Chick and Pettifor Call to Reverse UK Spending Cuts

This fairly standard Keynsian call for counter-cyclical public spending to avoid a self-reinforcing depressionary spiral is interesting more in where it is found (on the Bloomberg website) than for any new thinking. Tweet

Land: The Final Tax Frontier

Here are some further interesting reflections from Martin Wolf, who seems to be breaking the economists' rule of a lifetime and actually engaging in some open-minded thinking. This time he is on the issue of land, and even goes so far as to consider the writing of Henry George on the subject. (I have already posted about my recent encounter with his devoted followers.)

Why should this issue be receiving attention, all of a sudden? Could it be that, with all other sources of revenue drying up, the politicians are at last realising the benefits of taxing land, which cannot be sent offshore or hidden in a foreign bank account? The Tax Justice Network considered this possibility in a recent special issue devoted to land tax, where I rehearsed many of the arguments Martin Wolf addresses in his piece.

Theoretically, Wolf must be right that the removal of land from economic theory was absurd, and contributed to the disconnection of the economy from the environment that has been a major contributor to ecological crisis. But as Greens we always have to be cautious about taxing land, since putting pressure on its value could merely lead to over-exploitation. Proposals for such land taxes always need to be linked to strategic objectives, put into practice via a newly democratised and community led planning process. Tweet

Culture of the Shameless: Part II

It's only once a year that I ask this favour. If you're enjoying all the priceless education and thought I share with you for nothing, in flagrant and shameless denial of all the precepts of economic theory, you might consider voting for me in the annual poll of political blogs.

The rules are simple.

1. You must vote for your ten favourite blogs and ranks them from 1 (your favourite) to 10 (your tenth favourite).
2. Your votes must be ranked from 1 to 10. Any votes which do not have rankings will not be counted.
3. You MUST include at least FIVE blogs in your list, but please list ten if you can. If you include fewer than five, your vote will not count.
4. Email your vote to toptenblogs@totalpolitics.com
5. Only vote once.
6. Only blogs based in the UK, run by UK residents or based on UK politics are eligible. No blog will be excluded from voting.
7. Anonymous votes left in the comments will not count. You must give a name
8. All votes must be received by midnight on 31 July 2010. Any votes received after that date will not count.

For ideas about other political blogs you can include to reach the total you can check the links to the right. Tweet

Culture of the Shameless

I really am not a vindictive person. In fact, I am rather fearful that if any of my Quaker friends read this post I will drummed out of the meeting. Or perhaps breathed out with sad and consoling looks, or something appropriately friendly. Or maybe I will be just accepted in spite of my cruel thoughts and my inability to get a grip on my rage about bankers.

I am angry about the way that the clear link between banking bailout and bankrupt Britain is neatly overlooked in almost all media discussions. I am angry about the fact that nobody questions the capitalist system which cannot operate without these periodic and hugely destructive collapses. But most of all I am angry about the inability of what we might tritely call 'the banking community' to take any responsibility for what has happened.

My anger may be summed up in one simple question: where is the jumping man? The last time we had a crash on anything approaching this scale, the 1929 stock-market crash, the Wall Street traders who had been sucking in the savings of small investors and investing them in widly risky schemes were clearly identified as the guilty parties. When the bubble burst they felt ashamed of destroying the savings of the working poor, who had been lured into a game they didn't understand. This as much as their own personal losses, we were led to understood, was the cause of the high rate of suicides in October 1929.

Except there was actually a low rate of suicides in that month, according to Galbraith's account of the Crash. The story of the jumpers was largely an urban myth. And even those who did jump did so because of being unable to face a future without their own personal wealth, not because of concern for the little people their risky dealing had destroyed.

A decade ago, when the Japanese economy began to fall apart because of of the failure of capitalist finance, an executive at the Bridgestone tyre company in Tokyo, committed hara-kiri as his company's profits plummetted and thousands lost their jobs. I am not exactly recommending this to the higher echelons of Goldman Sachs or RBS, but the shameless way in which they ignore the suffering around them and carry on rewarding themselves cannot help but make one look towards other times and other places with a sense of nostalgia. Tweet

Don't Mention the Trade War

Have you ever noticed how your German friends can't pronounce the name of their own country correctly? No doubt grown tired of us correcting their pronunciation, according to Martin Wolf in the FT they have no made an alliance with China and actually become Chermany . I wish this were a joke, or some sort of economic chimera, because the reality of Germany and China turning inwards and offering only stern words to the rest of the world about our budget deficits is a very worrying development.

It is extraordinary how many politicians fail to understand that, in a globalised and interconnected world, running a surplus is just as destructive as running a deficit. It is only when national economies are in balance that all can thrive; large-scale imbalances lead to tension between countries and suffering and strife within them. This is not news: it was Keynes's understanding at the Bretton Woods conference, which is why he proposed a global trading system within which those with a surplus, as well as those with a deficit, were fined by a global regulatory body. At that time it was the US, flourishing as the purveyor of arms to the world, that resisted; now it is Chermany, which is vaunting its economic strength and ignoring the political consequences.

Martin Wolf draws attention to the problem of 'chronically weak aggregate demand'. This is the most frightening code-word that an economist can find: it means people aren't buying enough stuff. From the point of view of a capitalist economy that spells disaster. The shark has stopped moving through the water and will soon expire. The other code-word of note in his piece is 'protectionism', contrary to expectations one of the most threatening words in the economist's lexicon because it means less trade. In capitalist economics, without growth the economy will fail and the best way to achieve growth is to sell stuff to other countries.

The facile posture adopted by Dave and the Boy George at the G20 is almost as laughable as their suggestion of 40% cuts. We are, apparently, to grow our way out of the recession by exporting more. Leaving aside the understanding of readers of this blog that the planetary limit makes any further growth impossible I have two simple questions for the dining-club boys: what are we supposed to export (the demand for financial services having declined rather rapidly over the past two years), and who on earth is supposed to be buying? Tweet

Shock till you Drop

How many of your friends have told you recently that they feel lucky to still be in work? This is the sign of somebody who has already given up the fight for decent standards of employment and a fair rate of pay. People who make comments like this should be politely but firmly put right. Their supine acceptance of the public-spending lies must not be allowed to take hold of the national psyche.

This sort of feeble-minded compliance is, of course, particularly prevalent in the public sector, which is the primary target of Slasher Osborne. The news that the Treasury is requiring plans for 40% cuts from the majority of departments makes clear that this is all about ideology and nothing to do with economics. One would expect the instinctive reaction of a Tory government to be to favour the private sector and punish the public sector. But in the case of Cameron and Osborne it is difficult to understand whether they really are stupid enough to sacrifice the whole national economy just to pick on public-sector workers, or whether it is a more subtle attempt to undermine the self-confidence of working people.

This is not a new strategy. Back in 1981 Thatcher's absurd policy of monetary tightening pushed the economy over the edge and resulted in the worst recession in a generation. The weakened situation of employees allowed the Tory government to force through a range of anti-union legislation that will make resistance much tougher this time around. I wonder how many people then were wandering round telling colleagues how lucky they were to still be in work. I was lucky enough to be too young to be in the labour-market.

Between them Mark Serwotka and Naomi Klein seem to have the right explanation: political shock and awe to make us vulnerable to whatever radical changes they seek to impose on our society. Together we can resist, but the shock tactics are designed to divide and conquer: pitting public sector against private sector, employed against unemployed. These are times for keeping your head, whether all about are losing theirs or not. Tweet

Kevin Rudd: My Part in His Downfall

This is my title but, as you will see from this guest post by Clive Spash, a not entirely inappropriate one. Kevin Rudd may come to be seen as the first premier to become a political victim of climate change.

Rudd's Demise and Corporate Power
by
Clive L. Spash

The demise of Kevin Rudd leaves some stark questions as to how Australia will ever tackle the power of the resource extraction sector. Rudd is cited as having become unpopular for having dropped a carbon emission trading scheme and for having advocated a tax on the mining sector.

Was Rudd wrong to ditch carbon trading? Clearly not in my opinion. Amongst many issues, the scheme (originally developed under the Howard government) was set to transfer billions of dollars to the coal and aluminium industries in 'compensation' and was designed to achieve no domestic reductions, pushing action onto the poor in other countries. Yet Rudd and his party refused to recognise such issues and only abandoned the scheme under political duress. Indeed explaining the general problems with such schemes, in academic terms, led to my own work being banned, subject to censorship and led to my resignation as a senior Australian civil servant. Is this something for which Rudd or his government could be blamed or is there a deeper malaise in Australian politics?


In November last year, the Australian Senate had a special one hour debate on whether the Rudd government was undertaking censorship. Rudd's party colleague, Minister Kim Carr, responsible for the CSIRO where I worked, later tabled a letter by the head of the organisation, Megan Clark, making a series of false allegations against me. Megan Clark is herself a former mining corporation (BHP Billiton) executive. In February this year, in a Senate Estimates Committee, the two attempted to deride my work on emissions trading and question its quality (despite its acceptance in a journal The Australian Research Council ranks as ‘A’ listed under its programme for Excellence in Research for Australia). Minister Carr readout a few selected phrases from a four page confidential journal referees report which can only have been placed in his hands by the CSIRO. These individuals have failed to suppress the work or damage its credibility, but what they did do was to expose the links between a Minister and the supposedly independent results coming from a government research agency. Carr also exposed the readiness of a Minister to place his own opinion above the scientific peer review process.

Rather than the Rudd government attacking alternative voices on climate change policy they should have been listening. They might then have developed a more sensible approach to tackling human induced climate change than the second hand policies of their opponents. Environmentalist should remember that Rudd's action of signing Kyoto meant not cuts in emissions but actually a commitment to an increase of 8 percent over 1990 levels. Rudd offered no alternatives to the rejected emissions trading scheme and seemed at a total loss as to what to do next. This failure to explore alternatives appears to be a long running Australian government problem, not just restricted to Rudd. For example, if research had been ongoing in a fair and open manner Australia might by now be leading the world in the renewable energy sector. Instead it is leading the world in resource extraction and sales of coal, especially to China.

Recent attempts to fund renewables also appear to have gone astray. Energy Minister, Martin Ferguson's solar energy flagship has been criticised as excluding those with the most advanced technology and best experience. Instead the short listed companies included some highly questionable fossil fuel corporations with little or no experience of large scale solar. The flagship was floated short on funds and with little regard to the requirements for creating and sustaining a solar sector. Ferguson has also appeared on television defending large greenhouse gas emitting energy technologies. He has stated the government does not select winners and these things should be left to the market (http://www.abc.net.au/lateline/content/2010/s2842402.htm). That markets are structured institutions set-up by social rules of governance and public policy seems to have slipped his notice, or perhaps not!

Rudd's own failure seems to have been one of too slowly becoming aware of where power lies in Australia. The final substantive act of Rudd's government was to try taxing super profits in the mining sector. This led to BHP, Rio Tinto, Fortescue Metal, Santos and the Minerals Council of Australia spinning propaganda about the tax destroying value for the miner and the nation. Opposition from Western Australia and Queensland inevitably followed. The fact that Rudd was overthrown from within his own party highlights the sensitivity of Australian politicians to mining interests.

The downfall of Rudd indicates on-going problems within Australia of how to control big coal, big mining and international corporations. Things could have been different. A politician brave enough to face down the climate sceptics while admitting emissions trading is a flawed approach should have offered real alternatives. A politician ready to take-on the mining sector and bring-in a serious resource tax should have been ready to first fight the same vested interests to put in place a tax on greenhouse gases. Revenue could then have supported a transition of the economy. A politician ready to seriously support a renewable energy sector could have taken Australia into a new era and weaned it off coal. Instead half hearted attempts at ill-conceived policies have left Australia as the biggest per capita carbon emitter in the world with a political economy heavily invested in exploitation of the environment. Tweet