The horizon is not so far as we can see, but as far as we can imagine

Month: June 2015 Page 1 of 3

France Arrests Uber Executives

To recap: French Taxi drivers went on strike, beat cars with metal baseball bats, and damn near shut down Paris’s airport.

As a result, France arrested two French Uber executives. It has also been seizing the cars of Uber drivers.

Unions work. Violence, done smart, works.

(French truck drivers, when they want something, will en-masse park their rigs in the middle of the street, shutting down traffic, etc.)

You receive good wages only when there is a tight labor market. That can be generally, or it can be “your profession/group in specific.” (Professional associations are just upscale unions who pretend they aren’t, unions being declasse.)

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Syriza and the EU Seem to Be in Completely Different Worlds

Juncker, Hollande, and Merkel have all warned that a “no” vote in the Greek referendum will mean Greece will face leaving the Euro.

Meanwhile, Greek PM Tsipras argued today that a “no” vote gives the Greek government a stronger negotiating position.

So, yeah, who’s right?

Who knows.

Depends if the EU leaders are serious. I tend towards, “They are.” If so, Tsipras is misleading the Greeks. This is a vote on Grexit, not on getting a deal within the Euro.

Of course, European leaders could be just doing their best to get a “yes” vote: Greeks want a better deal, but don’t want to leave the Euro. To that end, they say: “There is no better deal, all you’re voting on is Grexit.”

Tsipras has said that in the case of a “yes” vote he will enact the legislation, then he will step down; he will not be a “humiliated Premier.”

I’d say to get out your popcorn, but the stakes here are very serious. Europe is prepared to lock one of its member states into a permanent depression for an amount of money that is less than one percent of the Euro’s GDP, for the forseeable future.  The Eurocrats and leaders seem to think they are protecting the EU’s legitimacy, but I suspect they are destroying it. If the EU does not include fair deals for all its members, all that is left is, “Well, we won’t allow WWII.” As the memory of WWII becomes purely historical, that will not be sufficient.

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How Eurocrats, Greeks, Germans, and Eastern Europeans View the Greek Crisis

The Syriza government in Greece just made the move of proposing a referendum on the creditors’ last (unacceptable) offer, so the Greek people can now choose a destiny from a set of unpleasant destinies to which history has brought them. From the creditor’s perspective, this pushes them into precisely the situation they have spent the last seven years (at least) avoiding at all costs–the holding of a democratic dialogue on any part of the bailout. Even their threats to remove the proposal and to cut off ELA are acts of participation in this utterly unwanted dialogue. If Syriza proceeds with this, it will have turned the “sea lion” strategy around and on its head.

The bank bailouts were a “metacrime,” a moral monstrosity by which the productive economy was sacrificed to save what should be merely the money conduit system, rather than sacrificing the finance industry to save the productive economy, and all to conceal crimes and failures inside the money conduit system. However, while the immediate precipitation of the ongoing European/Greek crisis can be attributed to this, the route to such an unstable situation is rather more complex.

Ian asked me to put together some thoughts on the matter of the attitudes, aspirations, and motives of the participants at a “cultural” and interest group level, which I believe are non-trivial drivers of this conflict. For me, at least, when people do wrong things and get themselves into bad situations, I feel it is not enough to turn them into cartoon villains; often outwardly (or “functionally”) sociopathic behaviour has an aetiology in more conventional human failings. Humans often climb up ideological trees from which it is difficult to talk them down. That doesn’t mean I necessarily take a position of pure relativism; being unable to come down from that tree is itself a moral failing.

Before I begin, a disclaimer: I’m going to be painting with a broad brush here. A few years of living in Europe have taught me how impossible it is to live without a certain quota of “pragmatic” stereotyping—whereas it is genuinely easier, in my experience, to act as though one can avoid mentally assigning group characteristics in the USA and Canada. This, I acknowledge, is very dangerous; there are, for example, many Germans who see through what it is their elites have wrought in Greece. Secondly, that I try to write with a layer of sympathy doesn’t mean that I agree with the positions–for some reason, I always have to emphasize this.

EUians and Eurocrats

The first group I’ll discuss isn’t really a “national” grouping at all, but rather a stratum of mostly continental Europeans who view themselves as first and foremost “Europeans” as in citizens of the European Union. I am going to dub them “EUians” from this point on. On the extreme end, I have met EUians who explicitly believe that European countries should abandon their national languages and just adopt a lingua franca (i.e., English). All in all, they believe that Europeans need to “grow up” and accept that the era of the culturally-defined nation state is “over” and that it is a monkey on the back of Europa herself.

Some of you may see this as a pathetic self-abnegation, and maybe it is. But Europe spent the Cold War and maybe before that as a kind of chessboard on which great powers, including powers within Europe, play their games. The only way to evade this fate is to convert Europe into a single, possibly diverse nation on its own — and the only game in town is the EU.

In this worldview, it is only progress that national politics become increasingly devoid of content, and it is only necessary to build European-level democracy when the Europeans have finally, ironically, swallowed the medicine of their own mission civilisatrice. A case in point that is unfolding right now is the drama over refugees, specifically, how to settle them. Brussels had a perfectly reasonable and fair idea that refugees be allocated to countries in proportion to countries’ relative economic weight. This was met with absolute rejection, particularly by newer EU countries in Eastern Europe, who explicitly do not want even a small increase in the proportion of brown people who live there. Behind these countries hid some of the older, larger countries, whose national politics are already burdened by immigration-fatigue.

To EUians, this can only be confirmation that, at the national-political level, Europeans are only a hair’s breadth away from poking each other with sharp sticks in order to maintain ethnoreligious homogeneity. And they may be. But is it a sustainable solution to gradually dilute their democratic rights? To EUians, it is the only answer.

And that bring us to the inner cadre of EUians: the Eurocracy, the elite bureaucrats whose job it is to ^manage^ European economic and political convergence. One of the principal political functions of the Eurocracy is precisely to circumvent national politics. Eurocrats are to act as would-be philosopher-kings, coming up with reasonable solutions based on scientific principles. Oh, they’re human and can be corrupt and venal, but so can elected politicians. Whence the repeated referenda, and then adopting the Lisbon treaty anyway? Well, if the people say “no,” it’s not like the philosopher-kings are going to come up with a better answer–they already emitted the best answer! That’s why they’re Eurocrats.

Now consider the position of Greece at Syriza’s election. Yes, some Eurocrats might have been willing to admit that IMF predictions of Greek GDP growth were just the teensiest bit awry. But there is a procedure for these things, and that is definitely not the demand for changes to existing political agreements, which must then go through the process of national democracy. And Greek leftists just aren’t popular enough to withstand that in the rest of Europe, quite the contrary–by making explicitly left-wing demands, they have asked other populations that are not left-wing to support what they believe is a long-discredited experiment.

@WhelanKarl but the opposite view implies that democracies can’t sign binding agreements rich is surely crazier

— Dan Davies (@dsquareddigest) June 23, 2015

No, the from the Eurocracy’s point of view, the correct way to go about solving this problem is by the baking of fudge. If Syriza had agreed in February to support something memorandum shaped — taken the short-term pain of adopting a kolotoumba — the Eurocracy could have given it a little quid pro quo through the back doors of Brussels. But for EUians and Eurocrats, the bad signs started off very early — choosing ANEL over To Potami as a partner. Readers here probably think of To Potami as a Quisling, capitulationist part, but for the Eurocracy, an alliance with To Potami would have signalled that Syriza could be mollified ultimately through fudging an agreement and was not itself a dangerous populist party. But Syriza chose the spear-carrying nationalist Greeks instead.

So from their perspective, Syriza wanted to play populist politics on the open field of democracy and is reaping what it sowed. Europe does not, cannot, should not have room for a populist left, regardless of whether or not the policy proposed makes sense. European politics is about giving cover, and rational, professorial arguments embedded in a dangerous “democratic mandate” framework is just not on. Even this referendum, which the now apparently non-existent proposal might actually win, is a simply unacceptable exercise that, if repeated elsewhere, will destroy the European project, which is an inherent good that cannot survive the popular sovereignty of barbarian peoples.

The poster children

This is sometimes an overlooked aspect of the discussion, but the views of Baltic and East European states do matter. Some of the Baltic states took very painful medicine recently, and not medicine that different in character from what Greece was being asked to take, but has either refused (under Syriza) or only fudged (under ND, etc). And a lot of these countries have populations that are already poorer than Greeks are now.

Now many of you will retort that these countries, instead of joining in solidarity with the creditors, should likewise have the higher ideological standards that Greeks seem to have. But from their perspective, they embraced austerity and social pain as a manner of slicing off their own forearm in order to escape from the bear that has it by the wrist. Yes, I’m talking about Russia. I know that a good number of readers here think of Russia and Vladimir Putin as a kind of last-stand resistor against “AngloZionist” world domination, but for these countries, what they want to know is how soon the West can bring them that sweet, sweet AngloZionism.

So in a sense, Greece’s apparent cozying up to Putin is in some ways a worse affront than its apparent sense of entitlement. Greece is playing with existential fire for these countries, instead of thanking its lucky stars that’s it’s under the AngloZionist umbrella and putting their grandmothers on ice floes of austerity in gratitude.

(As I said above, I am painting with a broad brush. I have an Estonian colleague who is at least neutral on the matter of Greece, but it is clear to me that in terms of European politics, the existential threat of Russia is not far from his mind in any discussion, and Russia for him is his people’s most recent colonial dominator, not the EU.)

Germany (and Northern Europe)

Germany and German politics have been conceived as the other pole in a kind of Athens-Berlin conflict, as Germany is the Eurozone’s largest economy and its most successful. A lot of things have been said about the German role, and some of the criticisms are correct. And it’s true that to some extent, popular tabloid German media is all about the lazy Greeks, lolling about in the sun with one hand in the pocket of the hardworking German. It’s become a cliché.

But one thing to emphasize is that the debate about economic reason itself is quite different in Germany. Outside of Germany, many people can agree that Yanis Varoufakis’ proposals are economically reasonable and possibly even mainstream while criticizing him for his political approach. But within Germany, the proposals themselves—and the logic of anti-austerity thinking—are widely seen as coming from another planet. That’s because popular discussion on economics within present-day Germany does not really emphasize the notion of flows and balances. What does it matter that everyone can’t simultaneously be an export superpower? It’s everyone’s duty to try and find something they can offer to the world, and in terms of nations, that is expressed in terms of their export power. The US import “power” is viewed by many Germans as an unsustainable boondoggle…but the German export power is not. Germany even exports to the exporters.

From this perspective, the proper domain of economic policymaking isn’t to be playing some kind of Rube Goldberg game of who should be paid what when to make the balances work out, but instead it is about removing the obstacles to economic agility and to everyone reaching a Platonic state of optimal social contribution. The German mainstream isn’t like English-language conservatism — you can believe in principle in a generous welfare state along most of the German political spectrum, but it needs to be a welfare state designed around facilitating life transitions. And that sometimes means giving employers a little flexibility.

It’s on this basis that left-wing government in the rest of Europe provokes little sympathy in Germany, particularly in the case of Syriza (but not even French dirigisme gets any quarter). From the German perspective, far from Syriza having been forced to retract its programme, the last proposal of the creditors was actually quite generous and full of compromises on the things that Germans think matters. Syriza’s Red Lines are exactly the things that show that Syriza isn’t seriously different from any other clientelistic party of Greece, and therefore it deserves no sympathy, leftist or otherwise. Germany is willing to open its pocketbook to Greece — through the back door, of course, via Eurofudge — to ensure that Greece looks like a success story. But only if things like pension reform, privatization, labour reform, take place, and not just in a recalcitrant way, but in a way that shows that the Greek government believes in a reasonable “soziale Marktwirtshaft.”

But, from a German perspective, Alexis Tsipras wants to run non-surpluses without figuring out what Greece’s contribution to the world will be as it is, and neither the Eurozone nor the EU itself needs that. In fact, Tsipras wants to propagate this ideology in Europe elsewhere, and to them, that’s neither right nor tolerable.

Finally, Greece

Even with the proposals offically off the table (the fact that a referendum on them is a dealbreaker is in itself very telling!), the referendum is a useful exercise, especially if the “real” question in people’s minds is formulated correctly. It’s important to know “for real” if the kind of thing that the creditors were asking on Thursday would be acceptable to the average Greek, at least in its broad outline — not just some deal, but that deal, even if it is hypothetical.

But a lot of readers here may be disappointed to know that many Greeks would vote for such a deal anyway, even if it meant that Greece became a “debt colony” of the EU. Why would a people voluntarily choose such abjection, even if the Grexit path is hard?

The truth is that Greece sits in a perfect storm of historical factors and cultural memes that primes it specifically to be a chief candidate for a crisis like this. And the form that Greek nationalism has taken up to now doesn’t help at all. At the point at which Greece is “finally” free to take up its place in heart of the Europe whose mother it is, how is it conceivable that it could be facing ejection from what was supposed to be Europe’s cornerstone? How could it be possible that Greece could actually always have been, effectively, an Orthodox Turkey, when it suffered so much under the Ottomans? And how likely is it that, left to their own devices, the Greek elite would actually themselves choose to turn the corner and build a state administration as good as Germany’s? Isn’t it more likely that outside the Euro, Greece will just follow it’s old trajectory, and not become the devalued competitive powerhouse that Grexit-boosters believe it can be?

These are the questions that Greek citizens are going to be asking themselves over the next week, the real issues of the referendum, and it may be that a lot of participants on Ian’s blog won’t like the answers they come up with. Because a “No” most likely means a Grexit forced by the creditors, and while I believe the Greek government is technically correct in not making this explicit, everyone knows what it means. But it is nevertheless important to have had this exercise, because whatever the outcome of the proposed referendum, it will be contingent on and subordinate to the democratic choice of a people, exactly what the Eurocracy has been avoiding, unsustainably in my opinion.

(Brief Ian notes:

1) I asked Mandos to write this because I think it’s important.

2) Greece has now imposed capital controls.  Five years later than it should have been done, but a good step.)


Finance Ministers Refuse an Extension to Their Offer to Greece

There were rumors this would be the response last night. To put it simply, they are beyond offended that Syriza wants to put something which concerns all Greeks to a referendum. This is against European values.

I find this, from the NYTimes, interesting:

The refusal by the Eurogroup to grant Mr. Tsipras the extension was the first clear sign that Mr. Tsipras and his leftist government had overplayed their hand by failing to scare the country’s creditors — wearied by months of continuous wrangling and emergency meetings — into making last-minute concessions.

This is an interesting interpretation: It’s not that Tsipras wanted a democratic mandate. Rather, it was just a negotiating ploy (though Syriza has said they’d be happy to recommend “yes” with a better deal).

I hope that Syriza has plans on how to handle what looks like a default, because Europe seems intent on making sure there is one. Certain measures, like capital controls, should be in place now.

Syriza is also being extremely foolish here:

Some Greeks said a better question would be to ask whether Greece should remain in the single currency, a scenario that most Greeks favor. But Mr. Varoufakis told a news conference that the referendum could not be about the euro because membership of the single currency was meant to be irrevocable.

“There are no provisions for exit from a monetary union,” said Mr. Varoufakis, who said the rules foresaw only departure from the European Union. “Anyone who wants us to pose that question must first change the treaties of the European Union,” he said, referring to exit from the Eurozone.

You cannot run on default and not be willing to leave the Euro, because, yes, you will be bankrupt, and you need to be able to print money. This is Syriza accepting that treaties are higher than the democratic will—essentially accepting Eurocrat talking points and ideology.

The vast destruction of default will be Syriza’s fault if they are so stupid as to default without any provisions for also leaving the Euro. Europe will not be kind, they will aim for maximum destruction to make their point that “there is no alternative” and to teach that lesson to all the other countries who would be better off defaulting.

The only non-embarassing reason I can think of is that Syriza knows they will need to go off the Euro, but feels the Greeks wouldn’t say yes. Don’t ask a question when you know you won’t like the answer to it. Even so, Varoufakis should not have used an undemocratic frame.

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Syriza Will Put Bailout to a Referendum

This is a correct action. 

In an unexpected move, Prime Minister Alexis Tsipras went on national television early Saturday to call for a referendum on July 5 so that Greek citizens can decide whether to accept or reject the terms of a bailout deal proposed by the country’s creditors.

This is now a democratic decision. I hope the Greeks say “no,” but it is their decision, and the consequences of either vote will now be their responsibility.

Meanwhile, this will apparently be the German newspaper Bild’s headline tomorrow.

Bild Greek Referendum Front Page

Apparently, democracy is now “blackmail.” Also apparently, I was wrong about Europeans not being willing to be open in their contempt for popular sovereignty.

Blessings upon the Greeks. They will need them.

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I Am So Happy About Gay Marriage Being Legal in the US

But, yeah, sorry, but, can we talk Obama for a moment?

Rainbow White House

Obama did not support gay rights until after he was subjected to IMMENSE pressure, including public heckling and a gay donor strike.

Now, I appreciate a politician who will cave to interests I believe in, but let’s be clear, this is a case of caving.

My friends, above all things, supporting, trusting, and giving credit to people who do not actually have your interests in heart is what hurts you, again and again. Until you learn who you can actually trust (and for what), you are going to continue to get hurt.

Among the other news of the week was the passage of “Fast Track” legislation for the TPP trade deal. That is going to cost many of you your jobs, and it is going to make many of the rest of you poorer, even if you keep a job. People I trust on the Hill tell me that Obama has NEVER lobbied harder for anything (not even Obamacare) than he did for TPP.

Obama, as a rule, is happy to give you things that the oligarchy doesn’t mind. They don’t, overall, mind gay rights. A large chunk of the oligarchy wanted Obamacare (it was and is a huge subsidy to insurance and pharma companies, among others). There is a reason the public option was never seriously considered by Obama; it was a potential threat to insurance companies.

None of this is to say Obama is all bad, he certainly isn’t. But he is not your friend if you want widespread economic prosperity, and he never has been. Nor will he ever be. Nor, to point out what should be obvious, is Hilary Clinton (also not always for marriage equality).

You set yourself up for immense hurt when you trust the wrong people with political power and it is important not to engage in revisionism about what is, after all, very recent history.

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French Taxi Drivers Receive Concessions Through Violence

There are only two conditions under which labor receives a decent wage:

  1. It is in short supply generally (there is not enough and companies must generally compete for it).
  2. It is in short supply in a specific job category, because other people aren’t allowed to horn in (due to unions, guilds, medical degrees, law associations, taxi medallions, etc.).

I bring you now to the French Taxi riots over Uber:

“They’re beating the cars with metal bats. This is France?? I’m safer in Baghdad.”

70 vehicles were damaged, seven police officers injured and 10 arrests made on Thursday, when 30 legal complaints were filed against UberPop.


France’s interior minister, in a bid to halt a day of sometimes violent protests by taxi drivers angered by Uber’s low-cost UberPop service, said Thursday that the app-based business must be shut down. He said orders would be given to seize vehicles.

This is what works. This is the only thing that has ever worked worth a damn. Unions drove higher wages in the industrial era, and unions were violent. Period. End of goddamn sentence. They went toe-to-toe against strike breakers, they fought  police when necessary, miners even once fought the army on a mountain.

You will only have a good lifestyle when you have the POWER to insist that you get a good slice of the pie.


Thus endeth the sermon on the brutally obvious.

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Greece and the Emperor’s New Clothes

We are all familiar with the story of the Emperor’s new clothes, yes? The emperor is sold “clothes” which are imaginary, wanders around naked, and everyone pretends he’s clothed until a child points out he’s naked?

Commenter MFI pointed out yesterday that Oliver Blanchard, the chief IMF economist, had made the following assumptions about Greece in July of last year:

1. The Greek economy would grow by three percent both this year and every other year until 2020.
2. Inflation would average between one percent and two percent a year both this year and every other year until 2020.
3. The Greek government would run a primary budget surplus of four percent a year.

As MFI points out, at best, these assumptions are delusional. Greece is in forced austerity; they aren’t going to make these targets.

Edward Harrison has been on the same beat:

…the IMF revised down its estimate for Greece’s 2014 gross domestic product by some 22 percent in the space of 18 months.


Greek GDP forecasts collated by Edward Harrison

Greek GDP forecasts collated by Edward Harrison

As Edward and MFI note, these are damning.

But they are of a piece with estimates of the effects of austerity. Austerity is a reduction in demand. Reduction in demand leads to economic activity being lower than it would be otherwise. Governments who spend less money buy less stuff, this is indisputable. Then, everybody has less money and almost certainly buys less stuff as a result, thus reducing the size of the economy.

Meanwhile, money has been given to rich people and corporations who, mostly, have not spent it and when they have spent it, they’ve spent it on luxury goods.

Austerity cannot help but reduce GDP. This is what it is designed to do.

But it is sold as a way to make economies better. You cannot, as a government or quasi-governmental agency (like a central bank or the IMF), admit that austerity will make the economy worse and many of the people in an economy to which it is applied worse off.

The question, then, is the old one. “Evil, or stupid?” Is Blanchard, for example, such an ideologue that he believes the assumptions which allow him to forecast a better economy under austerity? Are the other economists who have made similar forecasts similarly stupid? I mean, assuming moderate stupidity (normal), they might have believed it in 2008 or even 2010, but we’ve seen the effects of austerity since the financial crisis, and that’s going on seven years.

These people are either very stupid or are doing what they feel they must to keep their jobs and their membership in a very lucrative club. If they were to say, “No, these policies don’t work,” would they keep their jobs?

It’s not that we don’t know austerity doesn’t work, if by “work” you mean “improve the economy more than not being in austerity would,” we do. It’s only ever worked in theory by making very dubious assumptions, and it has never worked in practice.

So, at this point, if you believe austerity works, you’re either an extraordinarily blind ideologue, or you’re crooked, on the payroll, and know what you’re doing.

Austerity is the policy that the IMF, most central authorities, and all neo-liberal parties (which means almost all parties in power in the EU) believe in. It is a policy which works: It puts public assets up for sale which would not be otherwise, so that rich, private investors can buy them up. Combined with “unconventional monetary policy” (the two are Siamese twins), it makes sure that the rich get richer, corporations are flush with cash they do not use to hire workers, and that everyone who isn’t rich, or part of the close retainer class, loses.

You really, really don’t want to fall out of that close retainer class. They are paid very well (Lagarde receives a six hundred thousand per annum salary, entirely tax free), they are treated well, and their future job prospects are secure, as are those of their families.

The Emperor, in other words, is bloody well wearing clothes. If you want to remain the chief economist of the IMF, you had best remember that.

Austerity does what it was meant to do. I predicted its course in 2009, as did many others, and it has performed exactly as expected.

It is working: Its advocates are its beneficiaries. The people who enforce it are benefiting as well and there is a sufficient constituency, both at the elite level and the common level, to keep it going (remember, Cameron was re-elected in the UK, and Labour got many votes when its essential promise was “slightly kinder austerity”). A few countries (Germany, for example) are winning under this policy regime.

So austerity will continue. It is a successful policy which does what it is supposed to do and which has a constituency sufficient for its continuation. It must be sold by lies, to be sure, and many of those who sell those lies probably believe them, because they personally benefit from pushing austerity and people prefer to believe that they are honest and working for good.

Others, I am certain, know it is being sold with lies. Who falls into which camp? Who knows? The end affect is the same.

The Emperor has no clothes and beatings will continue until morale improves.

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