Free trade isn't the problem

by Colman
Tue Nov 20th, 2007 at 08:00:47 AM EST

I noticed a highly recommended diary on dKos by gjohnsit, in response to one by bonddad, calling for protectionism and the death of free trade that neatly illustrates the error people make when they accept and fall for the propaganda of the free-market right and then rebel against it.

The "myth of free trade" is that unfettered trade is always, automatically good for you. The theory of free trade is that it can be configured to be good for everyone: the problem with it as currently practised most of the time is that the benefits accumulate in one part of society and the costs apply to other parts. The problem is with the grand social bargains that are made either explicitly or implicitly: the US and other countries could choose to redistribute the gains to compensate those who lose out. They don't, and the possibility that they might doesn't even seem to enter the political discourse.

The same applies to capitalism: how the costs and benefits affect people depend on how it is practised, on the type of capitalism and on the way the winners compensate the losers. Capitalism is a game played by rules that determine the shape of the outcome.


Migeru's comment in the dKos thread is worth noting:

Free movement of capital is not free trade. Economists and pundits justify "free trade" policies by recourse to David Ricardo's theory of comparative advantage. However, Ricardo's theory requires full employment and that capital and labour cannot move between countries. We're doing very well on the immigration front ensuring that worldwide labour remains "the least mobile of the factors of production" (paraphrasing Adam Smith). But on keeping capital tied to its home country we're doing very badly.

So, what we have is not Ricardian free trade in which capital and labour within a country get arranged to pursue comparative advantage, but a system in which capital moves internationally in pursuit of absolute advantage, usually by employing the cheapest labour possible, in appalling working conditions and with the laxest environmental and safety standards.

If Mankiw can believe this

"Outsourcing is just a new way of doing international trade."

he doesn't even understand the classical theory of trade.

Free movement of capital effectively merges economies. If you think NAFTA is merging Mexico, the US and Canada, it is free movement of capital that is merging the US and China. When you have free movement of capital you effectively have a single economy, and when you have a single economy you need a redistributive economic policy encompassing the whole area where capital can move freely.

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This is also the core argument against the proposition that "charity is better than social welfare": all we're doing is compensating the losers for what we've enabled the winners to gain.
by Colman (colman at eurotrib.com) on Tue Nov 20th, 2007 at 08:03:43 AM EST
Colman, what are you doing quoting a heretic?

We have met the enemy, and he is us — Pogo
by Migeru (migeru at eurotrib dot com) on Tue Nov 20th, 2007 at 08:40:48 AM EST
A heretic?
by Colman (colman at eurotrib.com) on Tue Nov 20th, 2007 at 08:55:11 AM EST
[ Parent ]
Small sounbite from the Beyond GDP conference (by Miloslav Ransdorf quoting someone else):

"Heretics are the only remedy against the entropy of the human spirit"

by nanne (zwaerdenmaecker@gmail.com) on Tue Nov 20th, 2007 at 11:57:32 AM EST
[ Parent ]
There lie a slew of interpretations in your first paragraph so I'm going to hack myself though them and someone can hack back when I aim wrongly.

  1. the free-market ideology as presented by the right is in actual fact a misrepresentation

  2. This misrepresentation is in itself enough to make people angry

  3. Hence, people attack a strawman argument of the representation as they know it and demand regulation for that instead of looking at the fundamental flaws that wire the design.

So... it's all Douglas Adams again?

Fundamental design flaws are completely hidden by their superficial design flaws.
by Nomad on Tue Nov 20th, 2007 at 09:30:27 AM EST
 No: the free-market ideology misrepresents the nature of markets, trade, capitalism* and the theoretical results of economics to further a particular political end by portraying it as the inevitable one true way, as proven by science.

* Not to mention most of science while we're at it.

by Colman (colman at eurotrib.com) on Tue Nov 20th, 2007 at 09:38:37 AM EST
[ Parent ]
but, if I can abuse another popular quote, more like The Matrix: "There is no spoon." An illusionary figment of reality being pursued as truth? No wonder then people speak of free-market religion or fundies.

This struck me now:

misrepresents [...] the theoretical results of economics

Are you saying that anyone who studies theoretical economics should be able to reach the conclusion that the pursued and presented model is faulty? If so, what are people learning instead at BA business schools?

by Nomad on Tue Nov 20th, 2007 at 10:03:13 AM EST
[ Parent ]
Yes. Propaganda.
by Colman (colman at eurotrib.com) on Tue Nov 20th, 2007 at 10:04:13 AM EST
[ Parent ]
I'm having a hard time studying theoretical economics because it makes little sense (see Socratic Economics V and minor errors). I doubt I would have been able to complete an Economics degree if I had tried.

We have met the enemy, and he is us — Pogo
by Migeru (migeru at eurotrib dot com) on Tue Nov 20th, 2007 at 10:24:16 AM EST
[ Parent ]
Another (more fun) Adamsian way to look at it is this:

Every ruling economic elite create a market for a special kind of bullshit.
A demand for Bullshit that provides a theoretical/theological/"scientific" framework to justify-- nay, ORDAIN-- predation. Theirs.

Why? lots of possible reasons- one might be the "shaving mirror effect" -- the need to be able to stuff a "structural adjustment loan" down the throat of some Latin American nation in difficulty, then pluck it clean of value, leaving economic ruin and the wreckage of lives--and still be able to shave without being tempted to cut deep. A lifetime of tame media and growing "better adjusted" in the economic world probably makes that unlikely--

There will emerge a range of bullshit products, targeted at different consumers depending on a lot of things--the relative ability (or not)to analyze and ask good questions, intellectual level, etc. etc --and on the degree to which the buyer has become so "expert" at the bullshit that he or she can no longer think outside the bovine litter box.

Lots of examples spring to mind--

What's the market for Friedman? Giant.But--shaky?

For Leo Strauss? Jeez. We sure know those guys.

Greenspawn? Aha. Greenspawn brings up another market- the goat bazaar. It's the place where discarded, discredited bullshiteers go to be sold to be roasted for the failure of policy based on bullshit..

Does all this sound a lot like Economics?

Mig, it'll never make sense to you, even though some of the bullshiteers are very, very good--

That's a compliment.

Grabbing what you can, as John Ruskin said, isn't any less wicked when you grab it with the power of your brains than with the power of your fists.

by geezer in Paris (risico at wanadoo(flypoop)fr) on Tue Nov 20th, 2007 at 11:08:00 AM EST
[ Parent ]
Sure, and that's always been true of artists, philosophers, writers, priests, theologians and other thinkers: there has always been a reasonably large caste willing to put huge effort into justifying the power of the powerful.
by Colman (colman at eurotrib.com) on Tue Nov 20th, 2007 at 11:15:21 AM EST
[ Parent ]
Does all this sound a lot like Economics?

It sounds like pop economics. Does Strauss sounds like philosophy?
by Colman (colman at eurotrib.com) on Tue Nov 20th, 2007 at 11:16:08 AM EST
[ Parent ]
It didn't sound like philosophy to me, I always assumed that Strauss was politics rather than philosophy.

Are we all going to sit here handing it off between disciplines so we don't take the blame for that one.

I'm tired of this backslapping, aint humanity great BS, we're a virus with shoes Bill Hicks

by ceebs (ceebs (at) eurotrib (dot) com) on Tue Nov 20th, 2007 at 11:19:38 AM EST
[ Parent ]
First, ---Coleman, It's in fun. At least partly. Like Doug Adams? Jeez.

Does Strauss sounds like philosophy?

If Strauss is a brilliant political philosopher to the pistol wavers in the empire, a nazi propagandist and panderer (more my view) --or a cartoon artist for Le Monde, does that mean Dr. Shadia Drury has wasted her life stdying his work?
On another level, much if not most of economics is indeed pop economics. That's an essential, high demand market. Not to say it's all BS at all. As you imply, I am not competent to make that statement--even if I would. But a lot of what justifies our economic world vision is pure horse hocky. Few here would disagree with that, I think.
The most powerful lies are the ones that contain a good measure of truth.
Strauss is in exactly the same business as Milton Friedman, and his influence is profound and pernicious in all our lives.

http://www.informationclearinghouse.info/article5010.htm

Disastrous mistake #1: Thinking that to label something is to understand it.
 

Grabbing what you can, as John Ruskin said, isn't any less wicked when you grab it with the power of your brains than with the power of your fists.

by geezer in Paris (risico at wanadoo(flypoop)fr) on Tue Nov 20th, 2007 at 01:14:07 PM EST
[ Parent ]
Pop economics as opposed to what? The very sensible academic economics of rationality and utility?

We have met the enemy, and he is us — Pogo
by Migeru (migeru at eurotrib dot com) on Tue Nov 20th, 2007 at 02:53:15 PM EST
[ Parent ]
As opposed to economics that knows its building partial models of idealised situations that don't directly apply to reality and have lots of shortcomings.
by Colman (colman at eurotrib.com) on Tue Nov 20th, 2007 at 02:56:10 PM EST
[ Parent ]
Huh. Haven't encountered that kind.

We have met the enemy, and he is us — Pogo
by Migeru (migeru at eurotrib dot com) on Tue Nov 20th, 2007 at 03:12:21 PM EST
[ Parent ]
It's what they give out Nobel prizes for. Or so I'm told.

I think it would be interesting to build a sane, bottom-up economics that has some connection to the real world and isn't just an excuse for ten different kinds of pathological and predatory empire building.

That would be a worthwhile thing. But it wouldn't look like any of the nonsense that's around at the moment.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Tue Nov 20th, 2007 at 06:04:34 PM EST
[ Parent ]
price, the structure of which is extrapolated to macroeconomic "observations" and analyses and thus government policy formulations. I will refrain here from commentary of various policies that over all legitmize and perpetuate price determinants.

price (P) = operating cost + premium (Pr) | Pr is a quantified differential defined as preference (mark to model or mark to market (S/D)). That premium is commonly accepted by capitalist buyers and sellers alike as justifiable profit ("wealth," "value added" to raw goods, finacial surplus), though terms underlying the expression (Pr) are NOT commonly comprehended as transparent properties of the transaction.

More common is the representation Pr = p - c, which is irrational, ceteris paribus.

The theoretical basis of an 'operating cost' function is financial compensation paid to acquire (to master) automated or animated production technolgoies which also limit acquisition of some raw material, further processed or derived for sale in a proprietary commodity form.

It is one thing to calculate fungible labor, i.e. ownership rights or slave production ->operating expense. It is another function altogether to negotiate a market clearing wage for labor and commodity substitutution. In such an exchange environment that dilutes principles of ownership, mastery of state regulation is desirable and economical determinant of premium.

Diversity is the key to economic and political evolution.

by MarketTrustee on Tue Nov 20th, 2007 at 03:44:26 PM EST
[ Parent ]
I agree with the analysis (which Migeru has made in a more detailed form here). I am somewhat confused about the policy presription which I assume must be (glibly):

a) drop as many barriers as possible to free movement of capital, labour and goods/services (closing economies is no longer realistic);

b) fully tax all negative externalities (including dislocation and job losses);

c)compensate the "losers" by means of massive redistribution across borders.

by lemonwilmot (lemonwilmot at gmail.com) on Tue Nov 20th, 2007 at 09:39:45 AM EST
Migeru and I have half-jokingly bounced around the idea of a global minimum guaranteed income in IM.

You'd need a global government to do it, of course.

by Colman (colman at eurotrib.com) on Tue Nov 20th, 2007 at 09:52:52 AM EST
[ Parent ]
Presumably based on purchasing power parity (or would we need a single world currency, "Global Credits", or some such).
by lemonwilmot (lemonwilmot at gmail.com) on Tue Nov 20th, 2007 at 10:01:42 AM EST
[ Parent ]
Something like that: we didn't do more than speculate wildly for a few minutes.
by Colman (colman at eurotrib.com) on Tue Nov 20th, 2007 at 10:03:00 AM EST
[ Parent ]
You keep giving away my diary ideas... Is this part of your evil plan to get me to write the diaries I keep threatening to write?

We have met the enemy, and he is us — Pogo
by Migeru (migeru at eurotrib dot com) on Tue Nov 20th, 2007 at 10:04:32 AM EST
[ Parent ]
Think of these as teasers.

<TV announcer voice>
"Coming soon on Migeru Diaries: Global Redistribution. Don't miss it!"
</TV announcer voice>

by Colman (colman at eurotrib.com) on Tue Nov 20th, 2007 at 10:14:53 AM EST
[ Parent ]
Evil, or wicked? I suppose it doesn't matter.

Words and ideas I offer here may be used freely and without attribution.
by technopolitical on Wed Nov 21st, 2007 at 12:56:40 PM EST
[ Parent ]
Hmm, I never said "global".

We have met the enemy, and he is us — Pogo
by Migeru (migeru at eurotrib dot com) on Tue Nov 20th, 2007 at 10:03:07 AM EST
[ Parent ]
Your idea of massive global redistribution and a "Global credit unit" is essentially what Keynes' blueprint for an International Clearing Union and the "Bancor" was all about. Unfortunately, the US wouldn't have any of that at Bretton Woods.

We have met the enemy, and he is us — Pogo
by Migeru (migeru at eurotrib dot com) on Tue Nov 20th, 2007 at 10:06:07 AM EST
[ Parent ]
I believe PPP is an even worse nonsense than real GDP. See the comments to Minor Errors.

We have met the enemy, and he is us — Pogo
by Migeru (migeru at eurotrib dot com) on Tue Nov 20th, 2007 at 10:29:18 AM EST
[ Parent ]
I suppose that's one possibility. a) follows from two principles: one is that it's easier to increase freedom than to take it away (hence it's unrealistic to go back to a capital regime like before the 1980's where capital couldn't move more or less freely); the other is that mobility of people (hence labour) should be a fundamental right.

I wonder whether the "losers" would be already fully compensated by taxing the externalities. In other words, b) and c) are part of the common economic, fiscal and redistributive policy that is necessary if you have a single market (for labour, capital, goods, and services).

We have met the enemy, and he is us — Pogo

by Migeru (migeru at eurotrib dot com) on Tue Nov 20th, 2007 at 10:00:02 AM EST
[ Parent ]
Which is exactly the same as the logical argument for political integration in the EU (that you can't have a properly functioning single market without harmonization of regulation, taxes etc.)
by lemonwilmot (lemonwilmot at gmail.com) on Tue Nov 20th, 2007 at 10:04:50 AM EST
[ Parent ]
The Nation States will be dragged kicking and screaming into a global government by economic globalization. But the economic logic is inexorable.

We have met the enemy, and he is us — Pogo
by Migeru (migeru at eurotrib dot com) on Tue Nov 20th, 2007 at 10:07:22 AM EST
[ Parent ]
The Nation States will be dragged kicking and screaming into a global government by economic globalization.

Mig, I'm going to have to disagree with you here.  We've gone through these periods of "free trade" before, and the simple truth is that it always ends badly.  Economics is embedded in a social context.  

When people realize that their political sovereignty is being eroded by economic integration, they rebel and force the market back into reasonable limits.  This has happened twice in the past 150 years.  First ,less dramatically, during the 1870s, and spectacularly during the 1930's.

The market reduces everything to commodities, and when you reduce people to objects, the inevitable result is that you've created a mindset that isn't repelled when you reduce people to objects, like the Germans did at Auschwitz.

Some things are sacred, like human dignity, and in the market nothing is sacred.

Look at the world today, and you can see the effects that market expansion have had.  Nature having been reduced to a commodity is consumed without reference to its capacity to regenerate, becuase the presumption is that the market will provide a reasonable substitute when nature fails.

Oil's all used up?  Switch to shale oil.  Shale oil's all used up, switch to coal to liquid.  And so on and so one until nothing is left.

And don't get me started on labor markets.

The market exists within and natural and social context which it denies because it did not create it.  And so it destroys the things on which it depends.  And then when it pushes humanity to the brink, market logic is forced back into the limited range of activities in which it is appropriate.

And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg

by ManfromMiddletown (manfrommiddletown at lycos dot com) on Tue Nov 20th, 2007 at 11:59:49 AM EST
[ Parent ]
You're confusing economic forces with market forces. Markets are a subset of economics. A wish to tame the markets is an economic force in that it shapes the structure of the economy.
by Colman (colman at eurotrib.com) on Tue Nov 20th, 2007 at 12:07:41 PM EST
[ Parent ]
I'm going to try very hard not to babble on in incomprhensible jargon here.

You're right to a certain extent, but let's dig a little deeper.

If you look at older books economics it frequently spelled out oeconomics, which isn't a misprint.  It helps reveal the origin of the word and a great deal about its true meaning.  

economy  
c.1530, "household management," from L. oeconomia, from Gk. oikonomia "household management," from oikonomos "manager, steward," from oikos "house" (cognate with L. vicus "district," vicinus "near;" O.E. wic "dwelling, village;" see villa) + nomos "managing," from nemein "manage" (see numismatics). The sense of "manage the resources of a country" (short for political economy) is from 1651. Hence, economic (1835) means "related to the science of economics," while economical (1780) retains the sense "characterized by thrift." Economist is 1586 in the sense of "household manager," 1804 meaning "student of political economy." Economy (adj.) as a term in advertising at first meant simply "cheaper" (1821), then "bigger and thus cheaper per unit or amount" (1950).

Economy taken from its origin does not presume that one either attempts to maximize their utility, nor does it assume that the pursuit of self interest is at the heart of economics.  Economics in this original sense is simply the way that a society provides for its material wants.

The market on the other hand presumes both self interest and getting as much as possible from every transaction. That's the problem.

When there are social and environmental limits on growth.  When the formal presumption that the market can expand forever is shown wrong, what emerges is not voluntary exchange. If much of the economy is zero sum, that is that in order for one person to gain another must lost.  Then the market is revealed as a very thin veil for redistribution in which  those who have take from those who do not have.

The whole voluntary nature of the game is thrown out the window, because both parties do not gain.  One must lose in order for the other to gain.

In this case, the invisible hand of the market is nothing more than naked power cloaked as economic interest.

And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg

by ManfromMiddletown (manfrommiddletown at lycos dot com) on Tue Nov 20th, 2007 at 12:42:20 PM EST
[ Parent ]
That's what I said!
by Colman (colman at eurotrib.com) on Tue Nov 20th, 2007 at 12:45:54 PM EST
[ Parent ]
Without accepting your theory about zero-sumness ...
by Colman (colman at eurotrib.com) on Tue Nov 20th, 2007 at 12:46:56 PM EST
[ Parent ]
That's the kicker.

Because the possibility of voluntary cooperation disappears where transactions are zero sum.  And unfortunately, this is true of much of the modern economy.  

Even Foreign Direct Investment can be a means of controlling a country.

Why go to the trouble of colonizing a country and being forced to at least keep up the appearance of providing the basic services that a government is responsible for if you can get the same thing by purchasing ownership on the market?

So if these governments can't count on resources from natural resource sales, how are they supposed to provide basic services?  And if they don't sell them at fire sale prices to foreign investors, where do they come up with the money to pay their loans?  And if they don't pay their loans, what happens?


And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg

by ManfromMiddletown (manfrommiddletown at lycos dot com) on Tue Nov 20th, 2007 at 01:23:41 PM EST
[ Parent ]
Because the possibility of voluntary cooperation disappears where transactions are zero sum.  And unfortunately, this is true of much of the modern economy.  

That's the assertion that I want to tease out there. And right now I have nowhere near the required brain power.  I need sleep.
by Colman (colman at eurotrib.com) on Tue Nov 20th, 2007 at 01:53:10 PM EST
[ Parent ]
Refer to the "noneconomic growth" thread I linked to in a parallel subthread.

Migeru:

a global race to absolute advantage spells the end of cooperation on many levels. It's a dog-eat-dog world and there is no reason for the many who don't have an absolute advantage to agree with the few who do have absolute advantage in something in order to set up a legal [i.e., consensual] framework that reduces economic activity to the endless chase for absolute advantage. In a Ricardian world all you need is a comparative advantage, and everyone more of less) has a comparative advantage. Pity indeed.


We have met the enemy, and he is us — Pogo
by Migeru (migeru at eurotrib dot com) on Tue Nov 20th, 2007 at 02:16:50 PM EST
[ Parent ]
There's nothing to tease out.

Today's 'economics' is politics by other means. There's nothing there to understand - it's a useful rhetorical device intended to perpetuate and expand privilege and status for a small elite at the expense of everyone else.

It's not supposed to optimise resource use, create sustainable outcomes, lift poor people out of poverty, enhance personal freedom, improve quality of life and freedom of choice, or even make sense.

It pretends to be objective and 'scientific' and inevitable, but that's only so it can appear more persuasive. In reality there's no there there.

The best previous example is the medieval church, which had people believing all kinds of bizarre things in order to make a minority powerful and rich.

What's needed isn't scientific approval for economics, but a re-Enlightenment which exposes how ethically crippled and ridiculous it is and replaces it with something less cynical and more generous and thoughtful.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Tue Nov 20th, 2007 at 06:32:04 PM EST
[ Parent ]
Another factor is the reason that why we only the last 150 years (or so) has had this kind of economic globalization, and why it has been accelerating. I am thinking about transport costs. Movement of capital as a production factor, movement of entire factories would have been unconceivable 200 years ago. When the brits moved the clothing industry from India to Britain they had to build a new one in Britain (and invent things like Spinning Jenny) while suppressing India (naturally, all under the flag of free trade). And few things were worth moving like that, since most goods were consumed locally. Cheap energy has changed that.

But cheap energy is not going to last forever. Peak oil may be a liquid fuels problem (which in and of itself causes major problems for transport), but the days of really cheap energy is probably counted anyway.

The question is, will we get a global government before increasing transport costs forces a relocalisation of the economies?

A vote for PES is a vote for EPP! A vote for EPP is a vote for PES! Support the coalition, vote EPP-PES in 2009!

by A swedish kind of death on Tue Nov 20th, 2007 at 02:17:17 PM EST
[ Parent ]
Increasing travel costs will hit labour mobility first, then trade in goods, then movement of capital. So I think financial globalisation might outlast free trade.

We have met the enemy, and he is us — Pogo
by Migeru (migeru at eurotrib dot com) on Tue Nov 20th, 2007 at 02:20:31 PM EST
[ Parent ]
Not sure I agree. People can move pretty long ways assuming they can build a new life were they arrive (thinking about europeans to the Americas, and the chinese and indians to the areas around the Indian Ocean).

Goods depend on value, luxury items (which is bought for status) has always been traded from afar. But it will make no sense that fish-sticks in my store has traveled around the world first.

Capital, ay there is the rub. For what is capital? In some sense - and possibly the most destructive one in decapitalising economies - it is goods. And thus what applies to goods applies to this capital.

But it is more, the means of production and all of that. Knowledge, skills, social relationships. But can the worlds economies be ruled from a tax paradise in the bahamas connected with high speed communications?

A vote for PES is a vote for EPP! A vote for EPP is a vote for PES! Support the coalition, vote EPP-PES in 2009!

by A swedish kind of death on Tue Nov 20th, 2007 at 02:31:09 PM EST
[ Parent ]
That can't be right: there was plenty of labour mobility when the cost of travel was extremely high: see the US in the 19th C.
by Colman (colman at eurotrib.com) on Tue Nov 20th, 2007 at 02:33:06 PM EST
[ Parent ]
Sorry: meant Europe -> US.
by Colman (colman at eurotrib.com) on Tue Nov 20th, 2007 at 02:42:04 PM EST
[ Parent ]
And plenty of goods mobility and plenty of capital mobility. I'm just making a claim about relative moving costs.

We have met the enemy, and he is us — Pogo
by Migeru (migeru at eurotrib dot com) on Tue Nov 20th, 2007 at 02:42:58 PM EST
[ Parent ]
How do you deconstruct the relative moving costs? Obviously it is different for different goods and different eeehm, kinds of labour? Capital moving costs are very low with computerisation but seem to me more sensitive to the financial and legal framework and their (perceived) stability.
by nanne (zwaerdenmaecker@gmail.com) on Tue Nov 20th, 2007 at 06:21:50 PM EST
[ Parent ]
ManfromMiddletown:
When people realize that their political sovereignty is being eroded by economic integration, they rebel and force the market back into reasonable limits.  This has happened twice in the past 150 years.  First ,less dramatically, during the 1870s, and spectacularly during the 1930's.
So, are the British Eurosceptics right? Is the EU doomed?

We have met the enemy, and he is us — Pogo
by Migeru (migeru at eurotrib dot com) on Tue Nov 20th, 2007 at 02:17:57 PM EST
[ Parent ]
As is the US.
by Colman (colman at eurotrib.com) on Tue Nov 20th, 2007 at 02:19:28 PM EST
[ Parent ]
For "EU is doomed" to apply (from my reading of MfMs reasoning), EU has to fail in developing into the arena which people can use for their political sovereignty.

In effect, EU is doomed unless it develops into a state, including a social side.

A vote for PES is a vote for EPP! A vote for EPP is a vote for PES! Support the coalition, vote EPP-PES in 2009!

by A swedish kind of death on Tue Nov 20th, 2007 at 02:21:53 PM EST
[ Parent ]
Yes.

Unless the EU becomes develops a national identity all its own, the whole thing might collapse if there's a serious economic crisis.  We've already heard rumblings about the Italians leaving the euro zone.

And once you start backpedaling, Monsieur Monnet's bicycle starts to falter, and may just fall down.

And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg

by ManfromMiddletown (manfrommiddletown at lycos dot com) on Wed Nov 21st, 2007 at 11:23:21 AM EST
[ Parent ]
The issue with Europe is whether European identity trumps national identity.

You and Barbara are prime examples of why this may happen.  You're Spanish, she's Czech and you live in London.  Now without the free movement of labor in Europe do to the EU would you all be where you're at now?

Now again, during the period before the First World War, there was a great deal of internal and extracontinental migration from Europe.  Hungarians moving to France, Poles to Germany, etc.  But those mass flows stopped after the First World War.

Few remember, that prior to the First World War, most international travel occured without passport including migration.  4 million Europeans migrated to Latin America between 1870-1914.  An even larger number went to the United States and Canada.

Ultimately, assmilation occurred.  I mean recognize the irony that Sarkozy is the grandson of Hungarian immgrants calling second generation Arabs and Africans "racaille."

But the EU is a case where you have the conscience construction of a transnational identity much like you had in the Holy Roman Empire prior to 1806. And in that case, sovereignity at the national level is limited.

So does the EU die, or does it grow into an explicit political union?  How many people have to be shifted around if the EU dissolves and suddenly all the Polish plumbers and Spanish polymaths are kicked out of the UK?

The whole other thing is that countries like the UK and Belgium are starting to show serious internal strains.  What happens if Flanders goes on it's own?  Scotland declares independence?  One thing is that in the case of serious military threats from say a resurgent Russia have to be dealt with either through a European military or dependence on through alliance with the US.

And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg

by ManfromMiddletown (manfrommiddletown at lycos dot com) on Tue Nov 20th, 2007 at 02:43:15 PM EST
[ Parent ]
No quibble, just two datapoints for reference.

  1. Prior to the pass free period of 1870-1914 it was common that you needed internal passports to move about, unless you were of sufficiently high standing in society (~nobility). In Sweden this was handled by the (national) church. This became obsolete in the mid 19th century and thus passports were abolished. Of course freedom of movement is not absolute as we are reminded every time there is an EU summit. Just to pick an example, on route to the recent summit in northern Germany a swede was stopped in Denmark an ordered to return to Sweden when border guards found a tshirt from Piratbyrån (they are a lobby organisation) in his bag.

  2. Freedom of movement has existed between the Nordic countries since the 50ies. Do not know where this fits in the theories we are constructing here, but figured I would mention it.


A vote for PES is a vote for EPP! A vote for EPP is a vote for PES! Support the coalition, vote EPP-PES in 2009!
by A swedish kind of death on Tue Nov 20th, 2007 at 03:05:08 PM EST
[ Parent ]
Is that the Pirate Party?  Are they illegal outside of Sweden or something?
by Zwackus on Tue Nov 20th, 2007 at 06:09:02 PM EST
[ Parent ]
No, it is a different organisation. There are right now 5 different Pirate organisations in Sweden.

Piratbyrån - Wikipedia, the free encyclopedia

Piratbyrån ("The Bureau of Piracy") is a Swedish organization (or think tank) established to support the individuals fighting against current ideas about intellectual property by sharing information and culture freely. Piratbyrån itself is not involved in illegal activities, but rather wishes to give another point of view about spreading information than the current lobby groups do.

The Pirate Bay - Wikipedia, the free encyclopedia

The Pirate Bay (often abbreviated TPB) is an Internet site that bills itself as "the world's largest BitTorrent tracker" and also serves as an index for .torrent files that it tracks. ThePirateBay.org is ranked 192 (as of October 6, 2007) in the Alexa ranking list of the world's most-visited internet sites.[1]

The Pirate Bay was started by the Swedish anti-copyright organization Piratbyrån ('The Pirate Bureau') in early 2004, but since October 2004 it has been a separate organization.

Pirate Party - Wikipedia, the free encyclopedia

The Pirate Party (Swedish: Piratpartiet) is originally a political party in Sweden, which has given rise to groups with similar goals internationally. The party strives to reform laws regarding intellectual property, including copyright, patent and the protection of design. The agenda also includes support for a strengthening of the right to privacy, both on the Internet and in everyday life.

Young Pirate - Wikipedia, the free encyclopedia

Young Pirate(Ung Pirat) is the youth organisation of the Swedish Pirate Party. It was started in December 2006.

And there is also (but not on wikipedia yet) Piratbio - Pirate Cinema - that simply shows movies.

And none of the organisations are banned outside Sweden (afaik). There exist Pirate parties in a number of countries, ten or so EU countries, and Pirate Groups (similar to Piratbyrån) in at least Norway and Denmark. My take on it is that if you are young or poor (or both) and have anything (including a t-shirt) packed that can identify you as anti-establishment, freedom of movement does not exist during EU summits.

A vote for PES is a vote for EPP! A vote for EPP is a vote for PES! Support the coalition, vote EPP-PES in 2009!

by A swedish kind of death on Tue Nov 20th, 2007 at 09:14:54 PM EST
[ Parent ]
Thanks for the clarification.  It's nice to know that equality under the law and free speech are alive and well.
by Zwackus on Tue Nov 20th, 2007 at 09:25:05 PM EST
[ Parent ]
I think what Migeru said about relative and absolute advantage and the free movement of capital is just great. When we discussed that in a thread months and months ago I got one of those apple-in-the-head moments. A real eye-opener. (Like the time I lay upside down on the kitchen counter (for some reason or other), looking at the water flowing "upwards" into the sink and suddenly understood what gravity is all about).

Irritatingly, no other student of economics I have spoken to seem to understand this.

(Not talking about gravity.)

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid (arvid.hallen at gmail.com) on Tue Nov 20th, 2007 at 10:11:10 AM EST
It's not an original idea: I got it from reading cryptoconservative Paul Craig Roberts on radical left website Counterpunch. If MarekNYC were still around he'd lambast me for listening to the former and reading the latter.

We have met the enemy, and he is us — Pogo
by Migeru (migeru at eurotrib dot com) on Tue Nov 20th, 2007 at 10:27:16 AM EST
[ Parent ]
Yeah, he would. But Roberts is not stupid, and counterpunch is a good source in many ways. Great mistake to limit your view to the home street.
I subscribe.

Grabbing what you can, as John Ruskin said, isn't any less wicked when you grab it with the power of your brains than with the power of your fists.
by geezer in Paris (risico at wanadoo(flypoop)fr) on Tue Nov 20th, 2007 at 11:18:06 AM EST
[ Parent ]
I still recall it. The one article dissecting job creation in the US by sectors of economical activity in the model economy.
by findmeaDoorIntoSummer on Tue Nov 20th, 2007 at 12:43:29 PM EST
[ Parent ]
It's not the only Counterpunch article by Roberts on the difference between comparative and absolute advantage. Just the top google hit.

We have met the enemy, and he is us — Pogo
by Migeru (migeru at eurotrib dot com) on Tue Nov 20th, 2007 at 01:17:46 PM EST
[ Parent ]
I'm almost certain I read it originally at Lewrockwell, but I cannot find the link. Maybe it is under a diferent title.
They may be anti-state, while we are defenders of a intervening state, but we can find interesting ideas almost everywhere.
by findmeaDoorIntoSummer on Tue Nov 20th, 2007 at 04:26:30 PM EST
[ Parent ]
See the uneconomic growth comment thread in Icelandic Alþing Elections.

We have met the enemy, and he is us — Pogo
by Migeru (migeru at eurotrib dot com) on Tue Nov 20th, 2007 at 10:35:20 AM EST
[ Parent ]
That sure was a great thread.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid (arvid.hallen at gmail.com) on Tue Nov 20th, 2007 at 10:41:21 AM EST
[ Parent ]
That's not irritating, it's revealing.

We have met the enemy, and he is us — Pogo
by Migeru (migeru at eurotrib dot com) on Tue Nov 20th, 2007 at 02:51:49 PM EST
[ Parent ]
Damn, I've been away too long, spending too much time on US politics sites. I'd forgotten how much smarter the people here are. Thanks
by desmoulins (gsb6@lycos.com) on Tue Nov 20th, 2007 at 12:41:21 PM EST
Well the US government sponsors, aids, even pays for with taxpayer dollars the export of millions of American jobs.

Well then it's not free is it.  It is being paid for, subidized, aided and abetted all for the profit margins and benefit of one guy at the very top.

by Lasthorseman (Lasthorseman@comcast.net) on Tue Nov 20th, 2007 at 05:46:11 PM EST
Migeru
Free movement of capital effectively merges economies. If you think NAFTA is merging Mexico, the US and Canada, it is free movement of capital that is merging the US and China. When you have free movement of capital you effectively have a single economy, and when you have a single economy you need a redistributive economic policy encompassing the whole area where capital can move freely.

Actually what you have is an empire. And the problem we have now is that there are a limited number of empires - one big one, a few smaller ones - and a lot of nation states which still believe they matter, but whose internal politics and economics are defined by the needs of the nearest empire.

Redistribution is unlikely without civil push-back, because it's in the nature of empires that they're run for the benefit of their elites.

The elite is now international, while push-back can only happen nationally - at least so far.

The bottom line is that there's no chance at all of redistributive policies appearing by the usual democratic means without some event - like a depression or a war - which greatly weakens the empire first.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Tue Nov 20th, 2007 at 06:47:33 PM EST
You're on form TBG.

I loved this as well.

What's needed isn't scientific approval for economics, but a re-Enlightenment which exposes how ethically crippled and ridiculous it is and replaces it with something less cynical and more generous and thoughtful.

The Financial Capital sloshing about the globe isn't Value: it consists of two distinct and equally vampiric legal claims over Value - "Debt" and "Equity".

These combine to hoover up real Value ie "Money's worth" and thereby to impoverish the hapless victim countries by transferring  Value overseas, either in terms of actual commodities or finished goods for consumption, or in entitlements to ownership of productive "privatised" assets.

An asset-based global financial system would necessarily be based upon forms of money's worth of which the most important - that of land rental units (eg square metre/ years) simply have no value in exchange outside the country where the land is.

ie exchange control is essentially "built in" to what would be nationally fungible land-based currencies.

The obvious candidate for a fungible global reserve currency is an energy unit eg the energy equivalent of a fixed number of Kilowatt/Hours.

Then all you need is an International Clearing Union (as proposed by Keynes, as Migeru reminds us) and some form of mutual guarantee mechanism backed by Pools of value aka default funds.

In fact, the only way out for the US system now is, IMHO, a "Debt/Equity" swap on a massive scale by creating pools of land rentals - through new forms of quasi-REIT's.

Modern conservatives engage in one of man's oldest exercises in moral philosophy: the search for a superior moral justification for selfishness.Galbraith

by ChrisCook (cojockathotmaildotcom) on Tue Nov 20th, 2007 at 07:46:39 PM EST
[ Parent ]
So workers in all countries unite!

Is it just me or is the late 19th century looking familiar? Just that we appear to run through it in reverse or something.

A vote for PES is a vote for EPP! A vote for EPP is a vote for PES! Support the coalition, vote EPP-PES in 2009!

by A swedish kind of death on Tue Nov 20th, 2007 at 08:48:31 PM EST
[ Parent ]
It's no reverse. It's the logical continuation of the pre-1914 world, now that we have worked away all the nastiness of 1914-1991.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid (arvid.hallen at gmail.com) on Wed Nov 21st, 2007 at 02:23:20 AM EST
[ Parent ]
See Martin Wolf is worried by the new gilded age by Colman on April 26th, 2006

Gilded Age - Wikipedia, the free encyclopedia

In American history, the "Gilded Age" refers to unprecedented wealth polarization in the U.S. and wasteful displays of wealth and excessive opulence of America's upper-class during the post-Civil War and post-Reconstruction era, from the 1870s to the 1890s. The wealth polarization derived from industrial and population expansion. Industrialization during this era saw unusually rapid growth of railroads, small factories, banks, stores, mines and other enterprises and dramatic expansion into highly fertile western farmlands. Ethnic diversity increased through immigration. Steamship and railroad companies promoted immigration by emphasizing the availability of jobs and farmland. The era overlaps with Reconstruction (which ended in 1877) and includes the Panic of 1873.


We have met the enemy, and he is us — Pogo
by Migeru (migeru at eurotrib dot com) on Wed Nov 21st, 2007 at 03:12:02 AM EST
[ Parent ]
Ha, yes.

And it ended with the second world war, when all the resources of the state had to be mobilized. As a matter of course, these resources were in the hands of a small elite, so the elite had to pay for it all, not because the government was for equality but because they took the resources from the people who had them.

Another parallell, with peak oil and the possibility of massive costly state programs on the horizon. The state will get the money from the people who have money, no matter who they are...

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid (arvid.hallen at gmail.com) on Wed Nov 21st, 2007 at 03:22:28 AM EST
[ Parent ]
The state will get the money from the people who have money, no matter who they are...

The State won't touch existing money - it will create new money, one way or another.

When has a war ever been prevented because it could not be "afforded"

Modern conservatives engage in one of man's oldest exercises in moral philosophy: the search for a superior moral justification for selfishness.Galbraith

by ChrisCook (cojockathotmaildotcom) on Wed Nov 21st, 2007 at 07:14:25 AM EST
[ Parent ]


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