Ian Welsh

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

Category: The Twilight of Neoliberalism Page 12 of 13

Is Ocasio-Cortez the Start of a Movement?

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On June 30, 2018

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Most of you have, probably, by now, heard of Ocasio-Cortez, the insurgent Democratic Socialist candidate who defeated incumbent Joseph Crowley in a New York House Primary–and by a large margin.

Ocasio-Cortez is, for the US, quite radical: free tuition, true universal health care, re-instating Glass-Steagall and he out-and-out called Israelis shooting Palestinians a massacre when it was, in fact, a massacre.

Ocasio-Cortez is not the only such candidate to win in this cycle, but she is the most visible and Crowley was touted by many as Nancy Pelosi’s likely heir in the House Leadership. The New York Times barely even covered her, they just assumed Crowley would win.

Now it has been observed by many that the reason the Republicans are very right-wing is that they are scared of their base: An incumbent is more likely to lose in a primary than a general.

The Netroots movement that ran from about 2003 to 2010 had as its goal “more and better Democrats,” and tried repeatedly to take down Democrats from the left. By and large it failed and so the Democrats continued to be what they’ve always been; a party which agrees with 80 percent of what Republicans do, but wants to be a little nicer about it.

What matters about Ocasio-Cortez and her small cohort is whether they are precursors of a larger change. Will Democrats challenging from the left win, and win often? Will incumbent Democrats have to move left to try and hold their seats? (Crowley tried, but he wasn’t credible.)

I have long agreed with my friend Stirling Newberry that 2020-24 is the change-point in the US. It is at the point where, simply due to age, Boomer politicians will have to give up power, and younger politicians (Millenials and GenZ or whatever we call it now) will take over. A few leaders may come from GenX, but not many, because we are too few, and anyway, as a generation, we have awful politics.

If this first wave turns out to have what it takes, and have a decent ideology they stick to, then the US stands a chance at a sharp turn towards becoming a kinder, more equal nation which is better to live in. (And Ocasio-Cortez’s plan for environmental change is stunningly good: a massive green build-out which many have suggested for decades.)

I am simultaneously optimistic and pessimistic. While Millenials overall have fairly good politics according to polls, the generation after that is more questionable. Further, as with Boomers, it may not be those with good politics who win most (no, the hippies did not storm Congress in the 70s.)

But this is the early movement of the hinge. The door opens fully between 2020 to 2024 and that will determine the future of the US.

If you wish to see a precursor, watch Corbyn in Britain. Just as Britain preceded the US into neoliberalism with Thatcher, it may precede the US during this turn of the hegemonic sub-ideology.

(Oh, and Ocasio-Cortez? She uses the phrase “For the many, not the few,” which is Labour’s motto under Corbyn.)

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Why Free Trade Isn’t Efficient

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On June 26, 2018

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For the past few weeks, I’ve been reading a raft of literature by lawyers, economists, and bureaucrats involved with the World Trade Organization (WTO) and other free traders. It’s been a fascinating journey into an alternate world, one in which frictionless trade and money flows, and unified regulations and laws are considered to be a good thing.

The reasoning behind this virtually unquestioned acceptance is as follows: If there are no barriers to trade, whether financial or regulatory, goods and services will be created (or done) wherever they cost the least. If they are done in the lowest-cost place, they are being done in the most efficient way, and that means more is created and consumers also pay less.

It is thus a good thing, virtually always, to reduce barriers to trade and services. If it can be done for cheaper somewhere, it should be. Some people may lose, but overall more (or the same) is created for less, and this is good.

This is basically an article of faith in everything I’ve been reading from people who make their living around the WTO.

But you may have caught the error in the thinking: It assumes the lowest cost is equivalent to the most efficient.

But it isn’t. When manufacturing moved from the US to China, it cost less to do in China, yes, but it produced more carbon (climate change); it took more people to produce the same amount of goods, and it generally used more materials, as well.

In other words, it is less efficient in every way except the monetary cost.

The rejoinder to this might be that those people who were manufacturing those goods would be better employed elsewhere; people were being wasted. If it can be done for a few dollars an hour, rather than $20 or more (if labor was unionized), then the higher-paid workers should do something else.

But everyone knows now, and trade advocates admit, that the people who lose the jobs to offshoring and outsourcing were mostly not employed again, or never had as good a job again. People are not fungible, they don’t just fit into any spot.

Moreover, as those jobs moved away, those people earned less money, and local businesses got less money from them as consumers. Everyone’s employees are someone else’s customers: When everyone cuts wage “costs,” they’re also cutting demand.

The core problem with capitalism is that it assumes that money measures benefit: If someone is willing and able to buy something (is in “demand”), then that something is good.

But the cheapest cost and the highest profit don’t take into account actual efficiency or actual good in the world. Producing less climate change gases to produce the same stuff is more important than saving five or ten percent manufacturing cost, or making five percent or ten percent profit. Using less resources that are limited is more important than the lowest cost. And good wages are also important, because they measure good lives. (There is an argument that China’s industrialization required America’s de-industrialization. I don’t think that’s true, but that subject is too large for this piece.)

The core assumptions of capitalism are wrong. They are simply wrong. But that doesn’t mean they don’t create a very effective system, where effective means “good at sustaining itself” and “good at telling people what to do.”

Capitalism is really very simple. It’s an algorithm for directing human behavior, and it works because it makes sure that the people who obey the algorithm are the people who have power.

Until they run the world off a cliff.

More later, but for now the point is simple: Neither the lowest price nor the highest profit automatically equal the most efficient thing to do in any way except with respect to money.

And money, while it’s lovely, is not actually food, water, or a livable environment, nor will it be able to buy those things for everyone (or perhaps anyone) when there just isn’t enough of it to go around.

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The Class War: The Rich Won and the End of NeoLiberal Capitalism

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On June 22, 2018

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Many years ago now, I wrote a post called “There Was a Class War and the Rich Won.”

Ironically, after the financial meltdown of 07/8, and thanks to Bush, Obama, Bernanke, and Geithner both bailing the rich out and immunizing them from their crimes, that victory has accelerated. This chart, from Harvard, tells the story of the last 30 years.

 

What this chart doesn’t show is that the those gains went primarily to the top one percent, and in the top one percent to the top 0.1 percent and in the top 0.1 percent to the top .01 percent.

What happened was a vast centralization of wealth, and therefore of power. This power was used to buy the government: the presidency (Obama acted in the interests of the rich in every important way–so has every President since Carter); congress and definitely the courts, both of which have, ruled, time and time again, in favor of capital and for large and larger concentrations of wealth and power, culminating with “Citizens United,” which classified money as speech and sharply limited government’s power to regulate money in elections. This legislation was the crowning glory of the rich’s victory in the class war.

One of the problems with capitalism is that its benefits rest largely on having competitive (free) markets. But the first thing capitalists do when they “win” the markets is take their profits and use them to buy government so that they can end free markets (our markets are nowhere near competitive or free). Free markets, to anyone who has won, are a threat.

You can see this in the march of so-called “intellectual property.” There is no such thing in anything close to a state of nature: Intellectual property is entirely the product of government. Ideas are free, in nature, and can be used by anyone, and one person using an idea doesn’t mean someone else can’t use it. There is no natural property of ideas.

But we have extended intellectual property well beyond the life, even, of creators. Walt Disney is dead, long dead, and Donald Duck and Mickey Mouse are still the intellectual property of a company.

Competitive markets require that other people be able to compete. They must be able you use your technology, your ideas, etc… to bring down the price of goods. If you want to keep charging a premium, you have to keep coming up with new ideas. But when key technologies and ideas are locked behind patents and copyrights forever, this isn’t possible. (I can’t see any argument for most patents beneficially owned by companies to last more than five years, and even that is questionable. There is an argument for longer copyrights, if they are beneficially owned by individuals, but even in such cases, not long beyond the life of the copyright owner.)

All of this is putting aside other vast barriers to entry and laws and subsidies which benefit incumbents and which push hard towards monopolization.

So we don’t have free markets, and we do have vastly rich rich, and those rich own the government, without question (the events of 2007/2008 proved it).

Capitalism without free markets doesn’t provide most of the benefits of capitalism, and democracy which has been captured by oligarchy doesn’t provide most of the benefits of democracy.

And so both are being discredited, and fascism rises and non-market alternatives become more and more popular. You see it in Corbyn, you see it in the challenge to so-called free trade epitomized by Trump, and you see it in the fact that, for most young Americans, socialism is no longer a four-letter word.

Corbyn’s program includes a vast swathe of straight up de-privatization. It includes rent-controls and a program for the government to just build housing. It isn’t radical from a 60s point of view, but to a neoliberal capitalist, it is terror indeed. And if Corbyn was elected by just those under 40, he’d win in a landslide.

The days of our form of capitalism are nearly over. It is done, and that it is done is concealed by an overhang of older people in the developed world. What will replace it remains to be seen: there are alternatives on the right and left, and the right-wing alternatives are pretty ugly.

But that neoliberal capitalism is nearly done, that is obvious.

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The Slow Bipartisan Slide to Authoritarianism

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On January 17, 2018

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The funniest thing about Trump are those who feel he is of a piece, separate from US history and somehow a break from it. That this government is significantly, qualitatively worse than those that came before, rather than an extension of it. (A good example is immigration policy, about which Trump is somewhat worse than Obama, but only somewhat, and where Obama had a chance to end Bush’s policies, he embraced them, instead.)

We now have the spectacle of the success of the cloture vote for re-authorization of section 702 of FISA, which allows warrantless spying on Americans who have contact with foreigners, and which has been changed to allow the database of all such conversations to be searched, trolling for crimes.

These seems like a fairly clear violation of the Bill of Rights prohibition on, well, warrantless searches, but there you go.

Eighteen Senate Democrats crossed the line to make this possible and so did 65 House Democrats. Obama, of course, supported the FISA bill (which was bad even without this newest addition).

Indeed, going back to 2001, the Patriot Act, the 21st century “daddy” of authoritarian overreach was opposed by only one Senator out of 100 (and he’s no longer in the Senate).

One can cavil that at least less Democrats voted for this, but somehow “enough” always do, and those who know how legislatures work will suspect that those who didn’t were given “walks” so they can say they voted against.

There are three likely possible outcomes of our ongoing realignment period. One is left-wing populism. The second is right-wing populism (a very different thing, and not what Trump is actually doing. Its policies are what Bannon prefers.)

The third is an authoritarian surveillance state which attempts to freeze current power relationships for as long as possible.

And that’s what too many Democrats and Republicans are more than okay with; that’s what they want.

The results of the work I do, like this article, are free, but food isn’t, so if you value my work, please DONATE or SUBSCRIBE.

What the Republican Tax Bill Portends for the Future

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On December 2, 2017

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I haven’t written about this before because I don’t have a great deal to say that hasn’t been said by other people. The bill is an obvious cash grab by various private interests which will cause great hardship.

The idea that it will “pay for itself” is ludicrous, and no one with a shred of intellectual integrity believes it.

It is six trillion in tax cuts, with 4.5 trillion in tax raises, including not taxing private education, but taxing public education.

A lot of Americans will suffer greatly as a result and a smaller number will do very well.

There will be an attempt to gut Medicare and Social Security next year, and it will be argued as necessary on budgetary grounds, after decades of deliberate acts like this tax bill, which hurt the budget. (And is basically bullshit even on budget grounds, but that’s a different article.)

As for the corporate tax cut from 35 percent to 20 percent, well, the 35 percent was paid by very few large companies–if any, but the last thing the US needs is corporate tax cuts: Corporations are sitting on vast quantities of cash, and they are not investing it. They should be taxed punitively on any non-reinvested profits, and that money should be spent by the government, if corporations don’t. This is common sense stuff.

Taxing overseas profits at a lower rate than domestic profits is a special sort of insanity.

None of this is likely to stand.

A lot of people in the US will suffer because of this. Some will die. All of it will most likely be repealed within eight years, because, as with the Tories in Britain completely destroying the economy for ordinary people, this will lead to a huge backlash.

It will stand only if “centrists” succeed in making sure that genuine left-wing principles are locked out of the Democratic party, as Blairites tried to do with Labour, only barely failing.

However, a genuine left-wing candidate on the Democratic ticket, with policies similar to Corbyn’s, will win in a landslide, because the youngs will vote for them in massive majorities (and, as Corbyn showed, the rule “young people don’t vote” isn’t true when someone champions their causes).

By 2024 at the latest, there will be enough of a generational shift, and enough people hurt badly enough and unable to pretend that the status quo ante was every good, that the Left, if not prevented by internal party politics, will win.

And they will win with a fairly radical agenda.

There are alternative scenarios, of course, nothing is 100 percent. But the feared fascism is unlikely to stick in the US, because the youngs aren’t onside with it (unlike the youngs in Eastern Europe). The people who want fascism in the US are mostly old and getting older (and dying).

Every time fascists come out for a march, Antifa outnumber them vastly.

What is more likely, if the possibility of a large shift to the left is stifled, is cyberpunk dystopia (sadly, so far, minus the cyberwear). Surveillance police state, vast slums abandoned by corporations and governments, corporate syndicalist towns and enclaves (already happening, as tech companies start building housing for their employees), and so on.

Those are the two most likely scenarios for the US. Those who think they can go back to the (illusory) Clintonian prosperity are deluded. The present marches into the future, and the neoliberal era is dying. The question is not if it will be replaced, but by what.

Choose your sides.

The results of the work I do, like this article, are free, but food isn’t, so if you value my work, please DONATE or SUBSCRIBE.

Five Hundred Million Dollar Negative Yield Bond Issued

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On November 17, 2017

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No, central banks aren’t screwing the economy up with their purchases:

Veolia (Paris:VIE) has issued a 500 million three-year EUR bond (maturity November 2020) with a negative yield of -0.026 percent, which is a first for a BBB issuer.

To be clear: Central banks didn’t buy those bonds, investors did. But central bank purchases of government debt are a large part of what is causing this issue.

The ECB (European Central Bank) has been buying SEVEN times the issuance of government bonds. Seven times. Seven times.

They are straight up financing governments (which, done right, could be a good thing, but isn’t in this context).

The problem in the world today is the same as it was 15 years ago, before the financial collapse: There is too much money chasing not enough returns. Because there isn’t enough real growth, so money moves into bubbles and fraud, and destroying companies through leveraged buyouts and so on. This also means that, if there isn’t enough fraud or predation going on, it sits and stagnates and does nothing worthwhile.

What the developed world actually needs is stuff to invest in: high marginal tax rates (higher on capital gains than on earned income), distributive policies to the bulk of the population to create wide-spread demand, and moderate inflation of about five percent a year to motivate people to actually invest in new businesses, as opposed to financial speculation.

The problem with this solution set is that it must also include effective regulation, otherwise it can have environmentally devastating effects; for instance, because solar is not fully online, the above solution set could lead to oil price spikes.

Those problems, however, are not why people are ignoring the suggestion solution set. These solutions are not being implemented because current leadership does not believe in high taxes, wide distribution, or regulation. They are neoliberals, and 40  years of neoliberal disasters cannot convince them to engage in anything other than neoliberalism– because neoliberalism has made them and their friends very, very rich.

But the game is coming to an end. Normally, they want to tax the middle class and poor people, sparing the rich. But now, they are now starting to tax the rich through the back door of negative interest rates. Meanwhile, the poor and middle class, especially the young ones, are losing patience and are willing to go either straight-up socialist or straight-up fascist (see: the Polish 50K rally).

This is going to get a lot uglier before it gets better.

There will be three choices for countries: Fascism, left-wing populism, or dystopic surveillance/police states.

Choose.

The results of the work I do, like this article, are free, but food isn’t, so if you value my work, please DONATE or SUBSCRIBE.

Will Capitalism and Democracy Survive?

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On September 28, 2017

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Image by TW Collins

Systems of governance, and both capitalism and democracy are such systems, can run cycles of success, failure, and renewal for a long time. Consider Imperial Confucian China, with dynasties failing, sometimes with interregnums, then new dynasties arising. Dynasties would tend to be vigorous to start, corrupt and sclerotic at the end.

Or the Dark Ages and Medieval Europe, with forms of feudalism and monarchy surviving crises over many centuries.

Let’s consider the dynamic in a bit of detail.

A system survives when it gives power to those who support it AND are capable of continuing it.

This seems obvious, but it’s a little more tricky than it seems.

(Speaking of money, I am fundraising to determine how much I’ll write this year. If you value my writing, and want more of it, please consider donating.)

Take capitalism: Capitalism runs through greed. It gives power to those who do whatever it takes to make the most money The more money you have, the more power you have. Money is the ability to decide what other people do, not just the ones you hire directly, but through purchasing power. Apple decides what Foxconn does, and heck of a lot of other people it doesn’t hire directly.

Capitalism’s prime directive is: “Do whatever makes the most money.” Whoever does that successfully also receives the most power.

In a capitalist society, people who do not respond to capitalism’s prime direct, do whatever makes the most money, do not get power. Since they have no power, they cannot challenge capitalism.

The catch here is part two of the prime directive, “and are capable of continuing it.”

Capitalism must also run the actual real economy, which consists of people and things: houses, food, sewer systems, airports, and so on.

If capitalism fails to run that system effectively, that has real effects which having more money cannot manage.

You see this in the hyperinflation of Weimar Germany. You see this in the Great Depression. You see this now, in America, where parts of the population are seeing absolute declines in life expectancy.

In Capitalism, there is supposed to be a transmission between the real economy and how much money powerful people have: you should get your vast wealth by giving people what they want, and that should be good for the economy, and if it isn’t, you should go bankrupt.

People who pursue money but cannot actually manage the real economy should lose that money, and therefore their power.

This happened in the Great Depression. The rich took their losses, and lost their power (though not all of them).  Those who remained were the smarter or luckier–more capable.

Still, the magnitude of the disaster was such that capitalism was in some danger. As many have observed, FDR rescued capitalism.

What happened in 2008 is that a large portion of capitalists lost all their money (and more than all their money). If the capitalist transmission system had been allowed to work, there would not have been a single solvent major bank or brokerage in the United States.

They had fucked up.

BUT, they had also bought the politicians and regulators, and thus, were bailed out.

The real economy, which is not GDP, then shifted into a lower state of activity.

This process has been going on for a long time now, since 1980 really. The rich have been getting richer and worse at managing the actual economy.

What should have happened in 2008 was that the rich took their losses and power moved to democratically-elected officials, as it did in the 30s. But democratically-elected officials, handed said power on a platter, refused to take it. (Yes, the Fed, but the Fed can be brought to heel any time either Congress of the President chooses to.)

Democracy, thus, also failed.

A system must give power to those who want to continue it. It must also run the actual society well enough to avoid being overthrown.

Democracy failed in 2008, but it has not failed, completely–yet. In Britain, we see the rise of Corbyn, who wants to take back vast swathes of the economy from private business; for instance, things like the train system, where private owners have made train travel cost more but less reliable.

In the US, the Democratic Party is moving towards single payer health care, because the private industry has failed to run health care effectively and efficiently for the majority of the population.

These are healthy movements. Capitalism has failed to do what it is supposed to do: Run the economy properly. They said, in the 70s and 80s, “We’re better than the public. Privatize and de-regulate, and we’ll do a great job.”

Instead, we’ve experienced a progressive decline, which has been leading to catastrophe.

If democracy succeeds in removing from the private sector what it cannot run effectively, and in removing the power from the wealthy whom have proven they cannot manage–as with Corbyn’s maximum salary proposal (though more comprehensive anti-trust actions are needed), then democracy will survive.

If democracy cannot manage what capitalism cannot, then democracy, too, is on the line. It will have failed to run society effectively, and will be seen to have failed.

Either democracy tames capitalism, or democracy and capitalism may both die.

The results of the work I do, like this article, are free, but food isn’t, so if you value my work, please DONATE or SUBSCRIBE.

Why There Is More Reason to Hope Today than in Decades

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On July 12, 2017

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Somewhere between the late 80s and the early 90s, with Clinton’s election, hope died.

The post-war era had serious issues, but the post-war era–as the civil rights movement and 70s feminism showed–was handling those issues. It was moving in the right direction. Until it didn’t, until it couldn’t handle the cascade of problems from the rise of oil prices.

In Britain, Thatcher got into power; America got Reagan. They were opposed by people who preferred to try and fix the older world, and those people lost. So there came the third way, which said: “If you can’t beat them, join them!” Clinton, Blair, and all the various folks like them wanted to do Thacherism and Reaganism but with less cruelty.

That couldn’t, and wouldn’t, work. Clinton set the stage for large chunks of the financial crisis: He gutted welfare, set up truly cruel standards for incarceration which gutted poor black communities especially, and hurt everyone else who was poor, even if less.

Blair, his British counterpart, was onside with Iraq, and blah, blah, blah.

None of them did anything about climate change worth speaking of. Their solution to pollution in the developed world was to ship the most polluting industries to developing countries, mostly notably China, and pollution there is as bad as it ever was in the first world.

Meanwhile, as we all know, they pursued a raft of policies whose effect was to funnel money to the rich, gutting the middle class over time (though the middle class benefited at first) and impoverishing many. This created oligarchical power structures throughout the west, abetted by technocrats insulated from control by elected politicians.

The point here is that the trends were mostly bad. Those few good trends, such as improvements in parts of the developing world were not a result of neoliberalism (China used mercantile policies to industrialize), and in fact, as Ha Joon shows in Bad Samaritans, growth in the developing world was slower in the neoliberal era than in the post-war era.

We have been driving ourselves towards, not disaster, but catastrophe, and not one catastrophe, but many.

So, people thought I was pessimistic. I wasn’t. I never was. I was realistic. Because it’s government and corporate policy, it’s the policy of all of our elites, to do things which would have forseeable bad consequences. That’s been policy and they’ve been very determined to stick with it.

So, there has been no room for what some people mistake as optimism. Hope. The only hope was that at some point this would change. As long as we kept electing people like Clinton or Obama, there could be no hope because those in power haven’t wanted to change the way the world is run. They don’t intend to do anything which would avoid catastrophe.

That is just how it’s been.

So now everyone is running around like chickens with their heads cut off, and I’m the calm one.

Because there is now reason for hope. Large masses of people are now willing to vote for politicians who want to do the right thing. It is too late to avoid much of the consequences of what we have done. It is simply too late. We have methane release in the arctic, we have a great species die-off, and it’s too late.

But it is not too late to mitigate. As the first rule of holes states, “When you find yourself in a hole, first, stop digging.”

We haven’t even done that yet, really. There’s a small amount as solar becomes cheaper than coal, something which should have happened 20 years ago through government intervention, but it’s too late.

However, with Sanders and Corbyn’s near successes, with the fact that so many would consider voting for them, with Melenchon in France coming so close, there is now reason to hope that we finally have an electorate willing to consider actual change to do the necessary things.

This was not true in the past. People like Sanders and Corbyn were not taken seriously as national candidates. The idea was laughable.

So this is hope; a bright, shining, slender thing.

We have it now. And yet people are running around like the sky is falling. The only reason they are doing so is that most of them didn’t understand that the decisions which caused all the problems we’re having today were taken and reaffirmed for decades. If you knew where they were going (and it wasn’t hard to), you just had to look and not flinch. If you were able to do this, nothing that is happening today, nothing, is surprising–in general terms.

The only thing that is interesting is that a large number of people, and especially young people, are turning away from doing the wrong thing, and showing openness to change. This creates a crossroads: They may choose something worse, or something better. I think they’ll take something better when offered; we saw that with Corbyn, and polls now show he’d win an election held today.

Of course, they’ll also take something worse if it means change from the status quo. We’ve seen that.

But they are willing to Change, and that means there is Hope.

So, the sky is creaking, but that’s already been predetermined and running around screaming about in affected surprise is pathetic.

Meanwhile, we may be able to begin reducing the worst of what is to come, rather than continually trying to make it worse.

And that, my friends, is reason for hope.

The results of the work I do, like this article, are free, but food isn’t, so if you value my work, please DONATE or SUBSCRIBE.

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