Thursday, July 30, 2015

Labour's Lost Love

Apparently the Labour Party plans on winning the next election with the support of Ashbourne Annie. Good luck with that. While I'm sure there's more than a few voters out there who would appreciate help with their childcare costs, it's hard to see it being a big vote winner for Labour. And if it does looks like one then expect it to figure in more than a few manifestos.

But Labour's decline in Ireland has little to do with childcare costs or the Ashbourne Annies of this world. It goes a lot deeper than that. Recent analyses of Labour's performance in the UK shed some light on the decline. The problem for Labour in Ireland as in the UK is that it has lost its soul. Here's Luke Bretherton on the topic:
But if any meaningful language and vision of change is to emerge within the Labour Party, it needs to develop a way of talking about love and sin. To do this it needs to focus more on organizing and less on policy and procedure. It needs to be more populist and less progressive. To romance the electorate it must learn again to speak in the idioms of ordinary people. Rather than impose on them brittle schemes of social engineering, it needs to draw on the traditions and customary practices of the people it wants to represent in order to discover ways of forging a common life - a life that cares for the heart and soul, not just the market and the state. 
Admittedly that's not the sort of insight you'll get from a focus group in Ashbourne, or anywhere else for that matter. Modern political parties - on the left and on the right - are entirely managerialist in nature and simply offer to be better bureaucrats than the opposition. No wonder people are disengaged from politics.

Ironically, the left, including Labour, is a victim of its own success. The left replaced the politics of class identity and solidarity with the politics of cultural Marxism. The result was the destruction of much of the social capital and networks that had existed outside of the state and the market and had sustained the historical labour movement in the past. As Bruce Charlton observes:
What we have seen instead has been the near complete destruction of civil society in the West - and the process has bee all but un-remarked and un-noted as a general phenomenon. Almost all forms of human association have been brought under control of the state, most are irrelevant, participation in civil society is very low and feeble, many churches, professions social hobby groups been severely weakened or become extinct. 
Funnily enough, some on the left are beginning to notice that they've taken a wrong turn. John Milbank argues that Labour needs to differentiate between being 'market friendly' vs 'business friendly', recognising that the market economy - with its crafts and guilds which gave rise to the labour movement - predates the capitalist economy. While Chris Dillow thinks Labour needs to lose the blinkered view that only the State or the Market can solve all our problems: again, there are lots of social and economic alternatives that could restore the civil society that used to exist.

Indeed, such a project of restoration might unleash youthful energies that go far beyond the humdrum of politics. The always quotable Camille Paglia has this to say about today's young:
We have a whole generation of young people who are clinging to politics and to politicized visions of sexuality for their belief system.  They see nothing but politics, but politics is tiny.  Politics applies only to society. There is a huge metaphysical realm out there that involves the eternal principles of life and death. The great tragic texts, including the plays of Aeschylus and Sophocles, no longer have the central status they once had in education, because we have steadily moved away from the heritage of western civilization. 
It might be a hard sell to Ashbourne Annie, but it might just strike a chord with a lot of people who used to support Labour, until they realised that Labour no longer supported them.

Sunday, July 19, 2015

Jarrow II

Next year sees the 80th anniversary of the Jarrow March at the height of the Great Depression in England in the 1930s.  Some 200 men marched over 26 days from Jarrow to London in October 1936, to draw attention to the devastating impact of economic collapse on their town and community and to seek support from the British Government. It was a complete failure.

But after World War II, many attributed the new spirit of social reform to the memory of Jarrow and other protests like it that galvanised the country to never again allow such suffering in its midst.

I have a suggestion for the Greeks: pick 200 (or maybe '300' would be more appropriate?) to march (or lead a motorcade) from Athens to Berlin, taking in Bulgaria, Romania, Hungary, Austria, and the Czech Republic along the way: a distance of some 2,900 kilometres.  Calling on the support of political parties and communities in the countries they pass through who in turn are opposed to 'perpetual austerity' in order to forge a new consciousness across the European Union about what is happening and what needs to be done.

It might take longer than the march from Jarrow to London, but the fruits might come sooner too.

Tuesday, July 14, 2015

Where is Martin Luther when you need him?

The ugly just got uglier - via The Automatic Earth:
The structure of the EU itself guarantees that Germany will always come out on top. But they can only stay on top by being lenient and above all fair, by letting the other countries share some of the loot. 
To know how this works, watch Marlon Brando, as Don Corleone, talk to the heads of the five families in the Godfather. You need to know what to do to, as he puts it, “keep the peace”. He’s accepted as the top leader precisely because the other capos understand he knows how. 
The Germans have shown that they don’t know this. And therefore, here comes a prediction, it’ll be all downhill from here for them. Germany’s period of -relative- economic strength effectively ended this weekend. The flaws in its economy will now be exposed, and the cracks will begin to show. If you want to be the godfather, the very first requirement is you need to be seen as fair. Or you will have no trust. And without trust you have nothing. It is not difficult. 
Germany will never get a deal like the EU has been for them, again. It was the best deal ever. And now they blew it, and they have no-one to blame but themselves. And really, the Godfather metaphor is a very apt one, in more ways than one. Schäuble could never be the capo di tutti capi, no-one would ever trust him in that role. Because he’s not a fair man. But he still tries to play the role. Big mistake. 
The people here in Greece are being forced to pay for years for something they were never a part of, and that they never profited from. The profits all went to a corrupt elite. And if there’s one thing Don Corleone could tell you, it’s that that’s a bad business model. Because it leads to war, to people being killed, to unrest, and all of that is bad for business.
Though in fairness to Wolfgang Schäuble he did actually make the Greeks an offer they could have accepted, according to Ambrose Evans-Pritchard:
In an odd way, the only European politician who was really offering Greece a way out of the impasse was Wolfgang Schauble, the German finance minister, even if his offer was made in a graceless fashion, almost in the form of diktat. 
His plan for a five-year velvet withdrawal from EMU – a euphemism, since he really meant Grexit – with Paris Club debt relief, humanitarian help, and a package of growth measures, might allow Greece to regain competitiveness under the drachma in an orderly way. 
Such a formula would imply intervention by the ECB to stabilise the drachma, preventing an overshoot and dangerous downward spiral. It would certainly have been better than the atrocious document that Mr Tsipras must now take back to Athens.
It may be too late for Tsipras to go back and ask him for more details, but the chances are the Greeks may well refuse the Don's offer anyway.

I mentioned before that Europe needs a second Reformation.  Rather than seeking a better Don Corleone (a dubious ambition to say the least) we would be better seeking a second Martin Luther, willing to speak truth to power almost 500 years after the last one. Though it's unlikely he'll be a German this time round...

Thursday, July 9, 2015

Democaplypse Now

The only distinction that democracies reward is a high degree of conformity. Ambrose Bierce
Steve Keen thinks we are all turning Japanese, or as he puts it more starkly:
We are now in an era of permanent debt-deflation, countered only by government deficits…
The 'We' by the way is most of the developed democracies in the world. In the presence of crushing levels of personal debt - and absent high enough inflation to reduce their share of nominal GDP - then we're up 'Greek Creek'. Even The Economist has started channelling Steve:
So if inflation has been hard to achieve and default looks like a risky option, then stagnation (or near-stagnation) ends up being the outcome. That has been the case in Japan, where sluggish economic growth has been the norm since its asset bubble burst in the early 1990s. But stagnation only postpones the problem. Japan has faced less pressure than most, since it owes money mainly to its own citizens—it does not have to worry about foreign creditors. Yet even Japan has tired of the situation: Abenomics was designed to get the country out of the trap by generating more growth and inflation.
Greece is but a leading indicator of what the rest of Europe will have to face. With one of Europe's fastest ageing populations coupled with unaffordable pension commitments then more debt (private or public) is the last thing the country needs to escape its euro-denominated chains.  

An orderly exit from the euro is Greece's 'least worst' option right now. And if they have any sense they'll introduce the Drachma as a parallel currency before the exit is complete. By the way, we should do the same in Ireland as part of our own Anti-Fragile strategy. Always good to have options.

As usual, Nigel Farage isn't afraid to speak truth to power:

Saturday, July 4, 2015

Morality Tales

The unfolding Greek drama provides a teachable moment, via Interfluidity:
Among creditors, a big catchphrase now is “moral hazard”. We cannot be too kind to Greece, we cannot forgive their debt with few string attached, because what kind of precedent would that set? If bad borrowers, other sovereigns, got the idea that they can overborrow without consequence, if Spanish and Portuguese populists perceive perhaps a better deal is on offer, they might demand that. They might continue to borrow and expect forgiveness, and where would it end except for the bankruptcy of the good Europeans who actually produce and save? 
The nerve. The fucking nerve. Lenders, having been made nearly whole on their ill-conceived, profit-motivated punts, now fear that if anybody is nice to somebody who doesn’t deserve it, where will it end? I’d resort to that cliché about chutspa, the kid who murders his parents then seeks leniency ‘cuz he’s an orphan. But it’s really too cute for the occasion. 
For the record, my sophisticated hard-working elite European interlocutors, the term moral hazard traditionally applies to creditors. It describes the hazard to the real economy that might result if investors fail to discriminate between valuable and not-so-valuable projects when they allocate society’s scarce resources as proxied by money claims. Lending to a corrupt, clientelist Greek state that squanders resources on activities unlikely to yield growth from which the debt could be serviced? That is precisely, exactly, what the term “moral hazard” exists to discourage. You did that. Yes, the Greek state was an unworthy and sometimes unscrupulous debtor. Newsflash: The world is full of unworthy and unscrupulous entities willing to take your money and call the transaction a “loan”. It always will be. That is why responsibility for, and the consequences of, extending credit badly must fall upon creditors, not debtors. There is one morality tale that says the debtor must repay, or she has sinned and must be punished. There is another morality tale that says the creditor must invest wisely, or she has stewarded resources poorly and must be punished. We get to choose which morality tale we most use to make sense of the world. We do, and surely should, use both to some degree. 
Read the whole thing.

With the FT reporting that, come Monday, Greek banks may 'bail in' their customers via a haircut of 30% of deposits over €8,000 (because all the larger depositors removed their money weeks and months ago), then the teachable moment will drive its lesson home good and hard.

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