Stick the fork in Zapatero: he's done | 32 comments (32 topical, editorial, 0 hidden)

Re: Post-mortem? (4.00 / 4)

Economically, he never knew what hit him. And I suspect neither did any of his multiple economic advisors, ministers, or PSOE economic policy wonks.

By laying out pros and cons we risk inducing people to join the debate, and losing control of a process that only we fully understand. - Alan Greenspan

by Carrie (migeru at eurotrib dot com) on Thu May 27th, 2010 at 09:47:08 AM EST
[ Parent ]

Re: Post-mortem? (4.00 / 7)

What a sad, hollow shell of its former self socialism has become. A generation ago there would likely have been economists who could have accurately diagnosed the nature of the problem and identified feasible paths through the storm. Now such economists are not just out of power and influence but effectively have been discredited and marginalized. It is appalling than no one in a "socialist" party should be able to diagnose a problem deriving from the excesses of the very wealthy.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu May 27th, 2010 at 12:03:03 PM EST
[ Parent ]

Re: Post-mortem? (4.00 / 3)

ARGeezer:

It is appalling than no one in a "socialist" party should be able to diagnose a problem deriving from the excesses of the very wealthy.

I don't know about the diagnosis of the problem, but definitely it was still not seen as politically expedient:

European Tribune - Spain Crisis Report

[Zapatero] also espoused his philosophy that he didn't want to be accused of being a "demagogue" for trying to neutralise impopular measures such as freezing pensions until 2011 and cutting public servants' wages with a simultaneous tax raise for "the rich".

By laying out pros and cons we risk inducing people to join the debate, and losing control of a process that only we fully understand. - Alan Greenspan

by Carrie (migeru at eurotrib dot com) on Thu May 27th, 2010 at 12:26:03 PM EST
[ Parent ]

Re: Post-mortem? (4.00 / 4)

It seems that most of "the left" almost everywhere volunteered for a Neo-Classical/Neo-Liberal mind transplant sometime in the last twenty years. What remains of their former selves is "concerns" about social solidarity, which, regrettably, can no longer be the basis of action due to the mind transplant. The ones with intact faculties are mostly in their 80s and 90s. Looks like renewal is going to have to start from scratch, effectively, if it is to happen at all, anywhere.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu May 27th, 2010 at 01:44:56 PM EST
[ Parent ]

Re: Post-mortem? (4.00 / 4)

It seems that most of "the left" almost everywhere volunteered for a Neo-Classical/Neo-Liberal mind transplant sometime in the last twenty years.

That may have been a generational thing. Remember that the economic conventional wisdom threw Keynes out with the bathwater during the 1970's stagflation. Pretty much anyone born after 1960 has basically been educated in neoclassical economics or MBA-think, and that's if they have a formal economics education as opposed to what you pick up from pundits, best-selling paperbacks and the guy at the bar. Throw in the "electability" dynamic and you end up with the hegemonic parties of the left putting their economic policy apparatus in the hands of "serious" economists (albeit with the heart in the right - that is, left - place) with, in hindsight, unsurprising consequences.

By laying out pros and cons we risk inducing people to join the debate, and losing control of a process that only we fully understand. - Alan Greenspan

by Carrie (migeru at eurotrib dot com) on Thu May 27th, 2010 at 02:27:30 PM EST
[ Parent ]

Re: Post-mortem? (4.00 / 3)

I think this is the real problem of socail democrats.

noone faced merkel with the real problem.
Noone threateened to stop paying the debt if it was not monetize. Noone insisted on germany inflation.

And,e ven itn eh worst case scenario , nobody proposed a full tax ont he rich to compensate for teh losses.

The sad truth is that they might not know what hit them. It is really sad... this is the case or... Spain was blackmailed. That is anotehr option .. because someone somewhere must know that you can not contract yourself out of a crisis.

A pleasure

I therefore claim to show, not how men think in myths, but how myths operate in men's minds without their being aware of the fact. Levi-Strauss, Claude

by kcurie on Thu May 27th, 2010 at 01:52:27 PM EST
[ Parent ]

Re: Post-mortem? (4.00 / 4)

Just found this:

Los asesores económicos del presidente Zapatero \| nuevatribuna.es (22.5.2009)		PM Zapatero's economic advisors - NuevaTribuna.es
La orientación socioliberal del equipo económico del gobierno socialista, facilita que la derecha española, el PP, marque el territorio donde se desarrolla el debate económico, hecho facilitado en gran manera por el dominio liberal en los medios. De ahí que frente a la avalancha liberal de bajar los impuestos y reducir el gasto público, la respuesta del gobierno socialista ha sido, en ocasiones coincidente (en las bajadas de impuestos) y en otras resistente (como en la bajada del gasto público).		The social-liberal orientation of the Socialist goverment's economic team enables the Spanish right, the PP, to delimit the terrain on which the economic debate takes place, a fact further facilitated by the liberal domination in the media. Hence, faced with the liberal assault to lower taxes and spending, the response of the Socialist government has been, on occasion agreeing (on tax cuts) and in others resisting (on spending cuts)
Una característica del gobierno Zapatero ha sido el de haber propuesto cambios importantes en las áreas sociales, siguiendo la tradición socialdemócrata bien establecida en Europa (y en la cual España sufría un retraso considerable), ganándose un aplauso bien merecido en áreas importantes que afectan a la calidad de vida de la ciudadanía española. Reformas tales como las del Cuarto Pilar del Bienestar (con la aprobación de la Ley de Dependencia, entre otras medidas) han merecido un reconocimiento nacional e internacional. Ahora bien, esta faceta positiva de su mandato se ha visto limitada por su política económica y fiscal, que ha disminuido el potencial que tienen aquellas medidas sociales adoptadas por el gobierno. Y ello se debe al pensamiento económico que ha guiado gran parte de estas políticas económicas y fiscales, el cual queda bien definido en el libro de Jordi Sevilla (el economista más influyente en el nacimiento de la sensibilidad conocida como Nueva Vía), titulado El nuevo socialismo, prologado por el entonces candidato José Luis Rodríguez Zapatero. En este libro, Jordi Sevilla escribía (p. 73) que "¿Alguien puede defender a estas alturas del siglo que un programa socialdemócrata debe estar a favor de más impuestos y más gasto público e introducir rigideces normativas en la economía?" (para ver una crítica del libro de Jordi Sevilla, ver el capítulo "El debate sobre la estrategia socialista: el nuevo socialismo" en mi libro El subdesarrollo social de España: causas y consecuencias, Editorial Anagrama, 2002).		A trait of Zapatero's government has been to propose important changes on social issues, following the Social Democratic tradition well established in Europe (and in which Spain was considerably backwards), earning a well-deserved applause on important issues which affect the quality of life of Spanish citizens. Reforms such as the Fourth Pillar of Welfare (with the approval of the Dependency Law, among other measures) have earned national and international recognition. However, this positive side of his tenure has been limited by his economic and fiscal policy, which has diminished the potential of the social measures approved by the government. And this is due to the economic thought that has guided a large part of these economic and fiscal policies, which is well defined in the book by Jordi Sevilla (the most influential economist in the birth of the current known as New Way), entitled New Socialism, with a preface by the then candidate Zapatero. In this book, Sevilla wrote Can anyone defend in this day and age that a social democratic programme must favour more taxes and spending and introduce normative rigidities into the economy? (to see a critique of Jordi Sevilla's book, see the chapter "the debate on the socialist strategy: the new socialism" in my book Spain's social underdevelopment: causes and consequences (Anagrama, 2002).
Considero sorprendente que esta postura sea promovida por un autor que se define como socialdemócrata y que escribe sobre el país de Europa que tenía, en el momento en que tal libro se escribió (2002), los ingresos al Estado más bajos de la UE-15, el gasto público más deficiente de la UE-15, y el gasto público social más insuficiente de la UE-15. Una consecuencia de esta austeridad de gasto público es que el tiempo promedio de visita al médico de la sanidad pública era en el año 2002 de cuatro minutos, la más baja con mucha diferencia, de la UE-15. De esta filosofía se deriva la expresión utilizada por el candidato Zapatero de que "bajar los impuestos es ser de izquierdas". Era, hablando claro, la incorporación del ideario liberal en el partido socialdemócrata mayoritario del país. La sensibilidad de Nueva Vía, en el campo económico, era la versión española del socioliberalismo.		I find it surprising that this position is promoted by an author who self-defines as social democrat and writes about a European country which has, at the time the book was written (2002) the lowest state revenues in the EU-15, the most deficient public spending in the EU-15, and the most insufficient social spending in the EU-15. A consequence of this austerity in social spending is that the average doctor's visit lasted 4 minutes, by far the lowest in the EU-15. From this philosophy follows the expression used by Zapatero as candidate that lowering taxes is being 'left'. That was, speaking clearly, incorporating the liberal ideals into the country's majority left party. The sensitivity of New Way, on the economic front, was the spanish version of social liberalism

Note: "New Way" (Nueva Vía) is not the third way, but the name of the internal "current" within the PSOE which propelled Zapatero to the party leadership in 2000.

Una vez Presidente, Zapatero nombró ministro de Economía al Sr. Solbes, que fue durante la época 1993-1996, el responsable de que España viera las mayores reducciones del gasto público (incluyendo gasto público social) conocidas en la época democrática. Solbes fue responsable, más tarde, cuando fue Comisario Europeo de Asuntos Económicos y Monetarios de la Unión Europea, de garantizar la aplicación de las políticas de austeridad del gasto público (mandadas en el Pacto de Estabilidad) en la UE-15, reduciendo la tasa de crecimiento de tal gasto público social en el promedio de los países miembros de la UE-15 durante el periodo de su mandato en la Comisión Europea (1996-2004).		As PM, ZP appointed as economy minister Mr. Solbes, who in 1993-6 was responsible for Spain seeing the largest reductions in public spending (including social spending) known in the democratic age [since 1978]. Solbes was later responsible, when he was EU Commissioner for Economic and Monetary Affairs, for guaranteeing the application of the (GSP-mandated) public austerity policies in the EU-15, reducing the growth rate of public social spending of the EU-15 member states during his tenure at the Commission (1996-2004).
Solbes, nombrado Ministro de Economía del Sr. Zapatero, indicó, al final de su primer mandato, que la medida de la cual él estaba más orgulloso era "la de no haber aumentado el gasto público", EL PAÍS (22 de julio de 2007), todo ello, dicho y hecho, en el país que continuaba teniendo el gasto público más bajo de la UE-15, lo cual daba gran satisfacción al mundo financiero y empresarial que le canonizó como el mejor Ministro de Economía que España había tenido. Su compromiso con el ideario socioliberal, sin embargo, le imposibilitó que respondiera a la enorme crisis económica y financiera que golpeó España y su énfasis en no rebasar el 3% del PIB, como límite máximo del déficit del estado, fue causa de su inoperancia frente a la crisis y su dimisión.		Solbes, appointed ZP's Economy Minister, indicated, at the end of his first term, that the measure he was most proud of was "not having increased public spending" (El Pais - 22 july 2007), all this, said and done, in a country still having the lowest public spending in the EU-15, which greatly satisfied the financial and business world which sanctified him as the best economy minister Spain had ever had. His commitment to the social liberal ideals, however, prevented him from responding to the economic and financial crisis which hit Spain, and his emphasis on not exceeding the 3% of GDP as highest limit of state deficit was the cause of his ineffectiveness against the crisis, and his resignation.
Como director de la oficina económica de La Moncloa, Zapatero nombró al economista Miguel de Sebastián, que había sido director del gabinete de estudios del BBVA, y que en un artículo en EL PAÍS (14 de mayo de 2003) titulado "Bajar los impuestos y de verdad", afirmaba que no debía aumentarse el gasto público como porcentaje del PIB. Es más, a la pregunta que le hizo un corresponsal de El País sobre si confiaba en el intervencionismo público, Miguel de Sebastián respondió "En absoluto. Soy defensor de esta idea de los demócratas estadounidenses, de un estado dinamizador frente a un estado del bienestar". EEUU, por cierto, tiene el gasto público y el gasto público social más bajo del club de países ricos, la OECD (para ver una crítica del pensamiento económico de Miguel de Sebastián, ver mi capítulo "El modelo del Partido Demócrata como propuesta para la izquierda española. Debate con Miguel de Sebastián", en mi libro citado anteriormente).		As director of the PM's economic office, Zapatero appointed the economist Miguel Sebastián, who had been Chief Economist of BBVA, and who in an article in El Pais (14 may 2003) entitled lowering taxes, really, claimed that public spending as a fraction of PIB shouldn't be raised. Moreover, to the question by an El Pais correspondent whether he trusted public interventio, Miguel Sebastián answered "not at all. I defend the idea of the US Democrats of a dynamic state against a welfare state". The US, by the way, has the lowest public spending and public social public spending in the rich nations' club, the OECD (to see a critique of the economic thought of Miguel Sebastián, see my chapter "The Democratic Party model as a proposal for the Spanish left. Debate with Miguel Sebastián" in my previously cited book).
Más tarde, cuando Miguel de Sebastián dejó de ejercer la dirección de la oficina económica, pasó a ocupar su cargo (a sugerencia suya), el economista David Taguas, también procedente del gabinete de estudios del BBVA, que había escrito en la revista de las Cajas de Ahorro, que la seguridad social era inviable, y que lo que tenía que hacerse era privatizar toda la seguridad social, tal como hizo en su día el General Pinochet en Chile (para ver una crítica de las posturas privatizadoras de la Seguridad Social, de David Taguas, ver mi artículo "¿La seguridad social es España es inviable? Respuesta a David Taguas, Director de la Oficina Económica en el Palacio de la Moncloa", publicado en la revista TEMAS PARA EL DEBATE, nº 151, junio 2007).		Later, when Miguel Sebastián stopped directing the PM's economic unit, his position was taken (at his suggestion) by David Taguas, also [Deputy Chief Economist] at BBVA, who had written in the journal of the Cajas de Ahorros that social security was inviable, and what needed to be done was to privatize all of it, just like Pinochet did in Chile (to see a critique of the Social Security privatizing positions of David Taguas, see my article "Is Social Security in Spain Inviable? Reply to David Taguas, director of the PM's economic office", published in the journal Temas Para el Debate no. 151, June 2007).
Como sucesor de Solbes, Zapatero ha nombrado a Elena Salgado, que tiene fama de buena gestora, pero que ha nombrado como su mano derecha al economista Jose Manuel Campa, economista liberal reconocido, uno de los firmantes del manifiesto a favor de la transformación de los contratos fijos en temporales con descenso de la indemnización por despido, quien, en un artículo reciente, escribió que "la reducción de los salarios es la medida más eficaz para mejorar el bienestar social en esta crisis" (véase artículo del 15 de Mayo de 2009, EL PAÍS , sección de ECONOMÍA).		To succeed Solbes, Zapatero appointed Elena Salgado who has a reputation for good management, but who has appointed as her right hand the economist José Manuel Campa, renowned liberal economist, one of the signatories of the manifesto in favour of the transformation of indefinite contrats into temporary contracts with a reduction of severance pay, and who in a recent article wrote "wage reduction is the most effective way to improve social welfare in this crisis" (See El Pais article, 15 May 2009, Economy section)

By laying out pros and cons we risk inducing people to join the debate, and losing control of a process that only we fully understand. - Alan Greenspan

by Carrie (migeru at eurotrib dot com) on Thu May 27th, 2010 at 03:51:41 PM EST
[ Parent ]

Re: Post-mortem? (4.00 / 3)

What is needed is a simple message:

We erred. In good times we allowed social spending, and especially the taxes on the wealthy to remain low. We did this for social peace. Why go after more money from the wealthy, no matter how lightly taxes they are, if we can do well with what we have. Now that times are bad these agreements, especially along with further reductions as insisted on by economists and politicians who are apologists for the wealthy, will crush the lower income portion of our nation.

Worse, these policies will not end our economic problems. They will only make them worse. The problems are not due to the actions of those who are being asked to bear greater burdens. The problems are due to the actions of the very wealthy, and politicians, ourselves included, who went along with what the very wealthy wanted.

Our most basic problem is paying down the large debts that the wealthy and the government have run up. Cutting government spending in this economic situation WILL REDUCE economic activity and, thus, our ability to pay our debts. The economic activity of our country is the result of all of the spending throughout our country. When times are hard and people have too much debt they cut back spending. But the bottom 80% of the earners are unable to cut much. Those who can make big cuts in their spending are the very wealthy, and they do make these cuts. That is a large part of why the economy drops.

Why do the wealthy stop spending? Because they made a mess of the economy. Created, with the help of the banks and the government, a large run up in property prices, took loans and built retirement villas on the coasts, which villas cannot now be sold for a price that will pay the loan, etc. etc. They kept the profits when the bubble was expanding. Now they want your social benefits to pay for the costs when the bubble has collapsed.

So we will raise taxes on the highest earners. This will start with including all income in the payments for social benefits. That now includes only the base salary. Now bonuses and all other income will be taxed at the same rate as basic income. This will enable us to maintain benefits to the unemployed during these hard times and that will keep times from becoming harder. We will also phase out all exemptions and double the rate for all incomes over one million euros/year.

In addition we will impose a 1% tax on the gross earnings of all corporations doing business in Spain in return for the privilege of enjoying the benefits of being a corporation and we will impose a transaction fee of 0.1% on all financial transactions, with an exemption for the first 100,000 Euros/year. Etc. Etc.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu May 27th, 2010 at 06:25:40 PM EST
[ Parent ]

Shorter version: (4.00 / 4)

There are two problems: The first problem is that times of growth seduced us into allowing the wealthy to take an ever greater share of the national product. This seemed acceptable as long as the economy was growing, but now that it is contracting, we need to claw back from the share of the pie going to the rich - otherwise the poor will pay for the depression, and that is not acceptable.

The second problem is that much of the wealth of the past boom was, in fact, counterfeit. Now the counterfeiters are demanding that their counterfeit money be made real out of your pension and salary.

(In principle, the two can be addressed separately, but I rather like the idea of insinuating that wealth disparity is due to counterfeiting by the wealthy - mostly because it's normally true.)

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu May 27th, 2010 at 06:52:22 PM EST
[ Parent ]

Re: Shorter version: (none / 1)

I agree with the counterfeit money argument and it should definitely be included. What I suggested is far from definitive, but was set forth to show that it should not be too hard to make these arguments in straight forward terms in any society suffering under GFC financial predation, from Greece to the USA. But it should be a little easier to get resonance in countries with a recent socialist history, even if the socialism has become social goals rather than anything economic based. At least, in Spain, socialism is not a dirty word, yet.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu May 27th, 2010 at 10:14:21 PM EST
[ Parent ]

Re: Shorter version: (none / 1)

I think every explanation should include something like this:
Migeru:

Productivity growth is a deflationary pressure. To counteract that pressure you need an expansive monetary policy. Otherwise, servicing debt becomes increasingly difficult, a crisis ensues and growth is halted.

Not only have we allowed people to counterfeit money we have based our economic development on people counterfeiting money.

by generic on Fri May 28th, 2010 at 05:59:59 AM EST
[ Parent ]

Re: Shorter version: (4.00 / 2)

The counterfeiting argument is a bit tricky.

The way I see it, any credit (including bilateral trade credit, overdrafts, and so on) adds to the monetary mass. Clearing houses and banks can act as underwriters for trade credit, and they can issue their own credit. Then the monetary authorities merge with banking supervision because they have a dual role as underwriters of bank credit and directors of monetary policy.

So, the State provides a deposit guarantee to the private banks in exchange for outsourcing to them the underwriting of trade credit and the creation of money as credit. The monetary authorities are supposed to keep track of the monetary mass created in this way, and curtail credit creation through their banking supervisory role if they see the monetary mass grow too much. If the monetary mass shrinks, the monetary authorities can inject money into the economy, by lowering interest rates or by buying bonds (issued by the State treasury or private firms) with newly created money.

Private banking for profit has an incentive to create as much credit as possible, as this results in higher personal income for the private bankers. This means that normally the central bank has to worry more about curtailing excessive private credit creation than about injecting money into the economy. But note that the conflict of interest inherent in private banking, where private bankers have an incentive to create as much credit as possible, whether the borrowers are creditworthy or not, in order to skim a fraction as personal profit, coupled with the identity of credit and money and the State guarantee of bank credit implicit in the explicit deposit guarantee, makes excessive private banking credit creation a form of counterfeiting.

By laying out pros and cons we risk inducing people to join the debate, and losing control of a process that only we fully understand. - Alan Greenspan

by Carrie (migeru at eurotrib dot com) on Fri May 28th, 2010 at 07:01:02 AM EST
[ Parent ]

Re: Shorter version: (none / 1)

But the contrast between banks that actually perform due diligence investigations on borrowers, verifying income and recent tax returns, obtaining an estimate from a licensed estimator, and a home inspection report and "mortgage broker" boiler rooms that are allowed to pump out high interest NINJA loans with no restraint from the responsible central bank authorities is not too hard to make. But perhaps these more obvious excesses did not occur in Spain.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri May 28th, 2010 at 09:00:47 AM EST
[ Parent ]

Re: Shorter version: (4.00 / 2)

When we compare those boiler rooms to "casino gambling" I fear we're giving casinos a bad name. Casinos skim 5% of the volume of gambling, just like the boiler rooms, but when someone shows up and wants to count cards and game the system by taking from the casino, the casino manager doesn't go along with it. First off, such counting of cards is illegal.

Not so in the banking system.

by Upstate NY on Fri May 28th, 2010 at 10:58:38 AM EST
[ Parent ]

Re: Shorter version: (4.00 / 3)

There are two problems:

There are at least three. The third is the poisoning of the minds of almost all economists trained since the '70s and the pollution of the public discourse with Neo-Classical Economic blather. That also needs to be hit upon regularly in order to push back against the madness upon us.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu May 27th, 2010 at 10:19:23 PM EST
[ Parent ]

Re: Post-mortem? (none / 1)

Of course in Spain, a party that has not been in power, such as Izquierda Unida, would have no apologies to make, but would have its own baggage to deal with. What is needed is something that is reasonably liberal on social issues but pretty much middle of the road consensus on everything else but the economy.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu May 27th, 2010 at 10:30:46 PM EST
[ Parent ]

Re: Post-mortem? (none / 0)

Um, the author of that is Vicenç Navarro.

By laying out pros and cons we risk inducing people to join the debate, and losing control of a process that only we fully understand. - Alan Greenspan

by Carrie (migeru at eurotrib dot com) on Fri May 28th, 2010 at 04:44:54 AM EST
[ Parent ]

Stick the fork in Zapatero: he's done | 32 comments (32 topical, 0 editorial, 0 hidden)

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