The best writing on the global crisis

The intuition of the older generations beats hands-down the arrogance of the post-war generations. They shunned debt – and knew that the products of manufacturing industry were the real thing. My generation thought that it knew better. At any rate it wanted better and made a Faustian deal. It’s payback time now – and few writers are able to explain what has happened, let alone how we cope with the new world.

Some of my previous posts have referred to the accounts of people such as Howard Davies and Robert Skidelsky – the first of whom looked briefly at 39 possible explanations (!!) for the recent global collapse. I've also given space to the more radical accounts of Paul Mason and Yanis Varoufakis who put the events in a deeper context; and covered the more apocalyptic writers such as William Greer and Dmitry Orlov who not only give their own explanations but also spell out the scale and details of the changes we need to make in our own personal lives if we are to survive. 

It should be noted that only 2 of these writers could be designated an academic (Skidelsky and Varoufakis)

But this week I came across perhaps the most impressive bit of analysis and writing – from Tim Morgan who writes strategic papers for a consultancy. They are all clear, challenging and well worth reading. The latest is called Perfect Storm and basically attributes the global crisis of the past 4 years to four factors -

• The madness of crowds
• The "globalisation disaster"
• Self-delusion (eg statistical lying)
• Seriously diminishing returns from the exploitation of fuels on which our growth has depended for the past two centuries

I’m only half way through the paper but let me share some excerpts from his gripping introduction -

With 24-hour news coverage, the media focus has shifted inexorably from the analytical to the immediate. The basis of politicians’ calculations has shortened to the point where it can seem that all that matters is the next sound-bite, the next headline and the next snapshot of public opinion. The corporate focus has moved all too often from strategic planning to immediate profitability as represented by the next quarter’s earnings.
This report explains that this acceleration towards ever-greater immediacy has blinded society to a series of fundamental economic trends which, if not anticipated have devastating effects.
The relentless shortening of media, social and political horizons has resulted in the establishment of self-destructive economic patterns which now threaten to undermine economic viability.

We date the acceleration in short-termism to the early 1980s. Since then, there has been a relentless shift to immediate consumption as part of something that has been called a “cult of self-worship”.
The pursuit of instant gratification has resulted in the accumulation of debt on an unprecedented scale.
The financial crisis, which began in 2008 and has since segued into the deepest and most protracted economic slump for at least eighty years, did not result entirely from a short period of malfeasance by a tiny minority, comforting though this illusion may be.
Rather, what began in 2008 was the denouement of a broadly-based process which had lasted for thirty years, and is described here as “the great credit super-cycle”.
The credit super-cycle process is exemplified by the relationship between GDP and aggregate credit market debt in the United States (see fig. 1.1 of the report). In 1945, and despite the huge costs involved in winning the Second World War, the aggregate indebtedness of American businesses, individuals and government equated to 159% of GDP. More than three decades later, in 1981, this ratio was little changed, at 168%. In real terms, total debt had increased by 214% since 1945, but the economy had grown by 197%, keeping the debt ratio remarkably static over an extended period which, incidentally, was far from shock-free (since it included two major oil crises).
As figure 1.1 shows, this changed dramatically in the 2 decades following – with the percentage of debt hitting almost 400% in 2008.

Behind the blog

So many blogs, books and papers about the state of the world/one’s country! So little time! How to identify what’s worth reading? That’s the main aim of this blog.

I’ve been getting a lot of hits in the past few days – and therefore feel the need to introduce myself to new readers.

This blog doesn’t peddle any political line. It’s written by someone who has been lucky enough to be able to paddle his own canoe for more than 40 years and to write things as he saw them – no matter the jarring effect it might have on his readers. I’ve been a “maverick” insider since an early age, for 22 years an influential political strategist in a powerful Scottish Region, helping to change the way it operated and writing critically about that experience. 

And, for the last 22 years, I’ve led various teams of consultants in transition countries in efforts to pass on our understanding of what makes for systems of “good government or good governance”. And written critically about such programmes – my website has some of the papers. I vividly remember one of my (Prussian) superiors expostulating to one of the papers - "we do not pay you to think..... but to obey!" I kid you not - this from a Berlin consultancy. Please note that I am a great admirer of Germany - as you will see from searching my various posts on the country!

And all during this period, I’ve been reading avidly to try to understand how organisations get so perverted – and how we can prevent that. The blog tries to share the best of that writing

My heroes are

• the little boy in the Hans Christian Anderson tale who dared to shout out that the Emperor had no clothes
• Voltaire’s so innocent Candide as he experienced such disasters and yet was assured by experts that “everything is for the best in the best of possible worlds”
• Marcus Aurelius in his Meditations 
• The priest who was the source in the late 1940s of the inspiring Mondragon cooperatives in Spain which now employ almost 100,000 workers in rural areas of the Basque country.
• Robert Michels for spelling out more than 100 years ago "the iron law of oligarchy"

I believe in people coming together at a local level to work for the common benefit - principles enshrined in communitarianism (about which I do have some reservations). I spent a lot of time supporting the work of social enterprise in low-income communities. None of this went down all that well with the technocrats or even members) of my political party - and the national politicians to whose books I contributed (Cook and Brown) soon changed their tune when they had a taste of power.
But, above all, I am a passionate sceptic or sceptic pluralist as I put in a blogpost in September 2011 - see, for example, my Just Words?

The caricature is one of the great William Hogarth's - "Academics"

Apocalypse Soon???

It’s Davos time again - a (generally missed) opportunity for “movers and shakers” to come together and discuss the state of the world – even although I understand that quite a few campaigners for a more just world can and do cough up the 40,000 euros registration fee. Somehow I don’t think they will be hearing the sort of frank and tough analysis you can find on John Ward’s blog - to which I drew readers' attention last September .

He surpassed himself a few days ago with an incredible summary of present socio-economic trends - putting together the various developments in a menu he calls The Top Ten Takeaways.

• Slurp; The money we used to earn from giving our money to banks has been taken away.

• Tax. Every type of tax we pay (using everything from personal allowance caps to upped speeding fines) has been increased.

• Welfare. The credits, services, and subsidies that save most of us money have been reduced, and in some cases removed.

• Quantitative Easing. The currencies we use to buy goods and services are having their value eroded by sovereign debt, QE, and in some cases direct money printing.

• Energy. The forms we use to cook, heat, drive and light up the darkness are increasing in price at a rate far beyond anything justified by either demand or conservation.

• Credit. Aside from the odd piddling and wastefully managed government scheme here and there, credit to purchase durables and property has largely dried up. By definition, this reduces one’s current and future standard of living.

• Food. Media owners and distributive opinion leaders are giving us clear warnings about the price of food being hiked substantially in the near future. They just haven’t explained why yet.

• Wages and salaries. Aside from the top 3-5%, the great majority (over 80%) of ‘middle class’ consumers have seen their real salaries eroded since around 2003. That fact applies whether we’re talking the US, the UK, or Greece.

• Market fraud & manipulation. QE has indirectly caused those with a bearish view about stocks in 2010 to have been proved expensively wrong. The Libor rate was manipulated after 2007 globally to save the banks and cheat the investor. The price of gold has been capped, and that process is now becoming all-encompassing in the light of central banker plans for the metal. Because of smoke, mirrors and bollocks on the subject of sovereign debt, the bond market yields are artificially low, further reducing a fund’s ability to create decent returns for the retired….already hit by slurp, QE and capped gold.

• Both upstream and downriver, governments are reducing the individual’s ability to save for later life, and/or live off what they have saved. The UK has once again removed some tax advantages from pension savers. The US has effectively embezzled at least half of its public sector pension funds. Free healthcare is being phased out for the elderly. The Greek and Spanish national pension reserves have ceased to exist. Every French bank is guaranteed by the taxpayer: when they start falling over, French citizens will be powerless to stop their State pensions dwindling back to nothing. UK pensioners have been told they will lose inflation indexing, and probably winter fuel allowances/free prescriptions.

Listen to the vast majority of mainstream Western politicians, and you will find very few who would even admit that this process is taking place, let alone speculate about what its ramifications will be. Bromides like ‘We’re all in this together’, ‘Yes we Can’, ‘Your friend in hard times’ and so forth offer nothing beyond onanist drivel spurting across the airwaves to placate the proles. Honourable and honest exceptions like Austin Mitchell, Ron Paul, and Alexis Tsipras are straight with those who bother to listen. But as the American Spectator wrote this week, ‘Obama’s empty inaugural address offers nothing but more blind leadership’. It’d be a nice turn of phrase – if he really was a leader.
 What they calculate is this: to compete with Asia and South America, we need to cut wage costs; to pay off debt we need to inflate currencies; to take on credible new debt, relaunch currenci(es), and repair the banks’ balance sheets, we need gold to be almost completely appropriated by the sovereign banking system; to reduce political incompetence we need to have more technocrats and fewer elections; and to ensure no opposition to any of this gets off the ground, we need a two-speed, heavily regulated internet via which ISPs and the security services can monitor what everyone’s up to 24/7.
Then, they figure, we can get some serious growth under way, keep the East in check, reduce taxes caused by debt, write off the banking system’s debts, and return to Business as Usual….provided our view holds sway in 90% of all public media.
I’m not for a second suggesting it’s a fully written up plot hatched by the Elders of Davos, because the world doesn’t work like that…and the egos involved here are so Viagrad out of shape and proportion, there’s no way you could get even a fraction of these truly disturbed materialists to sign up to such a plan, even if it existed. But a general direction is there for all to see, and there is a growing Right Commentariat which thinks it just dandy as a potential road to salvation.

The discussion thread is also interesting with one respondent linking us to a fascinating financial consultant’s report entitles Perfect Storm which contains apocolyptic stuff you never expect to see in such publicly available reports.

Another giving his own summary of events -

The greedy money worshippers have realised that the law doesn’t see fraud and white collar crime as something to either understand or bother about. So there is no cultural restraint on wholesale theft by financial people. If they get caught, they can pay the lawyers and bribe the lawmakers. Who is going to stop them.
They are not happy with stealing all the money, they want it all. They know the middle classes are not organised, so they will take all their savings from them, and make them take on unpayable debts. The middle class is doomed. There will only be two classes, the proles and the gentry. SOme of the proles will do anything they are told for a few crumbs off their master’s table, and they will be commoner-law enforcement and the like. We will get a Brute-Squad before long.
Everything is connected; the privatisation of NHS is part of the same theft of wealth; the reduction in welfare is to allow them to keep paying for a massive, supine public sector (they need the votes); the strangulation of small, independent business is to force everyone to work for large, bullying corporations and forget their freedoms; the planned conversion of coins and notes into debit cards is to allow them to tax and seize all your money; the weakness of leadership in government is to stop anyone acting on their grievances; the useless infantile press and tv who want raise a peep in objection; the stealth taxes on energy, transport, leisure, VAT, inspection charges, licenses, red-tape.
I think this has been a long time coming, but is basically opportunist. I reckon the bankers can’t believe how this has fallen into their laps, but now they are going all-in for everything. Westminster won’t stop them, it is up to the lukewarm frogs.

Back in Sofia

The grey sky ended at the Danube - as it tends to do on these runs down to Sofia. And the temperature was high for January – all of 12 degrees – one reason I had chosen Tuesday for the run since snow flurries are expected later in the week. The Balkans were beautiful with their snow caps glistening in the sun and blue skies but Vitosha mountain shrouded with clouds. The sight of Sofia in its plain - with the mountain towering over it - never fails to move me.

Leaving Bucharest I noticed that my horn wasn’t working, checked my lights and, discovering one front light also defective, pulled in to a garage. The superviser was friendly and spoke good English so, noticing a couple of Chryslers parked in the yard, I asked his advice about reliable cars. My faithful Cielo is approaching its 17^th birthday (with almost 150,000 kms on the clock) and I have to replace it this year. Skodas and Dacias have been in my mind – as well as second-hand Audis. He warned against European engines (he didn’t like the Italian engines in the Chryslers) and recommended Japanese although Skoda was acceptable. I have been put off by finding people complaining so much about their experience of Audis.

After initial grey and rain, this morning has been bright here in Sofia – some of the coffee shops have actually already put some seats outside on the pavement! Protected, however, by awning. Stocked up with the great vegetables for which Bulgaria is rightly famous (as well as with Brussels sprouts which I simply can’t find in Bucharest - which also doesn’t have the great wholemeal bread so easily found here). Ginger seems difficult to find in both cities. And yes, I also bought wine - a box of the great St Ilyia white (from Sliven area) and of Brestovitza (Plovdiv area) Sauvignon.

For some reason, the galleries of all three of my gallery friends were closed! So this article on the outrage Matisse caused in New York a hundred years ago will have to do for cultural comment.

The painting is an Atanas Mitov - of Vitosha 

Why should Scots support the Union?

An update on the situation in a small and faraway country which has been growing disenchanted with its larger neighbour in the last 30 years and could shortly pose yet another problem for European constitutionalists – Scotland.

The prospect of a referendum on independence became inevitable when the Scottish Nationalists won, in May 2011, an outright majority of seats - all the more astonishing since the electoral system had been designed in 1998 to avoid any party winning such a majority. In the middle of last year the UK Prime Minister bowed to the inevitable and accepted that a referendum would be held - in 2014. Political grandees from the establishment parties have united to fight for the Union but, as a powerful  article argues today, with little conviction and fewer converts.

Labour has still failed to sell the union on its own merits. Events since then may even have rendered the task impossible. Unionists have talked loftily about dangers of break-up and separation in a world that is thirsting for continuity and stability.
Yet we conveniently overlook the fact that London has already broken away from the United Kingdom and now exists as a world super-state governed by the greed of unhindered capitalism and recognisable as British only by its taxis and bad service. As the world's most newly minted oligarchs continue to colonise the independent state of London, it becomes almost impossible for families on less than £250k to live decently there. Poor London families made homeless by the coalition benefit cuts are being evacuated as far north as Middlesbrough.
Last week, Goldman Sachs, one of the banks with its fingers in the till when global economic meltdown occurred, awarded an average bonus of £250,000 to each of its employees. The gap between the richest in our society and the poorest stretched a little more and we were reminded yet again that the UK government, despite its promises, allows greed, incompetence and corruption to be rewarded. (How many people do you think will go to jail for the Libor rate-fixing scandal?) Meanwhile, Westminster politicians are dividing the poor into categories marked "deserving" and "scum".
The most common wet dream of every Bullingdon Tory is the national lottery. And what a jolly wheeze it is: get the poor to fund our biggest capital projects in exchange for a cruel fairy story. Now they've doubled the stake to £2, confident that the benefit cuts are increasing their customer base daily. In Glasgow, the boss of a council-run regeneration agency was given a £500k pay-off at a time when the Citizens Advice Bureau is reporting almost 1,000 calls a day from people whose families have been impoverished by the benefit cuts. Life for millions of people under the most rapacious and reactionary government in 150 years has diminished. To prevent the peasants revolting, however, they have been treated to exaggerated displays of unity euphoria such as the Olympics and assorted royal jubilees.
Labour in the UK long ago gave up any pretence at being the party of the marginalised and the vulnerable. Instead, it throws rotten fruit at the SNP when it says what Labour should be saying. Alex Salmond last week painted a handsome picture of what a new Scottish constitution following independence would look like. Every Scot, he said, would have a right to a home and free education. There will be no nuclear weapons. And we'll decide who we're fighting and who we're not. Until Blair, Mandelson, Balls and Miliband hijacked the party, that was what I thought Labour stood for. Now they simply boo and hiss with the Tories and say it can't be done.
Earlier this month, the UK Treasury declared that, following a period of intense and prolonged analysis of the economic numbers, each of us would be £1 a year worse off in an independent Scotland. Put another way, for £1 a year you will never have to endure the economic privations of a Conservative government ever again. You will not be penalised for being poor or old and nor will you suffer the pain of watching your young boys being killed in illegal wars or occupations.
We won't be lacking friends, either. Of matters concerning oil and Europe in an independent Scotland, the Norwegian government officials I met in Oslo last month were very upbeat. "Come and talk to us before you commit to the EU," they said, "and let us advise you how to manage your oil fund and how to negotiate with the oil companies."
With each passing week, it becomes more difficult to support a union that doesn't really exist anyway. Morally, it may soon become indefensible to remain in a state that rewards corruption and promotes inequality when you have an opportunity to leave it behind.

However, as my friend and namesake, Alf Young, points out in this article, a declining number of Scots are, these days, disposed to vote for independence. And the voters will, in 2014, be faced with a very complex issue as the UK Prime Minister is now committed to giving the British voter a referendum on whether to stay in or exit from the European Union. So the Scots will not really know what they are voting for next year - Scotland, the UK or Europe?

The photo is of Helensburgh in Sotland - and is an elevated view of what I could see most days from my home town of Greenock on the river Clyde.

different municipal styles

Over the past 6 years, I’ve basically spent most of the winters in Sofia and the summers (apart from 2008) in the Carpathian mountain house – with 6-7 weeks each year in Bucharest. So I’m in a good position to compare and contrast two (neighbouring) countries which are enjoying only their second brief period of freedom after half a century of communist control and several centuries of Ottoman domination. Each has its reasons for feeling different eg Romanian a romantic language in a sea of Slavs; Bulgarian still Cyrillic in its lettering.

Romania is aggressive – both in the size of its buildings and in social behaviour – Bulgaria much more modest in these respects. For more on the differences, see this post.
Yesterday I noted another difference - under the control of Sofia municipality, the Sofia City Art Gallery (to which this blog has often paid tribute) flourishes. Under the control of Bucharest municipality, 5,000 paintings apparently languish with nowhere to be displayed – apart from 2 rooms donated by ArtMark which manage to display about 15 of them. A rich Romanian émigré with an empty palace in the city offered the Bucharest mayor the palace rent-free to give the paintings an outlet – but the offer was turned down. Too much trouble for the lazy mayor whose favourite hobby is demolishing such old buildings. 

Bucharest and Sofia appeared recently at the very bottom of the list of livable European cities - but Sofia at least tries and has indeed many features which make it highly attractive. It's where I go to cycle. swim and wander pleasurably visiting friends in small galleries!
The gouache is a Zhelezarov - of Sofia's women's market 

Gladwell and Diamond - a Health warning

I enjoy the essays of Malcolm Gladwell – as I enjoy essays as an art-form (and his book The Tipping Point). But I had failed to spot the ideological baggage he carries.

His original training was apparently in a school funded by the tobacco industry; he has received considerable amounts from the corporate lobby (which shows in quite a few of his arguments) and he now earns most of his money from huge speaking fees from multinational companies.

Another populiser, Jared Diamond, has also come in for some serious criticism for making life comfortable his readers by using a “blame the victim” meme in his books about the collapse of civilisations.

After a successful slave rebellion formally freed the Haitians from their French masters, the French still managed to bully the Haitians into paying them the huge indemnity for “lost property”—that is, freed slaves—in exchange for diplomatic relations. By 1900, 80 percent of Haiti’s annual budget was consumed by these payments, which did not end until 1947. By then, Haiti had paid France about $21 billion in contemporary US dollars. In explaining Haiti’s social collapse, Diamond ignored 120 years of illegitimate debt payments as well as the long history of US interference in Haitian affairs, including America’s decades-long support of dictatorship under the Duvalier regime.Diamond’s blindness to imperial power was of a piece with the assumption embedded in his subtitle: Failed societies (a reified abstraction) have somehow chosen to fail. In the wake of the earthquake that devastated Haiti in 2010, the New York Times columnist David Brooks revealed his attachment to the same point of view: Haitians’ attachment to voodoo and other primitive superstitions, Brooks believed, had immeasurably exacerbated their suffering in the wake of the disaster. Once again, Diamond’s work revealed its resonance with neoliberal conventional wisdom. As the anthropologist Frederick K. Errington wrote, Diamond’s two books constituted a “‘one-two punch.’ The haves prosper because of happenstance beyond their control, while the have-nots are responsible for their own demise.” One could hardly imagine a more comforting account of global inequalities.

Ignoring class and other social divisions among the victors as well as the vanquished, Diamond overlooks the complex political conflicts involved in imperial policy—which included decisions about how to use guns and steel as well as how to make alliances with native elites. As the anthropologist Michael Wilcox writes: “A more appropriate troika of destruction [than ‘guns, germs, and steel’] would be ‘lawyers, god, and money.’”

A more neutral account of Diamond can be found in this recent Guardian piece.

A recent article has put these sorts of books in a wider context

The more the healers (and their “conditions”) proliferated, the harder it became for customers to figure out where to focus their limited time, money, and attention. It made sense that by 2000, our biggest guru wasn’t a writer but a new pope, Oprah Winfrey, whose brand lay in the power to ordain others. Like that other millennial guide, ­Malcolm Gladwell, she was a curator rather than a creator.Some think it was The Tipping Point, Gladwell’s 2000 argument for the power of social connections, which made it safe for techies and business types—and, more generally, men—to read about bettering themselves. “The whole idea of showing that there is a counter­intuitive way of looking at information, to make you understand yourself in a completely different way—that’s been game-changing,” one commentator  says.You could argue that the marriage of self-help and social science began a few years earlier with Daniel Goleman, a bridge between self-help’s New Age past and its journalist-driven, label-defying present. A Harvard Ph.D. and a science reporter for the New York Times, his ­Emotional Intelligence: Why It Can Matter More Than IQ spent more than a year on the Times best-seller. 

postscript; John Gray has just written an interesting piece on Gladwell's latest book about David and Goliath. Gray suggests that -

One of the features of Gladwell’s genre is a repeated effort to back the stories he tells with evidence from academic sources—a move that has attracted some of the most virulent attacks on his work. Yet Gladwell has more in common with his academic critics than either he or they realize, or care to admit. Academic writing is rarely a pursuit of unpopular truths; much of the time it is an attempt to bolster prevailing orthodoxies and shore up widely felt but ill-founded hopes. There are many examples of academics who have distorted fact or disregarded evidence in order to tell an edifying tale that accords with respectable hopes.