Our earnest recommendation of the second part of Steve Schirreres’ excellent diptych of articles for The Conversation
As Britain declined after world war one, no other power replaced it with the necessary financial, military and cultural power necessary to avert the political and financial instability that followed. The result was revolution, boom, crash and depression, leading rapidly to the Second World War. “Ah!” we hear you say, “Ah! That could never happen again. Look for example how well the world did to wriggle out of the consequences of the financial crash of 2007-2008!” But that, gentle readers, is to beg the question. For back in those days the world had two shots in its locker which are now fully fired. First, a spirit of co-operation among the great powers which let them co-ordinate rescue plans quickly: and the trust to make them stick. (Schifferes is rather good on this, having had a ringside seat) Now Mr Trump has declared that he will only ever consult American national interest. He may have valid domestic reasons for taking this line; but it will make any recovery from a future recession very much harder indeed.
Secondly, the America of those days still had deep and unrivalled capital markets, which enabled its Federal Reserve to act as a lender of last resort to the whole world. And this is where Schifferes gets really interesting. Firstly he details deep worries about the long term stability the US Bond market and the dollar. Remember- a hegemon needs both bonds and a currency to ensure global stability. Combine this with the threats to the US Stock market( a concern to many commentators at the time of writing) and you have not only the elements for a perfect storm, but no obvious lifeboat to climb into when it strikes.
If you want to know how the world really works, and get some glimpse of where it might be heading, then these articles are a must read. And remember- next time you get cross because the train is late, or service slow in your local restaurant: these troubles may be slight compared to what is coming down the line.
As we write these words, President Donald Trump seems to have run into some largely self-inflicted economic troubles. It is hard to say how serious or long lasting these are, and whether they will permanently affect his ability to govern. But one thing is clear: even if he fell from office tomorrow, his significance, his very presence would last for all time. He and his movement are a symptom not a cause. As two articles in the Guardian, one by Richard Partington, and the other by George Monbiot, make clear what has been going on. [1] ]2]
Globalisation, Neo-liberalism, free movement of capital and people, call it what you will, has brought us unprecedented advances in knowledge, and prosperity for billions of people who would otherwise have been excluded from both these things Yet in the countries where the creed began, especially those free market Anglo-Saxon economies of the USA and UK, it has left millions behind. Whose lives rot in the shadow of decaying factories, crumbling roads and decrepit health systems. While lurid images of good times and progress still flit across their screens, their only link to the bright hopeful world beyond. Some, like the educated and the rich are still doing well. Why not them? In such desperate circumstances it is all too easy to start blaming foreigners, global elites, or the tiny fraction who follow divergent sexual practices. And if the educated become an enemy, how will they adopt our values of reason and evidence?
Trump speaks for millions of these people, and that is why his support not only holds up, it may even grow as the crisis gets worse, as George opines. We don’t agree entirely with his analysis: many people we know who hold populist opinions are securely embedded in well funded pensions or established businesses. For us, the roots of xenophobia and self congratulation are far deeper. But the vast spread of uncertainty, insecurity and above all a pervasive sense of dread, the downsides of economic “efficiency” and ergonomic supply chains are the sea in which these emotions thrive. “Socialists do fine until they run out of other peoples’ money” runs the old saloon bar cliche. To which Donald Trump and others would retort “Capitalists do fine until they run out of other people’s security. And jobs. And eventually their nations.
Why did no one ever make a better case for a mixed economy, surely the answer to our problems?
A few weeks ago we posted a series of blogs (LSS 8 1 25 et seq) wherein we speculated about the pros and cons of a hypothetical World Government. If you do things like that, you need to look seriously at the possible candidates. And it looks as if the first one has come along. It is Donald J Trump, erstwhile 45th President, and now 47th President of the United States of America, A man who according to his own lights is as antipathetical to the idea of international cooperation and world government as you can get. But read on gentle reader.
Because there’s a theory doing the rounds which suggests that, whatever his ostensible aims, this is what he will achieve. It goes something like this. The early weeks of the Trump administration have been marked by falling financial markets and wild swings of tariff policy that have engendered a widespread sense of chaos and unease. An angst which is entirely inimical to the interests of the United States and its wealthier classes. But really it is all part of a Cunning Plan. Eventually things get so bad that The Donald calls all interested parties to a huge meeting at his palace at Mar-a- Lago. There he makes the following offer. First all willing parties revalue their currencies upwards against the dollar. Secondly they cash in all current US Treasury bonds in return for 100 year securities, which yield no interest whatsoever. In return the willing receive military protection and no tariffs, Anyone else had better look out. The 1985 Plaza accords on steroids, you might say. Except this time, all financial power and military power accrues back to the USA which becomes, de facto, the world government. We have channelled the excellent Roge Karma of the Atlantic (via Apple News) for today’s link; [1] But many thinkers, including the learned Gillian Tett of the FT have been floating this since January (she gets namechecked in this one)
The trouble with Cunning Plans is that they don’t always work. There are several problems with this one, starting with the Plaza accords. When they were signed, it was by a small group of rich nations who held a common enemy(the Soviet Union) President Reagan had carefully nurtured good, respectful relations with his allies. The current administration, whatever its reasons, works by bullying, blustering and threats. Not ways to engender co-operation and consent. Secondly there are now large and proud players, such as India and China who are rapidly evolving their own interests. Why should they throw away these futures on a scheme designed to benefit the United States? But the final sinkers are the very nature of the United States and its 45th/47th President. Hisory shows that they are not a reliable military protector, as any South Vietnamese, Afghan or Ukrainian will tell you. And if Mr Trump is so keen to weaken the dollar, why does he come out so strongly in its defence as the world reserve currency, as Mr Karma so astutely points out? Someone in Washington clearly knows the value of this reserve status, and the mortal peril which its loss represents to US power. Such inconsistency invites no confidence whatsover.
Our verdict? America really did have the game in its hands between 1989 and 2003, when it was thrown away in the sands of Iraq. Trump is like the Byzantine Emperor Justinian,(527-565 CE) setting out re conquer lost dominions. Wishing ends without sufficiently weighing the means. If there is to be a World Government, it won’t be like this.
At least the Left had moral purpose. For all the mass murders. inefficiencies and lies perpetrated under Socialist systems, we cared about the poor! Whereas you lot (the Capitalists, comrades) are nothing but selfish greedy amoral money grabbers, hooked on cocaine and fast sports cars. But Capitalism has one moral advantage wired into its very DNA. It foments truth and honest dealing.
Before you reel in disbelief, citing hoards of dodgy builders, corrupt bond traders and megalomaniac media moguls, consider this. If I buy a load of concrete from you to make a reliable bridge, I need to know it works. If I know I can sue you because the concrete is unreliable, and get good judgement in a court, you are much more likely to supply me with good concrete. The bridge stays up, and I am confident I may build another. If on the other hand you are a friend of the President, or a member of his party, you can buy the judgement of that court. You keep your money, I get no redress. The Party and The President get a kickback. But the long term consequences are dire. Bridges fall down. Less people undertake the risk of building them, as the chances of a total loss soar. Foreigners especially will suspend their investment. For if a native cannot get justice, what chance for evildoers like them in such a system? It was this truth we overlooked: and no educated progressive we know has been a socialist since about 1985. This idea of open, independent, and above all transparent justice was the real American Exceptionalism. And why they began to pull ahead even of relatively open societies like Britain, where the justice system was mired in class prejudice.
However it seems to us that President Trump and his administration may have started to reverse this process. As Giselle Ewing explains in Politico[1] the Trump government has embarked upon a highly partisan series of attacks on both individual lawyers lawyers and the firms that employ them. This barrage of measures include investigations, denials of security clearances, terminations of contracts, and even blacklists. All in effect dividing the legal system and its future promotions into two camps. One of the Government. The other: its opponents. Once again, we stress that in our view Mr Trump is acting rationally by his own lights, and above all those of his supporters. Who are for the most part poor labourers and struggling small businessmen. Whose everyday lives are harsh and insecure. To whom long term concepts like Justice and Equity will seem abstract and far away. But if this trend continues, then the USA may end like Russia or one of those African countries where justice is no more than the whim of the President. And economic forces like investment, property rights and and trust behave accordingly.
“Tear down your wall!” This was the gauntlet which US President Ronald Reagan threw down to the Communist bloc in the 1980s. It was a harbinger of times to come. Reagan was the leader of the Neoliberal programme, by which he meant that trade: the free flow of goods, services, capital and people would bring undreamed-of levels of prosperity and confine the memory of the restricted economies of Socialism to the dusty bookshelves of the History Faculty. Remember the 1990s and all those endless negotiations on GATT and the World Trade Organisation, as the good times rolled? The world was to follow the principle of Comparative Advantage, as advocated by David Ricardo, with each nation specialising in what it did best.
Yet the Neoliberal model contained the seeds of its own downfall, as we have noted before on these pages. The profound existential crisis it endured after 2008 has never ended. And now everyone, both ruled and rulers, has learned to turn away from its nostrums and the many problems which unrestricted movement has brought
Chief among these of course is immigration, which has incited a visceral fear of identity crisis among the native populations of countries where it runs high. Immigration was never a socialist thing, but a capitalist one. Donald Trump has recognised this, by using trade tariffs explicitly to control immigration(and the supply of stupefying drugs, (which similarly obeys the rules of a free market) As this Guardian article notes, he is simply the most powerful exponent of the spirit of our times. Free markets are out. Red Tape is in. What could be more Red Tape than immigration control? [1]
Of course everyone will follow suit. The first will be nations and trading blocs, retaliating against their American tormentor. Perhaps everyone will be poorer, but they may well live in more stable societies. However, once you throw over the market principle and prize stability above prosperity, you open the door to other innovations. Like higher taxes, which are also advocated to promote social good.. To restrictions on the buying and selling of second homes, lest they damage the fabric of local communities. To ever tighter restrictions on the use of cars, cigarettes and alcohol. Access to the internet and other sources of information. Trump and his supporters may not yest realise it fully, but they have already sold the pass.
Today we revived a post about the Roman Scholar Cassiodorus, or part of it. We did so because we thought his life might be relevant to the folly of our own times. While we shuffled through the process of writing, posting and so on, we noticed that a reader had picked up on another four year old post about the infamous Smoot Hawley Tariff. And so, without further ado, we reproduce below The Smoot Hawley Tariff:Another fine Mess…… Because we think it’s more relevant than ever. Thank you, that reader
It is the year 1930, and Republican Herbert Hoover is in his second year as President of the United States. Outside the White House, popular tunes on the radio include Embraceable You, by George and Ira Gershwin, and Ten cents a dance by Lorenz Hart and Richard Rogers. In cinemas Laurel and Hardy have made their transition to talking pictures with shorts like Hog Wild and Another Fine Mess. These would have supported new feature films such as Hells Angels and The Dawn Patrol, both evoking strong memories of the recent World War.
In May 1930 Hoover was a very worried man. In the previous autumn, the Wall Street Crash had sent shares into meltdown, triggering an avalanche of company closures and layoffs. By March 1930, US unemployment was already at 1.5 million. Now there was even worse news. On his desk lay a Bill called the Smoot-Hawley Tariff-and he, as President, was expected to sign it.
The Bill had been introduced into both Houses by Senator Reed Smoot (Rep, Utah) and Representative Willis C Hawley (Rep, Oregon). It was a response to cry from Republican heartlands to protect American jobs for American workers-and especially American Farmers. To this end, it introduced high tariffs on a vast range of imported manufactured and agricultural goods. Now it had passed both Houses of Congress, and so only needed the President’s signature to become law.
The trouble was that the whole rest of the world depended on trade with a thriving American economy. America was the only healthy economy left of any size after the Great War. A rise in US Tariffs would mean a collapse in trade for everyone else; and even the possibility that they might retaliate. 1,028 leading economists signed a petition asking the President to use his veto. The head of JP Morgan begged the President to reject this “asinine” legislation. Henry Ford spent an evening with the President in a last- ditch attempt to persuade him to use his veto. It didn’t work: Hoover knew that he needed the support of his Republican Party to govern at all. Not to have signed would have sparked a civil war inside the party. And so on 7 June 1930, the Smoot Hawley Tariff became Law.
The economic consequences unfolded at once. Over the next three years US imports decreased by 66%, and exports by 61%. An economy estimated at $103.1 billion in 1929 had fallen to $55.6 billion by 1933. The collapse in farm and other commodity prices brought starvation to the farming communities who had so strongly pressed for the Bill. In December 1931 US unemployment reached 9 million. By December 1932 it was 13 million.
The international consequences were disturbing. Led by Canada, all the major trading countries began putting up their own protectionist tariffs. Any hope of the world trading its way out of depression vanished. Unemployment rose to vertiginous heights, especially in Germany. There were consequences. In 1928 the Nazi Party had 12 seats and 2.6% of the vote. By 1932 they commanded 230 seats and 37.3%. Most worrying of all was Japan, which in despair abandoned the world community. Instead they looked for resources and markets by seizing Manchuria from China, initiating the eastern half of a war that would last until 1945.
What can we learn from all this, ninety years on? Never underestimate the power of ignorance and stupidity in human affairs. That nations have a right to defend their interests, but need to be very, very thoughtful about how they do it. And that the Talkies were here to stay.
By 1934 the new President, Democrat Franklin Roosevelt, was already starting to lower tariffs again. But the damage had already been done. Japan was by now so committed to China that only military defeat would get them out. In Germany, Hitler was consolidating his power by becoming Fuhrer. Some years of peace lay ahead, but the lines that led to war were already laid down.
Perhaps we should leave the last words to WH Auden, who wrote these memorable lines on 1st September 1939, as Germany marched into Poland, and the most terrible conflict in history got under way
Accurate scholarship can/Unearth the whole Offence/from Luther until now/That has driven a culture mad……………………….I and the public know/What all schoolchildren learn/That those to whom evil is done/Do evil in return
we apologise for being unable to find a royalty-free image of Messrs Smoot and Hawley
Hugh Brogan The Pelican History of the United States of America penguin 1985
Two days out from the US Presidential Election. For weeks now, our anxiety has been growing. Are they really going to elect That Man? Again? After all he did to their security, alliances, economy, health? Has Democracy itself failed? The mere fact he has got so far suggests Democracy is very, very poor at solving its problems.
And then the lightbulb moment saved us. We were listening to a BBC piece on Radio 4 about the attempts of various UK Governments to control illegal immigration. Onto the show they tipped an expert who warned “any attempt to control the people smuggler gangs will fail, because their leaders live mostly in the Middle East.” In other words people smuggling is a multinational business. Like IT, oil, fashion, fast food, transport, automotive manufacture. Some of these many giant businesses operate within the law(most of the time, anyway) Some like drug dealers and people smugglers tend stay outside it. But the economic and technological forces driving them are the same. The world is a very small place thanks to modern technology, and the rules of supply and demand are infallible. Economies of scale evolve that are far beyond the jurisdictions of nation states.
Which brings us back to the US elections. The people who will (probably) elect Donald Trump are not bad, mad or stupid. But they are frightened and bewildered. Because the very concept through which they view the world (the nation state) is now utterly inadequate to contend with the problems we face. Things like global warming, pandemics and the mass migrations of people are so obviously beyond the competence of even the largest national entities as to make their individual policies irrelevant. Suddenly a vote for a President, Prime Minister or whatever becomes like gripping the gear lever on a failing car. Whatever you do, it suddenly makes little difference. In that sense, the rise of Donald Trump is a sure and infallible signal of the utter failure of national politics everywhere. It states more clearly than anything that the time has come to look long and hard for an alternative. And, as that truth, it should be welcomed.
#donald trump #us elections #global warming #nation state #world government
“He’s going to be your President too.” These wise words were spoken to us by a much older cousin concerning the US Elections of 1968. And they have stayed with us ever since. Even if you are British, German, French or Australian, the forthcoming US Presidential election concerns you very closely. Which is why this article by Robert B Reich of Newsweek has caused us considerable disquiet. All the more so, because Newsweek has always been scrupulously neutral in its reporting, if anything leaning right of centre. [1]
It acknowledges just concerns about Biden‘s apparent physical frailty (well covered already), but then tuns to a considerable evidence list that suggests that the 45th President of the United States, and current Republican frontrunner has some substantial questions to answer about his own health, to say the least. Without stealing Robert’s thunder (we ‘ve given you the click) we will make this tiny crib as a taster
“………….In October, Trump warned his supporters that Biden will lead America into World War Two. He has also claimed that Hezbollah, the Iranian-backed militant group, is “very smart.” That whales are being killed by windmills.……….
World War Two?-uh, haven’t we sort of had that already? Whales and windmills? You don’t need a PhD in either Zoology or physics to question that one.
Yes, this blog is written in England, by persons who do not hold US citizenship. But we do share the planet with a country which holds a colossal nuclear arsenal, one which could destroy the world many times over if it were activated in a moment of narcissistic rage. We humbly beg our friends over the pond to please, please think very carefully, both now and in November.
Learning, Science and Society 