.
Meanwhile, many of North America’s Keynesian economists, such as Nobel laureates Paul Krugman and Joseph Stiglitz, sympathize with Greece’s anti-austerity stance. Other economists, mainly in Europe, argue that Germany must assume a political role befitting its economic preeminence and must accept sovereignty-sharing (and burden-sharing) arrangements to ensure the monetary union’s cohesion and sustainability. Humiliating a small country and rendering it a virtual protectorate does not serve Europe’s long-term interest. Den Rest des Beitrags lesen »
ATHENS – The point of restructuring debt is to reduce the volume of new loans needed to salvage an insolvent entity. Creditors offer debt relief to get more value back and to extend as little new finance to the insolvent entity as possible.
Remarkably, Greece’s creditors seem unable to appreciate this sound financial principle. Where Greek debt is concerned, a clear pattern has emerged over the past five years. It remains unbroken to this day.
In 2010, Europe and the International Monetary Fund extended loans to the insolvent Greek state equal to 44% of the country’s GDP. The very mention of debt restructuring was considered inadmissible and a cause for ridiculing those of us who dared suggest its inevitability.
In 2012, as the debt-to-GDP ratio skyrocketed, Greece’s private creditors were given a significant 34% haircut. At the same time, however, new loans worth 63% of GDP were added to Greece’s national debt. A few months later, in November, the Eurogroup (comprising eurozone members’ finance ministers) indicated that debt relief would be finalized by December 2014,once the 2012 program was “successfully” completed and the Greek government’s budget had attained a primary surplus (which excludes interest payments). Den Rest des Beitrags lesen »
If anything, Germans are more hawkish on Greece than their leaders
TO HEAR Germany’s critics, one would think that the word and the concept of “austerity” was a dubious Teutonic gift to the world. In fact, Austerität is rarely used in German. It was borrowed fairly recently from English, which got it from French. The French got it from Latin, and the Romans took it from, of all sources, Greek: austeros means bitter.
What others call “austerity”, Germans call Sparpolitik, “savings policy”, which has a much more positive connotation. In the week after the new agreement between Greece and its creditors, many people in Germany felt baffled and angry, but also resigned, at becoming the avatar of unloved austerity. Within a day of the plan, leftists in Greece and elsewhere urged a boycott of all things German.
Wolfgang Schäuble has been the main bogeyman for opponents of Germany’s hard line in the debt crisis. A pro-Syriza newspaper portrayed the German finance minister in February as a leering Nazi promising to make soap from Greeks’ fat. Though irate, Mr Schäuble took it in his stride, having been in parliament for 43 years, and having suffered much worse before, including an assassin’s bullet. He has a long pro-European record, differing mainly with fellow Europeans on how much stress to put on rules and systems, rather than ad-hoc deals.
Nor was Mr Schäuble isolated. A few critics in Germany called his proposal, during the marathon negotiations, for a “temporary” Greek exit from the euro zone reckless and harsh. But some finance ministers from other euro-zone countries supported it. The Social Democratic Party (SPD), with whom Mr Schäuble’s Christian Democrats rule Germany in a grand coalition, is more divided. But the SPD’s leader, the economy minister Sigmar Gabriel, publicly defended his cabinet-mate, saying that he knew in advance of the temporary-exit plan, and that the only right thing to do was to consider every available option. Den Rest des Beitrags lesen »