Tag Archives: #austerity

Why are our leaders so stupid?

April 26, 2016christianity, economic history, Economics, irony, Philosophy, politics, religion, Uncategorized#austerity, #classical greece, #economics, #Isis, #St.Augustine, #UKIP, Avveroes, Bonhoeffer, Boris Johnson, Brexit, Columbus, Derren Brown, Donald Trump, expansionary fiscal contraction, George Osborne, Muslim Fundamentalism, Protestant Evangelical Preachers, Rumi, St Francis, Tea Party, Walter Benjaminangrytunbridgewells

What puzzles me is why are people such as Donald Trump and Boris Johnson so popular. The first advocates the policies of a clown and the second pretends to be a clown to achieve political success.

When I was at school in the 1950s I remember being told about Columbus’s voyage to America. The Headmistress told us that it was a particularly daring adventure, as people at the time believed the world was flat and thought that Columbus was in danger of falling off the edge of the world. The truth was very different as I discovered later. Columbus was an experienced sailor who knew about the fishing grounds off North America that European sailors visited each year that the Atlantic Ocean was bounded by a large landmass to the West. Also it was known at this time that the earth was round. The classical Greeks had realised that the earth was round because they knew there was a horizon, beyond which the eye could not see, therefore the earth surface must be curved.If was the geographer Eratosthenes (276BC to 195/4 BC) who calculated with an incredible degree of accuracy the earth’s circumference. It is highly unlikely that Columbus was unaware of that the earth was round. My teacher was typical of those of the time that believed that people of the past had a childlike understanding of the world, whereas in fact the opposite was true.

We assume today that our knowledge and understanding is superior to that of the past. Yet our politicians constantly disapprove this notion. In the USA Donald Trump is likely to become the Republican Party’s candidate for the Presidency and Boris Johnson possible future Conservative Party leader What both these leading politicians have in common is an anti-intellectualism, both of them in their campaigns seek to appeal to most primeval of voters instincts. Trump blames the Mexicans for crime and wants to erect a wall to keep them out, and Johnson believes that Obama’s part Kenyan ancestry makes him anti British, because of the injustices the British inflicted on Kenyans during the days of Empire. To say that both these politicians are intelligent men who are just using anti immigrant and anti foreigner feeling to win support and that they don’t really believe what they are saying does these two men a disservice, they believe what they are saying. They are both populists who believe in simple solutions to difficult and complex problems, both of them personify the anti-intellectualism which is dominant in the our society. The political dialogue in both countries is dominated by the anti-intellectualism of those such as the Tea Party whose policies are moving closer to the mainstream in both countries. UKIP a party that gets much media coverage seems to be campaigning for things such as ending the smoking ban in pubs. Sam Goldwyn once said a movie never lost money for underestimating the intelligence of the average cinema goer, now in politics the belief is that no politician ever fails for underestimating the intelligence of the average voter. There is a change in society that has made stupid politics the dominant strand. Possibility it is linked to Walter Benjamin’s insight (when writing about the cinema) that contemporary media leaves little time or scope for reflection, as the media image is all involving leaving no opportunity for distancing necessary for reflecting on the projected image.

If I was to compare contemporary England with medieval England, I would say that the former is technically sophisticated but intellectually unsophisticated. This is not to say that there are not a community of intellectuals whose thinking is far superior to that of those of the medieval era, but these people are excluded from the public debate, which is dominated by the advocates of stupid politics. Obviously Trump and Johnson are not stupid men, they just find a politics of idiocy the most effective means of self promotion. What is most disturbing is that these men intend to pursue the policies they advocate, without regard to the damage caused to society through the introduction of their simplistic policies.

As an economist I can see the dangers of practising stupid politics. Britain has endured years of austerity because the government believes in a nonsense called ‘expansionary fiscal contraction’, that is cutting government expenditure will increase growth. Despite this policy having no economic credibility the opposition’s chief economics spokesman, a man who had a top class degree in economics from Oxbridge immediately signed up to the policy. Knowing it was fallacious economics made no difference, he did not want to appear out of step in with all the others who were practising stupid politics. Bonhoeffer said that the success of the Nazi’s was due to fact that good people did not speak up, similarly stupid politics is prevailing because the intelligent do not speak up. In England it is the noise and abuse made by the practitioners of stupid politics that scares of the intelligent when we most need them.

Intelligent women for example are put of entering the English Parliament because of the sexist behaviour in the bear pit that is the House of Commons. When female opposition MPs speak, male MPs on the government benches often make crude sexual gestures with their hands and shout sexist abuse. Also any show of intelligence is likely to get a politician pilloried in the tabloid press as a geek, as happened to the last leader of the opposition. Anti-intellectualism is rife in the English political culture and it’s preventing intelligent government.

What really provoked me into writing this article was a tweet by the illusionist Derren Brown, in which he referenced a You Tube in which two evangelical preachers explain why it is necessary for them to own private executive jets. One says it is so he can get some quiet time in which to talk to God, as he would be unable to do that on a flight with other passengers who would disturb him. Christ when he wanted a quiet place for meditation found a quiet spot in a garden or in the countryside, surely these two men could have done the same. These two men are Christian literalists they believe that the bible is the word of God and that all should to obey the word of God as explained in the bible. These two Christian literalists are following a practice condemned as being wrong as far back s the early Middle Ages. St. Augustine in his book on Christian teaching explained that the bible should not be taken literally, the word of the bible required explanation by the Christian teacher. Following St. Augustine’s advice all medieval bibles contained commentaries on the page side by side with the biblical text. These commentaries were there for the preacher to help him explain the text to the people. What these evangelical preachers are doing is practising a type of Christianity that even the least educated of medieval priests would have recognised as wrong. If these men had been medieval clerics they would have been relegated to some obscure rural parish where they could have done little harm. Yet these men are seen as representative of true Christian belief, religion seems to mirror the practice of stupid politics.

This simplistic religious view of the world that divides the world up into good and bad guys is very influential. George Bush’s crusade against the evil of Saddam Hussein’s Iraq is representative of good versus bad guy politics. Isis and other Islamic fundamentalist groups embody the same good bad guy philosophy. A philosophy that justifies the cruel treatment of all unbelievers whether they be Christian, Yazidi or Shia Muslim, as they are already condemned by God for rejecting the true religion and as such are wordless people. One of the main targets for Islamic fundamentalists are the Sufi Muslims who practice a more sophisticated and humane religion. The simplistic belief of the fundamentalists contrasts unfavourably with the sophisticated Islam of the medieval period as demonstrated in the poetry of the Rumi (1207-73) or the philosophy of Averroes (1126-1198). Christian thinkers owed much to these men, Francis of Assisi’s thinking was greatly influenced by the poetry of Rumi. Depressingly anti-intellectualism is not only a feature of Western politics but also in the politics of much of the Muslim world.

There are many sophisticated and intelligent clerics today but they do not get a hearing in today, because their speech is too subtle and nuanced for a world that wants simple truths. Rowan Williams the very intellectual former Archbishop of Canterbury was pilloried in the press as a bearded weirdy. They were not interested in the message from an educated Christian, for them Christianity is that of the simple minded fundamentalists.

There is no doubt that the public appetite is for stupid thinking, there is a wanting for people offering a few simple homespun truths that they claim will solve the world’s ills. Does not the constant diet of super hero films coming out of Hollywood demonstrate that something is very wrong in our culture? Hollywood appears to have opted out of making adult films, as it has correctly judged that the audience for its films want simple child like stories. The only hope is that the world particularly the Western world will tire of simple childlike stories and politics. When politicians such as Donald Trump and Boris Johnson get chance to put into practice their childlike policy solutions and those policies prove to be a resounding failure, the pendulum will surely swing in favour of a more grown up politics.

Fear of the outsider. moral panics – why governments alway fail to respond to the impending crisis

September 25, 2015economic history, Economics, Politics#austerity, #Greece, Colin Wilson, Jeremy Corbyn, Labour Party, Moral Panics and Folk Devils, Mutiny in the army, The Outsiderangrytunbridgewells

Colin Wilson wrote a book in the 1950s which became a sensation, it was titled ‘The Outsider’ and it caught the mood of the time. This was the era of the beatnik and French existentialism and his account of how he became an outsider through dropping out of society and rejecting the culture mores of the time captured the sense of angst of the time. It was a book of its time and is no longer read. Although Colin Wilson claimed a uniqueness of view, viewing society critically from the imagined position of an outsider has a long tradition. The tradition is demonstrated most clearly in the Christian religion as human society is constantly judged as failing from God’s perspective. Jeremiah the Old Testament prophet gave his name to a pessimistic philosophy of human failing.

Society needs the outsider as the stranger to society is the best person to question its mores. Too often a complacency sets in amongst the classes that make up the leadership of a society. They develop a fixity of view and regard anything outside the consensus of agreed thinking as heretical. While it may be unfair to claim that they view society as the best possible of all societies, it is they believe the best that can be achieved given the limits of human nature. In Britain the growing impoverished underclass can be ignored, as they are the price that has to be paid for the attaining of the good society. If all the members of this elite group of leaders have a similar background, this consensus of views is unlikely to be challenged. Britain provides an exemplar of this closed group think, the majority of our political leaders, lawyers and journalists have been to one of the elite colleges all having studied for the same degrees, whether intended or not Oxbridge does impose a fixity of views on our elite. From within this elite there may be critics but their criticisms are very muted. Only the outsider or stranger can question the views of this elite group as they are not bound into the group think.

The outsider or stranger does not have to be a foreigner just somebody from outside the elite groups. In America this outsider status is so highly valued that even insiders such as the billionaire Donald Trump claim to be outsiders. However when this claim to outsider status is real, the political establishment can become upset over the perceived threat to their status. Jeremy Corbyn a serial outsider in British politics has become the leader of the Opposition Labour Party. The reaction from the political and media class has become hysterical, he is challenging their world view. No greater threat can be conceived than a non sharer of group values being leader. Horror best describes their reaction, last week a popular tabloid stated that he intended to abolish the army, then rumour had it that all the senior leaders in the armed services threatened to resign if he became Prime Minister, threatening mutiny in the armed services. All Jeremy Corbyn has done is to question the unfairness of the current social system and why the . He is not an armed terrorist yet the modest threat poses to the existing inequality, demands that he be treated as one.

A similar tendency is demonstrated in Europe where the elites have thought it necessary to demonise Tsiparas and Syriza the Greek outsider and his outsider party. They are criticised as being naive, unrealistic and even childish. The purpose of the negotiations over the Greek debt was to nullify the threat posed by the outsider. Tsiparas it goes without saying was not a member of the existing political class but an outsider and as an outsider he had to be marginalised.

Outsiders may not always be correct but in not subscribing to the group view of the majority they ask the questions that will force the “insiders“ to reconsider their policies. There is in British politics one question the outsider would ask would cause a significant shift in policy. At present all the main three parties are agreed on the need to reduce the government deficit. Yet there is a much larger deficit which is never mentioned, the banking sector deficit which is five times greater than the government deficit. An outsider would ask if debt reduction is so important while is all political debate and decision making focused on the one smaller debt. A debt is a debt, whether its run up by the government or the banks. Interestingly this is a question that never asked in other European countries. Germany for example has a banking deficit of 324% of GDP, yet German politicians never question whether this is sustainable.

Fear of the Outsider

However all too often the outsider is feared and disregarded by the governing classes and the much needed change in the policy direction does not happen. Maynard Keynes a respected academic but an outsider to the conventional economics of his time (1930s) was at first ignored and later accepted. His outsider views of how to manage the economy had become the views of the insider by the 1950s. More usually the governing classes react with horror and fear towards the outsider, ignoring the very valid claims they make for change.

The fear of the rich and powerful insiders can be understood in the sense that outsider groups threaten their wealth and privileges. Naturally they would act against any such threat, however the reaction of the rich and powerful insider groups to the outsiders goes beyond this and borders on hysteria. One British army general was reported in the press as saying that there would be a mutiny in the army if Jeremy Corbyn the radical Labour leader became PM. Given that this nameless general was not exposed and dismissed, it seems likely that his views are shared by many senior officers. Yet this can only be seen as an over reaction, as the policy changes proposed by Jeremy Corbyn are quite modest, he is not advocating violent revolution.He is a Gandhi rather than an al Baghdadi (leader of Isis). A man who seeks to persuade, pacifists don’t tend to practice violent revolution. All abuse and fears expressed in the reaction of the insider groups seems out of all proportion, however there is an explanation for this behaviour.

One is that there is a moral panic developing amongst these powerful insider groups. The best example of a moral panic comes from the writings of Stanley Cohen (Folk Devils and Moral Panics). There were he said a small number of shuffles between two youth sub cultures on popular holiday beaches. The two groups where the mods and rockers, while there was plenty of noise there was little real violence. Yet the press wrote up the story, these young men were a feral group threatening the existing social order. What disturbances there were few and easily put down by the police. Similarly the press particularly the tabloid press have conjured up a folk devil in Jeremy Corbyn. He is seen as an agent of anarchy and disorder who threatens the very fabric of society. This fear justifies a variety of measures to disempower the social movement he represents. In this atmosphere the general who threatens an armed insurrection to prevent this radical coming to power is applauded. Other plots will develop to prevent this radical ever becoming Prime Minister, such as a parliamentary coup which removes his as leader. Just recently one senior party was reported as discussing when would be the best time to remove him through a parliamentary coup.

This over reaction by the political, financial and industrial elites will prevent them from acknowledging that his support comes from a mass movement that has a number of very justified discontents with the contemporary social order. A disproportionate number of his supporters are young and they are the group that has been dispossessed of the greatest wealth. The politicians have imposed high tuition fees on those going to university, so ensuring that they will be in debt for the rest of their lives. They have presided over a growing dysfunctional housing market in which it is increasingly impossible for the young to buy a home, leaving them at the mercy of rapacious private landlords. Just as the aristocratic elite were deaf to the cries of the impoverished poor in the 18th century, so the parliamentary class of today are deaf to the cries of the young. This deafness is not just simple callousness, but having created a folk devil out of Jeremy Corbyn and his supporters they are incapable of dealing rationally with them and their demands for change.

This moral panic is not just limited to the British elites and insider groups but this fear is widespread throughout the governing classes in the West. The horrified reaction of the European Union politicians to the leaders of Syriza attempts to ameliorate the harsh bail out terms imposed on Greece was typical of those in the grip of a moral panic. The politicians of Syriza were childish, naive, unrealistic dreamers. Once having demonised these politicians they did not need to treat them as equal negotiating partners. Instead they could abuse the power they had to compel the Greeks to accept the harsh austerity terms they wanted. This was done through the simple expedient of denying Euros to Greek banks forcing the country into near total collapse through the collapse of its banking system.

The leadership groups in society are often gripped by these moral panics, panics which blind them to the real nature of their opponents. Perhaps the McCarthyite panic that gripped the USA in the 1950s, when the country was gripped by the fear of a non existent communist conspiracy is the best example. What this fear does is to prevent the governing classes from coming to terms with the outsider groups and never dealing with the very real problems that have caused these movements to form. Whatever very real problems Britain faces the major problem is getting the governing classes to admit there is a problem, to accept that the outsider groups have a valid viewpoint and that they should listen and not suppress them. Our governing classes have seen the ‘canary in the mine die’ yet they ignore the warning signs of imminent danger.

Scapegoating the dominant economic policy of our times

September 17, 2015economic history, Economics, religion#austerity, #Greece, Christine Lagarde, Financial Crisis of 2008, Golden Dawn, Professor Wren-Lewis, scapegoats, Sodom and Gomorrah, The God of the Market, The Old Testamentangrytunbridgewells

There is a difference between the economics practised by politicians and the economics taught in the universities. One commentator has called the former macromedia (Professor Wren-Lewis) meaning that politicians have developed their own unique understanding of economics. The politician’s economics is a mish mash of economics, common sense and prejudice. While the economy is doing well this misunderstanding of economics matters little, however the problems occur when this misguided economics is the basis of policy making in the time of crisis. This is seen in the various crisis that have afflicted Europe since the crash of 2008/9. Greece is perhaps the most notable policy failure, although even the one self proclaimed success story the UK, if far less successful than claimed by its leaders. The Central Bank interest rate remains at crisis level of 0.5% as even a modest increase will derail the recovery.

The consequence of this misguided economic practice is that all governments can now do is hope that the next crisis will not occur on their watch, as they have little clue as to how to tackle it. Political economics is informed by prejudice as with many a primitive religion and always looks for scape goats to blame for provoking the anger of the Gods. If they can identify those who have angered the Gods, they can deflect blame from themselves. This policy means the government won’t have to undertake of those difficult policy measures that would mean taking on those powerful interests that would oppose change. In Europe a convenient scape goat has been found in the people, much as in many a fundamentalist religion it is the misdeeds of the people that has brought suffering on them. God punished the people of Sodom and Gomorrah by turning their cities into salt, while the God of the market punishes the people by making them poor. In the case of Sodom and Gomorrah it was the sexual licence that brought down on them the punishment by God. In Europe it was the greed of the people. They were not content with the modest income the market allocated them, they wanted more. More generous wages, sick pay, benefits of all kinds, the greed of the people know no bounds and forced the governments into borrowing more and more and forcing the government into greater and greater debt. The God of the market punished the people with the great crash of 2008/9 and his angr could only be appeased through an act of penance. This penance was to intended to get the people to reject their greedy lifestyle by embracing austerity. Since the people would not willing do this themselves government would have to act to compel them to do penance. Penance was enforced through cutting people’s incomes, such as by welfare cuts, wage cuts or wage freezes Once people had learnt the error of their ways after a period of suffering, prosperity would return.

(Using ‘The Old Testament’ to explain the practices of contemporary politicians might seem strange. However once it is realised that the sophistication of policy making by the political leaders has advanced little since the time of ‘The Old Testament’; this use of ‘The Old Testament’ stories as a metaphor to explain contemporary political behaviour is valid.)
One consequence of this is that it is hard to make a reasoned defence what is an irrational policy so the opponents of the austerity programme must be labelled as deviants, to prevent their policies being given a hearing. Politics can be divided into the sensibles and the foolish. The upholders of the agreed of consensus of policies are the sensibles and their opponents are as but foolish children, who know no better. One notable sensible is Christine Lagarde of the IMF who described the Greek politicians who opposed austerity as children. In Britain since the Labour party members elected a leader opposed to austerity he has been subject to a constant stream of abuse by the media and the austerians of his own party. This last group have pledged that they will do all in their power to prevent a move away from the agreed policy consensus. In terms of ‘The Old Testament” metaphor the guilty people are asking to practice again those bad habits that got them into trouble in the first place. Only the superior people that is the austerians in parliament understand what is best for the people.

When the next crash occurs the austerians will tell the people it is because they did not willingly embrace poverty. They again are at fault and the only solution is to subject more of the people to increasing poverty so they learn the error of their ways. Only in that way can the God of the market be persuaded to relent and ease the suffering of the people. How long this policy approach will work is unknown. It will at some stage be challenged by an equally irrational ideology or belief system that cannot be discredited by upholders of the dominant austerian ideology. Perhaps the ideology of the Neo Fascist Golden Dawn in Greece will be that of the group that successfully challenges the dominant irrational belief system with that of a more compelling narrative, but one that is equally irrational.

The Demise of the Liberal Democratic State and the rise of the Corporate State

July 21, 2015economic history, Economics, politics, short term ism, society#austerity, #Freemarketeconomics, Anne Pettifor, European Union, Francis Fukuyama, Greek Crisis, Iraq Invasion, Liberal Democracy, mafia, Neo-Liberalism, New Orleans Floods, Oligarchs, Soviet Union, The Corporate Stateangrytunbridgewells

Francis Fukuyama was wrong the 1990s did not herald the triumph of liberal democracy, but its showy demise. George Bush’s attempt to impose democracy on Iraq by force demonstrated the folly of this premise. Even the democratic programme that he sketched out gave a dominant role to the business corporations that would effectively control the new Iraq. Giving lie the all the claims about remaking Iraq on democratic lines. Prior to the invasion there was a quarrel between two of the main participants in the invasion over the distribution of the spoils between the victors. British oil companies believed that the post invasion constitution gave too much to American and too little to British oil companies. The chaos of the post invasion Iraq denied the business corporations the influence and income they expected. Although the part of the profitable oil industry that is not under the control of Isis, is run by American oil corporations.

Perhaps it is in Europe that the evidence of the new nation state is best demonstrated. What is developing in Europe is a new corporate state, a state which functions primarily for the benefit of the business corporations? The financial crisis of 2008/9 illustrates this all too clearly. Due to irresponsible lending practices the banks failed, even if only a few crashed all threatened by the crash. Rather than let the banks fail the governments of Europe injected cash into the banks to prevent them failing. In Britain the bailout was equivalent to 10% of GDP, although given the huge size of the banking deficit the government was effectively mortgaging the countries assets and wealth to save the banks. It was not the banks that had to pay the price of their failure but the peoples of Europe. Europe wide austerity was regarded as necessary to reassure the banks creditors of the financial worthiness of the nations that were the guarantors of their debts. A government with small debts would be regarded as a better guarantor of the banks credit than one with large debts. Surprisingly the banks got of almost scot free apart from a demand that they increase their cash reserves to 3% of total liabilities and ring fence retail banking, on which the banks are stalling. The Banks are now asking for the government eforms of an increasingly dysfunctional financial sector. In response to the pleas of the banks the demand to increase their cash reserves to their required total has been constantly put back, nowhere more so than in continental Europe. Despite claiming a government of financial prudence Germany has been one of the worst offenders. Only the other week the government in Britain refused to renew the contract of the chief executive of the Financial Conduct Authority as the banks had accused him of being to hard on them. In Britain as in Europe, what the banks want the banks get.

There are many serious problems that the government in Britain needs to tackle but one of them is not the reform of the state funded broadcaster the BBC. The agreement under which the BBC is funded is up for renewal soon and the government has used this as an opportunity for root and branch reform of the broadcaster. One of the main backers of the winning Conservative party was News International, the largest shareholder in Sky TV. The directors of this company has long argued for a change in the nature of the BBC, a change that would make it less of a competitor to Sky News. Its former Chief Executive James Murdoch argued for a change that would benefit Sky TV. He said in a lecture that the BBC had a role as an innovative producer of TV programmes but it was not its role to exploit those innovative programmes. Once those programmes had been developed they should be given to the commercial broadcasters as the role of the BBC was to experiment not create popular TV. Unsurprisingly the main conservative spokesman on the media has echoed these views. He wants to end the BBC’s role of producer of popular programmes that compete with those of Sky TV. There is little doubt that one of the priorities of this government is to repay its corporate sponsors with favours.

Rather than continue with list of items that illustrate the increasing corporatisation of Britain, I want to compare the British governmental system to that of Russia. The Russian system of governance is often referred to as a mafia run oligarchy. All these commentators that do so fail to recognise the similarities between the Russian and British system of governance. Probably the only difference is in the level of criminality of the oligarchs in each country.

When the Soviet Union collapsed in 1990 the reformers in charge of the country wanted to adopt the free market of the West, so as to enjoy a similar level of prosperity. However they rushed into privatising their stated owned industries, without realising that the free market economies of the West were only successful because the market operated within a strong legal system that prevented the many abuses that occur in an unregulated market. Given what was literally a ground zero, the oligarchs were able to remake the Soviet economy to their own liking. They bought up the businesses at bargain prices and controlled the various sectors of economy, however for complete control they required control of the governmental system. This they achieved through bribery, intimidation and violence. Now President Putin runs a collective oligarchy, an oligarchy that exploits Russia wealth largely for its own ends. Opposition to the oligarchy is suppressed in ways similar to the former communist system, critics are subject to intimidation, often including violent assaults, and if that fails they are sent either to a mental asylum or camp where the mistreatment continues.

The oligarchs in Britain and Russia believe in a similar free market system, that is a free market in any obstacle to the free operation of business enterprise is removed. Obstacles such as trade unions, labour protection legislation and government interference. In Russia there was little too prevent the rise of the oligarch as in a ground zero economy (one in from which the state was largely absent) there could be no effective opposition and by controlling the government they can ensure that none arises. The task for the British oligarchs was much harder they had to create a society that was favourable to the free market (as they saw it). This meant they had to capture government and ensure that it introduced measures to remove all the obstacles to the smooth running of the market. Chief of these is the trade union movement and not surprisingly one of the first measures of this new corporate friendly government is legislation to further emasculate the trade union movement, so as to ensure that it cannot interfere with the smooth running of the market. The proposed legislation will effectively prevent trade unions from striking, so removing the threat they pose to employers.

There is however one significant difference between Russia and Britain. Elections in the former are largely controlled by the state and there is never any likelihood that the opposition can come to power. In Britain elections are open and fair and the opposition can become the government. However the two main political parties are coming to resemble each other, when the opposition criticises a government policy, it is not so likely that they disagree with the policy as believing that they could implement it better. Increasingly the two main parties are becoming the mirror image of each other, but are committed to the philosophy of Neo-Liberalism. Unfortunately elections are increasingly becoming a competition between the groups competing to be the representative of corporate Britain. One of the main concerns voiced by competitors for the leadership of the opposition party is that the previous leader was too distant from the corporate interest. Unfortunately too many politicians now see politics means to win a seat on the board.

The recent history of the Greek crisis shows how dominant is the corporate interest in Europe. When the Greek crisis caused by the nations over indebtedness occurred, the European policy makers could have agreed to a restricting of the Greek debt. This restructuring would have either involved pushing debt repayments in some time in the distant future or forcing the nation’s creditor to take a ‘hair cut,’ that is force them to accept a downsizing of the Greek debt. Either of these policies would have hurt the corporate interest, that is the banks would have lost billions of Euros in the ‘write down’ of the loans that they had made to Greece. Instead the European politicians forced on to the Greek government a programme Neo-Liberal market reforms. These policies were intended to make the Greek economy more competitive and boost exports. The surplus earned on the export trade could be used to pay of the Greek debts. Unfortunately this Neo-Liberal experiment failed and after five years of austerity, economic growth has stalled and GDP is down 25% making it increasingly unlikely the debt will be paid.The International Monetary Fund states that payments on Greek debts should be deferred for thirty years, as only then will the economy have grown sufficiently to enable the Greeks to begin to pay off their debt. Despite the urging of the USA the European politicians stubbornly support the banks cause and refuse to allow the Greek nation any debt relief.

Quite possibly the triumph of the corporate state is best demonstrated by the proposed Trans-Atlantic Trade and Investment Programme (TTIP). When this treaty comes into force any business corporation that believes government policies have caused it a loss, can refer their case to an international arbitration panel. This means that if government legislation aimed at limiting the harmful effects of tobacco restricts the sale of this product, the tobacco company can go to the panel asking for compensation or a revoking of the act. There is one such dispute between a South American company and an American Tobacco giant. Soon such actions will become common place and the sovereignty of European governments will be undermined. In Britain at least too many politicians are in favour of this policy, as they believe their support for TTIP will earn that a well paid position with one of the business corporations, they will willing surrender power for cash.

There is one failing of the corporate state and that it is remarkably incompetent, in that it lacks the competence to deal with a major crisis. The banks only survived the crisis of 2008/9 because they were supported by the government. There will be other such financial crisis in which business corporations will only survive with the support of government. There is in Europe the unresolved debt crisis, not the one of popular imagination but the combined private sector banking debt. A debt that in Britain exceeds 400% of GDP and in Germany 324% of GDP.

These business corporations have only a narrow minded view of the world a view one that is focused on their own self interest. The banks in Britain have been campaigning successfully for an end to restrictions on their less desirabale activities and the government has complied. It has largely passed unnoticed but at a recent City of London banquet the governor of ‘The Bank of England,’ said he saw no reason why banks should not be allowed to increase their assets to 900% of GDP. The majority of a banks assets are loans which are funded by borrowing from others, so if Mark Carney has his way the debts of British banks will rise to astronomic levels. There will at some time be a crash that in scope will exceed that of 2008/9. A crash of these dimensions would force a collapse of the corporate state as the government will be no only body with the authority and power to avert the collapse and rebuild the damaged society. One economist Anne Pettifor has written a book called ‘The First Word Debt’ crisis, a book which is ignored by all European politicians. Rather than act on the basis of the precautionary principle, the European politicians seem to act on t’he eyes firmly shut’ principle.

All political systems contain within themselves the seeds of destruction, in the social democratic society of the past it was the conflict between the major business corporations and society. A conflict that the former won. The corporate state is more unstable than other political systems as there is no great vision or commonality of view that unites the community of business corporations. The only commonality is their hostility to any regulation of the free market and in reality they are a number of social units all pursuing their own self interest. This means that the corporate society lacks the strong mechanism for directing society to towards a greater end other than mere self interest, lacking this overarching powerful body, society can only fall apart in the event of being struck by an economic or social tsunami.

The great floods that devastated New Orleans demonstrate how the new corporate state fails to cope with crisis. Cuts made to the emergency and environmental services made at the behest of a business dominated tax cutting government had left these services unable to respond adequately to the floods and their inaction prior to the flooding worsened the devastation. The levies that protected the town were in a state of disrepair and unable to resist the tidal surge and broke. All the world could do was watch in horror as the American government failed to halt the destruction of New Orleans.

The failure to resolve the Greek crisis points to a future crisis in Europe. Greece is but a small country accounting for but 3% of the European Union’s GDP, yet the European Union struggles to find a solution to its problems. It’s only success is in replacing the various democratically elected governments that are hostile to its austerity programme. Greece only rid itself of the military junta popularly known as the Greek colonels in 1974. The Greek army is the one institution that has not been devastated by the Neo-Liberal reforms imposed by the EU and it may be the only body that is capable of eventually restoring social order after the havoc caused by the latest austerity and reform programme. Possibly this is the future for us all as the failures of the Neo-Liberal or corporatist state can only result in its replacement by authoritarian state supported by the military. The pro business agenda so having hollowed out the democratic state its institutions lack the resources to respond to a major crisis. This is demonstrated by the financial crash of 2008, the Chancellor of the time commented in a newspaper article that the crash was imminent. Yet despite this knowledge the government and Treasury were incapable of taking any action to avoid the crash, much like a rabbit that is frozen by fear when faced with the headlights of an oncoming car.

Machiavelli and the Madness of Politicians

July 17, 2015Economics, Philosophy, Politics#austerity, #Freemarketeconomics, European Commission, Greek Crisis, IMF, Machiavelli, Madness, Neo-Liberalism, Syriza, Troika, Tsiparasangrytunbridgewells

What puzzles me is why when we have the best educated politicians in history, the governments that they lead are so abysmal. At least one European leader has a doctorate and most were educated at the elite universities in their own countries. Why are these so well educated leaders so awful at the business of government? The only plausible answer that I can find plausible is that they are affected with a degree of madness in that they consistently mistake the world of their fanciful imaginings for reality.

Perhaps this is best demonstrated with the current crisis in Greece. The leaders of Europe insist on repeating the changes they have forced on the Greek economy which rather than solve Greece’s debt crisis has worsened it. The programme of imposed austerity and so called structural reforms pushed Greece into a situation which resembles the Great Depression of 1929 to 1939. Obviously a country in suffering an economic recession is less able to pay its debts than one that is booming. Yet the so called Troika (the European Commission, the International Monetary Fund [IMF]) and the European Central Bank) insist that the Greeks must accept even greater levels of austerity if they are to receive the bailout funds necessary to keep their banks open. It is obvious to all that this a policy that won’t work, yet our European rulers insist that it must continue.

Reading this it seems that there is a hint of madness in the decisions of the European policy makers. They were all the time confusing the world of their imaginings with the Europe of today. Anybody can misunderstand the reality they face yet to consistently do so suggests madness. The IMF has twice produced reports saying that Greece is incapable of repaying its debts, the latest report suggests that Greece should be granted a moratorium of 30 years before it has to repay any of it debts. Yet despite the evidence from the Greek economy demonstrating that the policy forced on it by the Troika has put it into long term decline making it less likely to the economy will ever achieve a level of growth that will enable it to repay its debts, they continue to insist that the policy must not change. While it is possible that the European leaders directing the policy of the European Commission can be deluded as to the effectiveness of their policy, what is most surprising is that Christine Lagarde as managing director of the IMF is supportive of this failed policy when her own organisation is writing the reports stating that the policy is wrong headed. Why this level of delusion, why do these politicians fail to see what is in front of their eyes? Why are so self evidently mad?

The best explanation for the behaviour of our contemporary leaders comes from the writings of Machiavelli. In ‘The Prince” there is a chapter in which the following scene is described. The son of one of the Greek tyrants is accompanying his father on a walk. Then as they are walking past a field of wheat, and the son he asks how is it possible to remain in power when their are so many potential enemies in society. Rather than answering his son directly this man picks up a stick and knocks of the heads of the tallest stalks of wheat. European leaders in their dealings with Greece have adopted a similar policy. Whenever a Greek leader appears who might threaten their policy of austerity, they destroy them. The greatest threat the European leaders have faced is Tsiparas so they had set about undermining him and destroying his power base. In denying the Greek banks access to much needed Euros they have reminded him that they possess the power to close the banks and with that wreak havoc on the Greek economy and society. Rather than risk chaos, Tsiparas has capitulated. The leaders have calculated that the terms that they have forced him to accept will force his eventual resignation and destruction of his radical Syriza party. Not only these politicians cut down the tallest wheat stalk in Greek society, they have made it clear that they will do the same to any other wheat stalks in any other European country that might threaten their authority.

This leadership style that Machiavelli demonstrated is not a style of leadership appropriate for a democratic society, which depends on political dialogue and consensus to function effectively. If the opposition is destroyed or emasculated the political dialogue becomes extremely limited, as all the potential leaders realise that only by following the accepted script can their careers advance. Consequently there is a political echo as what leaders hear from the political dialogue is but an echo of their own views. ‘Yes’ men and women become the vogue in politics, individual thinkers self exclude, as they must pursue careers outside politics as the system penalises individual thinkers. They realise if they entered politics would be marginalised in the political set up or more likely as in the Greek example have their political reputation and career destroyed by a hostile elite of non thinking conformists, who hate any threat to their authority. This gives leaders a sense of omnipotence as all they ever hear is their words repeated back to them. Political difference is viewed in the words of Christine Lagarde, as not being ‘adult’ and not worth consideration. The views of Tsiparas and the Greek leaders were not worth considering as they were not spoken in the language of the elite. They were children who failed to understand the grown up world of the political elite.

Never having to engage in serious dialogue with your rivals and their alternative views, leads to an arrogance of power. By never facing contradiction these leaders cannot but believe in the rightness of their views. These leaders have been driven mad by power, they believe the acquisition of power sanctities the rightness of their views. What they say is true, anything else is heresy. They are like so many Kim Jong-uns who don’t have to pay regard to any view but their own. Kim Jong-uns that will resort to any tactic to destroy the reputation and career of rivals.

There is one great failing in Machiavelli’s book ‘The Prince’ he failed warned leaders that acquisition of power does not equate with greatness of mind. What we have in the West is a series of mediocre leaders who have attained power by Machiavellian means, but who lack the greatness of mind to govern effectively. In Britain and Europe the means to power is also the means by which great individuals are excluded from power. Mediocre thinkers who have attained power by manipulating the political system overestimate the significance of their success, playing the system well does not equate with greatness. The technocrat governments appointed in many southern European countries are not experts in economic management but timeservers willing to do the bidding of their political masters. The technocrats that Europe will put in charge of the running of the Greek economy, will be no more successful than their predecessors. The misery and damage they inflict on Greek society will be hidden behind a serious of dubious statistics that appear to shw success. Britain and Europe are ruled by a number of petty Napoleons who are blinded by power and in the madness, they believe that their insane visions represent what is best vision for humanity. We are ruled by the self deluding inhabitants of a political madhouse.

Superstition not reason is the basis for much government economic decision making

June 25, 2015Economics, Politics, religion, Uncategorized#austerity, #classical greece, #Freemarketeconomics, Banking sector deficit, superstition based economicsangrytunbridgewells

The English have any good luck mannerisms which are intended to ward off bad luck. One which I particularly do is crossing my fingers when I mention something dreadful, to prevent it occurring to me. Another is touch wood, as in I have not caught flu this year touch wood. Surprising this superstition is the basis of much economics practised by this government and to be fair many others.

Economists claim scientific status for their subject on the grounds that it based on quantitative analysis, analysis from which predictions can be made about future events. They will admit that in their predictions they cannot match the accuracy of those of a physicist, but the difference they claim is one of degree not nature. Governments invest billions in IT programmes that use the tools of economic analysis try to predict future events in the economy. It is telling that the most accurate predictions about the economy are made after the event, when there is more reliable information about the event that has taken place. Unfortunately the errors in these programmes have caused real problems in the past, as in 1976 when government statisticians calculated that the country was experiencing a horrendous balance of payments crisis; yet when later revisions of the figures showed that the initial calculations were inaccurate the damage had been done. The revisions came to late to avert a financial crisis which included a large outflow of currency and forcing the government into borrowing from the IMF and the introduction of an austerity programme which effectively ended social democracy in the UK.

However past history demonstrates that this attachment to facts and figures is more apparent than real. One of the theories underlying the initial Neo-Liberal free market economics, (practised by all British governments since 1979) was the quantity theory of money. This theory states that if money supply increases faster than productivity, inflation will result as their will be more money chasing the same number of goods. The control of inflation that as now was one of the chief concerns of government policy. In the 1980’s when this theory took hold one of the first policies that the government’s introduced was a policy to reduce the money supply to cut inflation. This in Britain caused the recession of 1980 and the loss of 20% of it’s manufacturing base, and this was decreed a good result, as in the new low inflation economy, growth would soon compensate for the losses of 1981/82. However after several years in power politicians of the Neo-Liberal persuasion seemed to forget about the quantity theory of money, despite it being the guiding principle of their policy decisions in the early 1980’s.

If Neo-Liberal economists wanted a demonstration of the truth of this theory, it is in their actions over the past thirty years. Politicians in Britain and Europe have overseen a huge rise in bank credit with a consequential inflation in asset prices, particularly in housing. According to the latest figures the debts of the UK banks total 340% and 324% respectively of the nation’s GDP in Britain and Germany respectively. Instead of the politicians reacting negatively to this huge rise in bank credit and the inflation that it induces, they have done all they can to keep that inflationary spiral going ever upwards. When in the crash of 2008/9 these over indebted banks should have experienced a painful devaluation of their assets, as many of their debtors defaulted on loans. Instead the governments of Europe pumped money into these banks to prevent any real deterioration in their loan books. Consequently the banks have continued with their irresponsible behaviour and their loans spiral ever upwards, pushing up house prices. The politicians believe that the inflation in house prices contributes to the ‘feel good’ factor and that any downward movement in house prices would mean instant unpopularity and losing office, which would result if they reduced money supply through a reduction bank credit. Foolishly the Neo-Liberal politicians and economists put electoral popularity above a painful restructuring of the economy, which would mean no longer using inflation as a driver of growth.

Recently the governor of the Bank of England announced that he was happy to see bank deposits (largely loans) to increase to 900% of GDP. Sometime in the future there will be a painful awakening for the over indebted Western European economies. All this is detailed in painful detail by the economist Anne Pettifor in her book “The First World Debt Crisis’.

There is a blindness in economists and politicians to real nature of the problems of debt. Never in any debates in parliament will the huge private sector debt be mentioned. Policy is based on the hope that the problems that this huge debt will cause will never happen. It seems to be if you ignore the problem and hope for the best the debt problem can be wished away. Whether I call it crossed fingers or touch wood policy, it is a very naive belief by economists and politicians that all will be well in the future. It is economics as superstition in that if the real crisis is never mentioned it will never happen.

Going even further I can suggest that there is an element of voodoo about government and inter government policy making. They seem to think if they sacrifice one element of debt it will appease the Gods of economics and prevent them from causing the house to fall down. Rather than sacrifice a chicken they sacrifice public spending. They seem to hope that the misery inflicted on those dependent on welfare will appease the Gods of the economy. If the bankers are the Gods of the economy it has worked, as there have been no adverse movements in the financial markets against the pound sterling. They certainly are satisfied with the sacrifices made by the poor. However they are not the Gods, as is demonstrated by their failures in 2008/9, the Gods (if they exist) are much more abstract figures not to be appeased by minor sacrifices, inevitably they will visit punishment on the foolish and naive governments of the West.

The Lazy Greek A Contemporary Myth

June 14, 2015economic history, Economics, Politics#austerity, #Freemarketeconomics, #liberty, Cafe culture, Coffeeangrytunbridgewells

The Myth

When I first went to Greece several years ago I bought like many visitors a guide book. There was in that guidebook a picture of a group of Greek men at a table in a cafe idling away the time and playing back gammon and drinking coffee. I imagine that image or similar appeared in several guide books and is responsible for the image that most northern European’s now have of the Greeks, that is a people who spent hours idling their time away gossiping.

There are many erroneous stories circulating in the press about work shy Greeks, but I intend just to focus on one, that is the pensions story. This one unlike many others appears to have an element of truth.One the reasons the International Monetary Fund (IMF) has given for pulling out of the current negotiations is that the Greeks extend further financial support to Greece is their refusal to reduce the size of their pension bill. At present the pension bill accounts for 10% of GDP, while the average for European member states is 2%. It seems from this that the Greeks are molly coddling their pensioners by paying than far more than other states pay. However this ignores two key facts and the first is that the austerity measures imposed on Greece have reduced the size of the economy by 25% which means if the economy shrinks and the pension bill remains the same, it will become a proportionately greater share of the GDP. If this is taken into account in pre austerity Greece the pension bill would have been about 6.5% of GDP, a figure not too different from that of the UK and Germany. Also this 2% average is a figure much reduced by the minimal pensions paid in many of the new Eastern European states. These states pay minimal pensions or none to their retired and this drags down the European average. It does seem that the EU and its member states want to push Greek pensioners not poverty through reducing their pensions to a nearer the Bulgarian average . Any astute observer would have noticed that reports in the newspapers that pensions in Greece had been reduced so much in response to the demands of the EU that most represented more than the lowest of living wages.

What the EU seems to doing is using Greece as a template for a Europe that is fit for bankers and big corporations but unfit for people. This is not to deny that there is much that is wrong with the Greek economy, but that the wrong problems are identified and the solutions that are imposed to solve the problem are the wrong ones because they are addressing the wrong problems. The austerity programme can be best explained by the use of metaphor, the programme has wrecked a badly built but functioning house and left it its place nothing but some waste land.

In Praise of the Greeks

What economists particularly those in government employ forget is one of the first lessons they learnt, which s that wealth is anything that is valued by people. Economists much prefer wealth that can be measured in monetary terms and don’t factor into account in their calculations, wealth that lacks monetary values, yet this wealth can regarded as equally valuable by its receipts. If out of work time was not valued, people would want to work as many hours as possible. Instead much to the frustration of employers they want time at home with family or friends or just leisure time to enjoy. In consequence there has been a move in northern Europe to increase the economic cost of out of time work to high as possible, so as to discourage workers from taking it. This has been achieved by reducing wages (particularly in Britain) so employees are forced to work for many more hours to earn a living wage. Employers have persuaded successive governments to weaken all the protections that workers formerly enjoyed at work. This means that workers with insecure employment, who are in fear of losing their jobs are much more willing to sacrifice their out of work time to meet the employers demands. Workers for instance on zero hours contracts in Britain risk not getting work ,if they refuse their employers request to come into work, no matter how unreasonable the request. Greece represents a throw back to the time when workers had rights, the right to refuse to adopt modern flexible working practices.

It looks to the politicians of Northern Europe and the USA that Greek society as a whole is conspiring to prevent the obvious and much needed structural reforms, most especially in the labour market. Labour flexibility means in simple terms that workers are at the disposal of their employers, who can use them in what to the most efficient ways, unrestricted by trade unions, politicians or culture. This can mean as in Britain that a split shift system is employed, so staff are only called in at busy times, times such as early morning or evening when the family needs the working parent most. Therefore in a low productivity society such as Greece it was obvious that it would incur debt problems, as it was paying its workers too much for too little work. Greece needed to be carried kicking and screaming into the modern age. Once Greece had adopted the reforms so desired by the Northern Europeans it’s newly productive workforce would produce the surplus goods for export which would reduce the deficit.

Part of the same story was that as the Greeks were paying themselves too much and as the local economy did not produce enough to satisfy their demand, they turned to buying goods from abroad. This obviously created a trade deficit, and the solution to the problems of debt addicted Greeks was to cut their incomes. Incomes were reduced by cutting average wages, reducing pensions and welfare payment and finally the cruelest measure reducing people’s income to poverty levels through unemployment. This shock treatment was deemed essential to reduce the deficit.

There goes unremarked another story, that a large part of Greece’s debt problems had little to do with Greeks over paying themselves or doing too little work. German and other European banks had huge surpluses of cash and rather than invest those funds in industry with it’s relatively long pay back time, they wanted an alternative that generated quick returns. Only speculative investments in property and other assets can earn the big returns, so the German banks in particular made huge speculative investments in the Greek property market . When the financial bubble burst in 2008/9 these banks had potentially lost millions of euros in foolish property investments. They were saved by the European Central Bank who lent millions of Euros to the Greek government to bail out is stricken banks, who were holding millions of euros of worthless investments. Then through a clever sleight of hand these debts were no longer those of the banks but those of the government, as the European money was given to the banks to bail them out, but it now counted as a government debt. This made it much easier to portray the Greek problem as that of feckless Greeks and not foolish German bankers.

While it is hard to argue that the austerity imposed on Greece which has caused national income to fall by 25% and increased youth unemployment to 50% has been a success. What matters is how this story is portrayed, which is that if you give the workers too many rights and privileges they will abuse them and the economy will lapse into chaos. This is why it matters that British newspapers print nonsensical stories about young women marrying old men so as to earn an entitlement to a lifetime income. There are many similar stories in the British media about the feckless Greeks, which have convinced the British that the problems of Greece are all its own fault. Greece is a useful horror story to be used by employers and governments when workers claim addition rights and protection against abusive employers. They can claim that when workers get too many right they abuse them and the result is national bankruptcy. If workers are given few rights and protections they must understand it is in their own interest and they won’t use them responsibly. In Britain all three major parties accept this mantra and when the last government restricted workers access to employment tribunals on the grounds that all these needless appeals against dismissal were costing the employers millions of pounds, this change was understood as necessary by all three main political parties.

Why a paean of praise for the Greeks, a country with one of the worst performing economies in Europe even before the financial crash? One reason they put a higher valuation on non monetary wealth, workers did retire early but this was symptomatic of a country that valued its people above its output. The patronage system did lead to abuses such as over employment, when too many party loyalists were employed in public sector jobs. Yet for whatever its faults it valued its people, compared to their British counterparts they had security of employment and could look forward to a well paid retirement.

Human society is not a perfectible creation, whatever the society there are always problems. What I am stating is that Greek society for all its faults found one of the answers to the problems that society faces. It was a society that attained a more equitable division between non monetary or material wealth and material wealth. Greeks because of the unique nature of their society were able to enjoy a much higher standard of non material wealth than their Northern European counterparts. It is perhaps no coincidence that Greece as with the southern European nations family relationships flourish they are the nations of the extended family. Only in the Anglo-Saxon country such as the USA could somebody write a book called “Bowling Alone” a book about the loneliness of contemporary life. In Britain the nation of overwork and underpay family breakup is at record levels, with some estimate suggesting that under current trends 1 in 2 marriages will end in divorce. Countries such as the USA and Britain that put little value on non monetary or non work wealth have some of the most serious problems of social disharmony.

Thinking ourselves into poverty

October 22, 2014Economics, Philosophy, Politics#austerity, #economicsodpessimism, Aristotle, Aristotle's mean, Economic Determinism, economics of pessimism, Hegel, human sacrifice, Mayan Culture, phenomenology, unemploymentangrytunbridgewells

If there were two words that I could use to describe the current state of economic thinking, they would be pessimism and helplessness. All economists can offer is an indefinite period of continuing misery, which they call austerity and that this misery is unavoidable and necessary given the conditions that prevail in the world economy. The Europeans in particular must suffer for indulging in a frivolous life style in which they squandered money on welfare, education and health services, money which would have been better spent on investing in industry. Now it’s payback time. What Europeans did not realise that there is an economic Darwinism, that governs the world economy. Those nations that are uncompetitive fall by the wayside and must suffer the consequences of which the main one is a dramatic fall in living standards. Europe having become uncompetitive through increasing its labour costs by taxing employers to pay for welfare spending etc. must now pay the price. The price is increased unemployment, poorer working conditions and lower pay and only then will Europe become competitive in the world economy.

What economists never say is that they are advocating for Europe a return to what used to be called the ‘second world’ standards. In the initial period after the Second World War there was a category of development status between first and third world, it was the second world. Second world economies were those of Eastern Europe where the standard of living was modest, people were poor but not in want, that is they were fed, housed and clothed but lived a life devoid of luxuries such as car ownership. Labour was cheap in these countries and businesses would never lose out to foreign rivals because of high costs.

The best way of understanding contemporary economics is by way of metaphor, contemporary economists can be compared to high priests in the blood stained Aztec, Mayan and Inca cultures. Then the people believed that the natural catastrophes that they suffered were the actions of malevolent Gods, who punished the people for offending them. Only the priests understood how to manage these supernatural malevolent forces which was through human sacrifice. The priests decided when sacrifice was necessary and how many should perish. The Mayan had one cruel ritual in which two teams of young men played a form of hand ball, in which the losing team were beheaded. This ritual blood letting would appease the Gods and stop them inflicting suffering on the Mayan people as a whole. Today rather than priests it is the economists who understand and manage the malevolent forces that threaten our well being. Only they have the knowledge necessary to appease the angry Gods of the free market and that is yet another form of human sacrifice. Fortunately the sacrifices to be made are of income not life. People must be prepared to accept drastic cuts in their standard of living for the betterment of all. In a world beyond human control the only way to control or assuage those violent forces that threaten human well being is to appease the Gods of nature or market through human sacrifice.

There is a crude economic determinism that governs economic thinking. People are pawns in the game of competing market forces, if those forces turn against a people they must expect to suffer. Economists can read the runes and advise that sacrifices have to be made to avoid the direst of economic consequences. Any reading of an economics textbook demonstrates the view that the economy is a force outside or beyond human control, and that human life must be managed according to its dictates. There are the laws of supply which demonstrate that if prices are too high (incomes) demand will fall and products will remain unsold (unemployment). Only when prices (wages) are cut will demand rise (employment levels increase). This even has a name it’s called Say’s Law.

One example is the economic austerity that is deemed necessary to reduce the out of control government deficit. It makes sense that if we reduce our spending our debts are reduced and as government debt total is about 80% of GDP, obviously we the British must cut our spending until the debt is back under control. Actually this is nonsense economists are lying. They are well aware of the much greater national debt and that is the one run up by the banks which totals about 400% of GDP. If the UK GDP was £1.5 trillion government debt would total £1.2 trillion while bank debt would total £6 trillion. Economists rarely mention the latter, it is deemed irrelevant relevant to their analysis. What matters is not the truth but what authoritative voices say is the truth. Economists as with the ruling caste of priests in Mayan culture could manipulate data to further their interests. If there was a bad harvest the solution was not to arrange a fairer distribution of food, but to appease the Gods by increasing the number of human sacrifices. Economists as with the Mayan priests practice a philosophy of non answers, ritual substitutes for action. Enforcing a policy of austerity on the majority benefits the economists and the financial elite of which they are members, as it is a ritualised substitute for taking sanction action against the real debt, bank debt. Cutting bank debt would mean reducing the cash balances of the banks and as the largest depositors are the rich they would suffer disproportionately.

Rather than seeing us as the victims of economic forces beyond our control, the economy should be seen as a human creation subject to human control. The economy is a organised set of human relationships designed by people to achieve particular ends. If it is a human creation, it is infinitely malleable and it can be designed to serve a variety of ends. Either the economy is designed to benefit a privileged elite or to benefit the majority. There are
There are other ways of understanding of economics other than accepted Neo-Liberal model. To outline the alternative I want to borrow from the writings of the 19th philosopher Hegel on phenomenology. He believes what we experience as reality, is reality as perceived through our conscious mind a reconstruction of reality, nothing more. We live in the world of our imagination. Hegel’s theory of phenomenology is fraught with difficulty when applied to the natural world, as our perceptions of cold and heat are not subjective. However it does offer insights into understanding society, something not visible but understood through our consciousness. Is it not true that we know the social world subjectively? It is a projection of our minds, yet it is also a imagining rooted in the common reality of our culture. If we admit that any individuals understanding of society is subjective, the apparent realism of free market economics with their laws of supply and demand disappears, it becomes just one of many understanding of social reality. Admittedly an understanding that one of the most authoritative groups in society that the interlocking elites of economists, financiers, traders and economists. There can therefore be other equally valid understandings of the economy. Why should the understanding of Andy Haldane (Senior Bank of England economist) be privileged over the understanding of a joiner, engineer or doctor. This economists understanding of the economy is but one of the valid views, there is no reason why the joiner should not have an equally valid of the economy. What I have in mind is the ends or purposes of an economy, rather than the techniques of economic management, in which Andy Haldane will be superior. Ends do inform technique so the separation is not complete. The joiner would see making people unemployed in large numbers as an invalid technique of economic management.

Rather than there being one authoritative understanding of economics there needs to be an acceptance of their being a number of equally valid interpretations. In a free society there would be representatives of different economic understandings participating in the political debate that decides economic policy making; instead of as in the UK where only representatives of the Neo-Liberal economic tendency are heard in the political debate. Holders of dissenting views are not usually imprisoned in the UK, the exception being is if their campaigning is perceived to be too,effective. Yesterday representatives of Occupy London and Jenny Jones London Green Party Assembly member were arrested for demonstrating in Parliament Square and intimidating the MP’s going about their business. Other ways are usually found to exclude or marginalise holders of dissenting views.

In a democracy the economic understanding of the economist or financier would be challenged by the holder of an alternative view. The financier would want freedom from regulation which which restrict their entrepreneurial activities arguing that by so doing the society as a whole would benefit from their wealth creating activities. This would be opposed by a trade unionist who would argue that the removal of restrictions on the entrepreneur would harm the community. They may want to use low cost methods of manufacture that are dangerous and pose a threat to the health of the workers. They may want freedom to employ labour as and when they need them, but the trade unionist would point out that this would be extremely harmful to the individual worker who would be denied a regular wage with which to support their family. The needs of people cannot be switched on and off to suit the whims of an employer. While neither side would ever accept the standpoint of the other a compromise could be achieved whereby the excesses of each could be curbed. A process not too similar Aristotle’s mean, whereby he saw virtue situated between two extremes. Courage was the virtue equidistant between foolhardiness and fear. Courage has elements of both, the courageous person knows fear but has the ability to overcome those fears. Perhaps the ideal state is one that practises Aristotle’s mean, all be it an economic mean.

Why economists should be banned from public life; it’s for the good of us all

June 13, 2014economic history, Economics, Philosophy, Politics, Uncategorized#austerity, #economics, #Greece, #MarkAnthony, #PontifexMaximus, #RomanSenate, #TonyBlairangrytunbridgewells

Can economists ever do good for human kind? If its contemporary economists that the question is asked of, the answer must be no. There are a few exceptions but generally speaking economists support the most inhumane of political experiments on mankind. With very few exceptions they have been the cheer leaders for the programme of austerity that has been inflicted on societies in Western Europe and the USA. Possibly there is some poetic justice in this turn of events. The leader of the IMF is always a European and the IMF has wreaked havoc on the economies of the developing world over the past decades. Whenever a developing country has turned to the IMF to finance its debts, the money has only been given on the condition that the country adopts the harshest of austerity policies. Health and education services are always the first the IMF insists on cutting, its a kind of perverse morality that believes the inhabitants of poor countries are deserving of poor health and education. Now the EU has adopted the same austerity policies to protect the debt holders (in this case German banks) who over invested in the Greek economy. The loans that saved the Greek banks from bankruptcy was only given on condition that Greece adopted the policies that turned the country into a basket case.

What I would like to suggest that governments adopt a ten year moratorium disbarring them from employing economists for that period. Society would be far better governed if politicians took responsibility for their actions instead of outsourcing the decision taking and blame to others. Perhaps if Tony Blair instead of sending his shadow cabinet on a business consultancy course but one on moral philosophy the horrors of the Iraq war may have been avoided. Infra structure products are hopelessly delayed as government invariably outsources decision making to think tanks, such as ‘The Adam Smith Institute’ or in the case the Third Heathrow Airport to an economist called Howard Davies. Stanley Baldwin when under pressure from the press barons to reverse his policy giving self governance to part of the British Empire spoke of them wanting the prerogative of power without responsibility, this is the prerogative of the harlot. The current generation of politicians want neither the power or the responsibility, just the opportunity to enjoy the trappings of power. The British government will not make the final decision on the High Speed 2 railway, that will be left to others.

There is a striking counter example which both throws light on the poor political governance of the UK and that is the Senate of Republican Rome. The Senate before it authorised any major action by the Roman State, asked the Pontifex Maximus (High Priest) to read the auspices to assess the prospects for success. This involved divining the attitude of the Gods to the enterprise by examining the entrails of a sacrificed animal. If the enterprise failed it was because the priest reading the entrails had made an error and had failed to recognise the hostility of the Gods to this enterprise. Today economists are asked to perform the a similar ritual, it is the economic report into the viability of the project. They read the auspices by examining the entrails (statistics) of the economy. While it is not hard for a minister to find a tame economist who will divine the government’s intention and predict the success of the enterprise, our system has one major flaw and that is the divining the auspices rarely delivers a single definitive reading. There are several economists who claim to perform the economic ritual better than the chosen government economist. They will deny that the government economist gave the correct reading of the economic auspices which generates confusion as to what is the correct reading and hesitancy in decision making. Their are too many high economic priests.

George Osborne the Chancellor of the Exchequer is the driving force behind proposal to build a new town at Ebbsfleet in Kent. What I can predict is that is that there will be numerous other economists claiming that the entrails were read incorrectly by the Treasury and that a new town is not needed or that Ebbsfleet is the wrong location etc. Putting a measure in the Queen’s speech does not guarantee that the town will ever built, as it depends on the agreement of that quarrelsome collective the economists to sanction it. With the government having outsourced decision making to the economists, I cannot see the new town of Ebbsfleet being built. Rather it will be a project whose merits will be debated into the indefinite future.

Despite the Roman system of decision taking appearing to depend on the whim of a supernatural deity, it was far more effective than ours. Firstly the Roman Pontifex Maximus (High Priest) was a senator and was always a powerful figure , unlike in Britain where the equivalent of the Pontifex Maximus is an outsider and is not regarded as an authoritative figure by other priests (economists). In Rome the reading of the auspices was merely confirming what the most powerful group in the Senate had decided. Murder was not an uncommon way of eliminating one’s opponents, as eliminating one’s opponents either ensured that only your supporters remained in the a Senate or it cowed the opposition into acquiescence. Mark Anthony was initially a gangster used by Caesar to intimidate his opponents in Rome. Our political leaders have rarely decided in advance what the policy will be, even if they favour one decision over another, they still outsource the decision to others. Economists the chosen group of outsiders lack the authority of the Pontifex Maximus, they all claim to be the Pontifex so there is no authoritative policy statement. What makes the Roman Senate a superior policy making body to the British Parliament was that the ritual was subordinate to art of decision making, whereas it is the reverse in the UK. The Senate unlike the British Parliament could make decisions even if they were bad ones. A similar phenomenon can be observed in the US congress which also appears incapable of decision making. One of the few policies Congress agreed on was designating the tomato sauce on pizzas as being one of an individuals five a day portions of fruit and vegetables. Congress can agree on meaningless acts but avoids difficult decisions.

Another advantage of the Roman reliance on the Gods providing supernatural policy sanctions is that such authority is far more persuasive than that conferred by economists on government policy. If the Senate wanted to oppose a particular policy, usually one that favoured the lower order the plebeians, they could claim the opposition of the Gods. Threatening natural omens would be reported such as cows with two heads all suggesting that the Gods were angry. Claiming a policy that you don’t favour will make people worse off, does not carry the same threat as a policy that angers the Gods.

It may seem strange to state that the decision making process of the Roman Senate is superior to that of the UK government, when it has access to a wealth of economic statistics and computers to aid decision taking. I argue that the Roman system was superior because the Senate’s decisions were made on qualitative grounds not quantitative. A boldness of vision comes naturally to individuals who celebrated virtue. Their moral exemplars were men such as Lars Porsena who burnt off his right hand to demonstrate Roman courage and steadfastness to the enemies of Rome, who held him captive. British politicians schooled in the world of cost and benefits are incapable of any grand vision. It breeds a kind of modesty in decision making and with it a desire to avoid big difficult decisions. There was a heroic generation of British politicians it was those who had guided us through a Great War. It was that generation that gave us a National Health system, free legal aid so the poor would be on an equal footing with the rich in court. Both of which our modest generation of pseudo economists want to end because of their supposed ‘unaffordability’ . The grandest vision any contemporary politician could envisage, is cutting the cost of a public service. In these modest time the hero is the cost cutting politician. Certainly there is not one contemporary politician who venture any project as grand as a national health service.

This is why this particular economist wants all economists banished from government and all forms of public service. I want to take away that prop politicians use to avoid making decisions, that is the economy, when everything is deferred due to economic considerations. University education is too expensive so the pseudo economists increase university fees to £9000 pa. The consequence is that a black hole develops in university funding into which the government is having to pour more and more money. Stupidity rules in Westminster/Whitehall masquerading as economic good sense, if higher education is really that unaffordable why not just cut the number of university places, instead of using the economic fudge of pretending it will be solved by increasing fees.

One further observation the contemporary Lars Porsena would not be the one who resisted the over mighty enemy, but the one who capitulated to the enemy and who facilitated their aims. Successive British governments when faced with the problem of tax evasion and avoidance by the rich and powerful, rather than taking action to end this abuse of power and offend these powerful men instead took action to make tax avoidance easier.

An Unusual Economist

After the crash of financial 2008/9, it was obvious that the current model of economic analysis was broken. I want to develop a new approach to economic analysis.