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The flaws of the EU's asymmetric approach to imbalances

by Migeru Wed Jul 20th, 2011 at 01:46:34 AM EST

I have had a piece on the Euro crisis published in Eurointelligence: THE FLAWS OF THE EU'S ASYMMETRIC APPROACH TO IMBALANCES

The EU is pursuing a lopsided approach to resolving the eurozone's internal imbalances. If all the adjustment were to take place among deficit countries, one of the consequences would be a situation under which the capital investment to improve productivity can hardly take place.
With thanks to afew, JakeS and kcurie who helped edit the draft, and to Wolfgang Münchau of Eurointelligence for the final tweaks and the choice of title and blurb. Negative thanks to the spellchecker of Münchau's copy of Microsoft Word for introducing typos in the final draft.

Please read the piece over there and comment over here.

front-paged by afew


The origin of the article is my reaction to an earlier column carried by Eurointelligence:

I am appalled at this article from the Bruegel think tank: EIP 1.0 - time to address macroeconomic imbalances forcefully! by Guntram B. Wolff on 7th July 2011
This column argues that the euro zone has no time to waste for structural reforms given the risk of default of Greece. The new excessive imbalance procedure (EIP) could play a crucial role in fostering such structural reforms. If needed, the Commission should start the EIP procedure as early as September should countries such as Spain not deliver on their reform commitments. The European Parliament and the public should monitor that the Regulation is applied forcefully and timely.
No concept at all of the crucial role surplus countries play in the generation and maintenance of Eurozone internal trade imbalances.
Policymakers have shown their resolve to significantly step up the governance of the euro area.  The so-called "six-pack" consisting of 6 pieces of legislation is in the final stage of becoming effective EU law: the trilogue discussions between the European Parliament, Council and Commission close to final. The remaining differences between the Council the positions of the European Parliament as voted on June 23 should as soon as possible be resolved so that the package can be implemented early. The six-pack has a completely new "Regulation for the prevention and correction of macroeconomic imbalances" (EIP), which has the potential to revolutionize European governance.
Then he goes on about how the EU Commission should immediately intervene in Spain to impose "reform". The article ends with an afterthought in which reform of suplus countries' deflationary policies is also called "less urgent":
Finally, policy action to boost growth and domestic demand is also needed in current account surplus countries but the degree of urgency is smaller. The European Parliament and the public at large should hold the Commission and Council to account on these policy options. Let's make the EIP already a success in version 1.0 and not waste precious time.
I should note this is the second time in two months I take exception to an article by the same deputy director of a reputable economic think tank...

Display:
I am indebted to:
for views, ideas and turns of phrase.

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Tue Jul 19th, 2011 at 03:22:24 PM EST
And me and me!!

I did propose "But the future of the eurozone looks even darker".. the mother of all turns of phrase.. well maybe not, but the mother of all beginnings of paragraphs!!!
I really loved it to see it there!!!

Seriously, the piece is brilliant, and the first draft was also brilliant. And now it is even more polished.

Regarding the issue at hand... we know that we agree. Frankly I can not see how it can be anything else...

On a side note: Can I brag about the  "even darker" in my blog :)

Congrats!!

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 Tue Jul 19th, 2011 at 04:52:32 PM EST
[ Parent ]
Are you going to translate it on your blog?

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Tue Jul 19th, 2011 at 04:54:51 PM EST
[ Parent ]
I was...

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 Tue Jul 19th, 2011 at 04:58:11 PM EST
[ Parent ]
I mean only parts.. copyright and all that stuff

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 Tue Jul 19th, 2011 at 04:58:42 PM EST
[ Parent ]
I followed the link and reached

Is there a house price bubble in the Euro Area?

Is there a house price bubble in the Euro Area?

from 2006. Interesting and containing such observations as

Is there a house price bubble in the Euro Area?

In a recent analysis, Deutsche Bank producing a scoring model to identify the sensitivity of European house prices to change in US house prices, and concluded that Ireland and Spain are most vulnerable to a slowdown in US housing

but hardly what I wanted to read.

The adress is right though - http://www.eurointelligence.com/article/article/the-flaws-of-the-eus-asymmetric-approach-to-imbalanc es.html

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se

by A swedish kind of death on Tue Jul 19th, 2011 at 03:34:02 PM EST
There is something wrong with Münchau's content management system.

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Tue Jul 19th, 2011 at 03:39:29 PM EST
[ Parent ]
Not the first time URLs point wrong.
by afew (afew(a in a circle)eurotrib_dot_com) on Tue Jul 19th, 2011 at 03:42:05 PM EST
[ Parent ]
I think one is not supposed to strip the hashes and PID's from the URLs...

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Wed Jul 20th, 2011 at 03:59:24 AM EST
[ Parent ]
By going to the home page, I got this link that works:

The flaws of the EU's asymmetric approach to imbalances.

by afew (afew(a in a circle)eurotrib_dot_com) on Tue Jul 19th, 2011 at 03:40:59 PM EST
[ Parent ]
Fixed.

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Tue Jul 19th, 2011 at 03:53:09 PM EST
[ Parent ]
Found it!

The flaws of the EU's asymmetric approach to imbalances

The flaws of the EU's asymmetric approach to imbalances

By: Miguel Carrion

Clear, straightforward. Very good, big thumbs up.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se

by A swedish kind of death on Tue Jul 19th, 2011 at 03:40:59 PM EST
[ Parent ]
Migs

The Euro-Plus Pact, the public debt brakes, and the focus on "competitiveness" and "reform" continue to ignore private debt and the complementary nature of internal eurozone deficits and surpluses. For this policy to succeed, all countries must become net exporters, a requirement as manifestly absurd as requiring all children to be above average.

Brilliant. The piece is concise and readable, and makes sense to this reader unable to formulate or understand macro-economic policy.  I don't like numbers about money (because i'm no professional) but this takes the discussion back to level of policies, strongly.

"Life shrinks or expands in proportion to one's courage." - Ana´s Nin

by Crazy Horse on Tue Jul 19th, 2011 at 04:21:06 PM EST
Excellent piece.

What are the copyright rules? Can you pull out the recommendations into bullet points and post it over here as the beginnings of a super-snappy policy document?

by Metatone (metatone [a|t] gmail (dot) com) on Tue Jul 19th, 2011 at 04:51:22 PM EST
The piece is mine and other columns are reproduced in other places. I don't insist on cross-posting here because I don't mind sending readers over to Eurointelligence and it's not subscription-only anyway.

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Tue Jul 19th, 2011 at 04:54:01 PM EST
[ Parent ]
I'm very happy to read over there.
I just think your policy recommendations could be a useful piece all by themselves...
by Metatone (metatone [a|t] gmail (dot) com) on Wed Jul 20th, 2011 at 03:03:53 AM EST
[ Parent ]
Regarding policy, I'm happy to throw my weight behind Varoufakis' formulation.

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Wed Jul 20th, 2011 at 03:53:19 AM EST
[ Parent ]
I'm just an amateur in economics, but i agree with everything in this article. I'm just skeptical about the finance being somehow "cured" from real estate and another asset credit business. What stops them? Even if there would be real investment, growth and balanced trade would that keep banks off the real estate? The countries would create the bubbles all by themselves, with their own surpluses. Ireland did, and the rest surplus countries like Nordic countries and Holland are following the same path.
by kjr63 on Tue Jul 19th, 2011 at 05:28:01 PM EST
Regulation and supervision. Intrusive and heavy-handed.

Private banks create credit and the central bank accommodates it by creating reserves to back that privately created credit. In the short term the central bank has no choice but in the medium term it can give signals that will have an effect.

Example: a bank creates a 40-year option-ARM mortgage with a 2-year teaser rate and 100% loan-to-value. Then it goes and tries to repo it at the central bank's discount window. If the central bank doesn't accept it it can cause problems for the bank, but it can send a message that it doesn't like the product by discounting it more heavily than usual. The central bank can also tweak regulatory capital assessments.

From Steve Keen's Dude! Where's My Recovery?

as long as 4 decades ago, the actual situation was put very simply by the then Senior Vice President, Federal Reserve Bank of New York, Alan Holmes. Holmes explained why the then faddish Monetarist policy of controlling inflation by controlling the growth of Base Money had failed, saying that it suffered from "a naive assumption" that:
The banking system only expands loans after the [Federal Reserve] System (or market factors) have put reserves in the banking system. In the real world, banks extend credit, creating deposits in the process, and look for the reserves later. The question then becomes one of whether and how the Federal Reserve will accommodate the demand for reserves. In the very short run, the Federal Reserve has little or no choice about accommodating that demand; over time, its influence can obviously be felt. (Alan R. Holmes, 1969, p. 73; emphasis added)
The empirical fact that "loans create deposits" means that the change in the level of private debt is matched by a change in the level of money, which boosts aggregate demand. The level of private debt therefore cannot be ignored--and the fact that neoclassical economists did ignore it (and, with the likes of Greenspan running the Fed, actively promoted its growth) is why this is no "garden variety" downturn.
See also JakeS' The trouble with [talking about] banking and comments therein.

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Tue Jul 19th, 2011 at 05:41:29 PM EST
[ Parent ]
Unfortunately, to get back to "Regulation and supervision. Intrusive and heavy-handed", we will have to "un-think" all of the BS spewed forth over the last 40 years to the explicit end of discrediting just that sort of government supervision. The fact that the policies on offer make no sense pales beside the fact that they appeal so strongly to the interests and sensibilities of the elites who have pushed them and benefited so greatly from them. And this will have to be accomplished in the face of the fact that these same elites largely control both government policy and the media.

But this article makes about as succinct and clear a case for so doing as is possible. I like the fact that you conveyed the conclusion of three sector national accounting without having to explain its essence. However, that explanation would make an excellent introduction to an article that was focused on that subject.

Kudos, Mig!

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

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed Jul 20th, 2011 at 08:48:52 AM EST
[ Parent ]
I know Steve Keen's opinions of the matter. But i'm still skeptical that simple interest rate weapon or collateral would solve the issue. In the end, monopolist, that the rentier always is, can wait (like Adam Smith said), unlike his "victims," who need food. And this "population wealth" of resources will grow even without finance.

I prefer taxes. When the rents are taken off the markets, there is nothing to speculate.

There sure are however arguments for private ownership. But this could be achieved by selling untradable "tax freedoms" that would be zeroed at sale. Then "the euthanasia of rentier" would be real and resources would create public wealth.

Loosely related, quite interesting debate between Alfred Marshall and Henry George from 1880's:

http://findarticles.com/p/articles/mi_m0254/is_5_60/ai_82469378/pg_11/?tag=mantle_skin;content

by kjr63 on Wed Jul 20th, 2011 at 11:29:07 AM EST
[ Parent ]
But is Germany trying to play a bigger game - to accumulate wealth and power by maintaining surpluses with the rest of the world - rather than specifically with the rest of the Eurozone - and thus Greece counts as collateral damage in this struggle?

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Tue Jul 19th, 2011 at 05:38:35 PM EST
You don't accumulate wealth by running export surpluses. And you only accumulate power if the IOUs you accumulate are worth anything under the rules that apply at the time when you want to cash them.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Jul 19th, 2011 at 05:40:29 PM EST
[ Parent ]
JakeS:
You don't accumulate wealth by running export surpluses

So what are the Chinese trying to do?

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Tue Jul 19th, 2011 at 06:11:33 PM EST
[ Parent ]
Maintain employment at home.

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Tue Jul 19th, 2011 at 06:12:40 PM EST
[ Parent ]
Encourage the Americans to ship their industrial plant to China.

It's a bit late to get in on that game now.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Jul 19th, 2011 at 06:48:45 PM EST
[ Parent ]
Yes, but the shift in the relative balance of power between China and the USA has already happened.

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Tue Jul 19th, 2011 at 06:51:15 PM EST
[ Parent ]
Depends on how you look at it. The US still has the warships that keep the sea lanes to the colonies open. And it's still American soldiers that die to keep those colonies in a colonial relationship with the US/China bloc.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Jul 19th, 2011 at 07:05:38 PM EST
[ Parent ]
China is being more targeted in its external resource deployments - buying up oil and mineral rights in Africa and Latin America - it doesn't need to deploy its armies to maintain its foreign interests.

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Wed Jul 20th, 2011 at 04:38:09 AM EST
[ Parent ]
It probably doesn't need armies, no. But it does need a navy to keep the sea lanes open. Having mineral concessions does you no good if every other ship you send to fetch your ores gets hijacked on the way back.

That's a real service that America provides, and one that China cannot rapidly replace (in part because building up the capacity to replace it would be viewed as an unfriendly act by pretty much everyone else on the planet).

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed Jul 20th, 2011 at 06:23:04 AM EST
[ Parent ]
China is running an industrial policy to get industrial and technical know-how. This is done by keeping wages down to a level the US is unlikely to compete with. This then produces surplus.

Germany is running a societal policy to transfer power from middle-class to upper-class by means of keeping wages from following productivity, while keeping its industry. This is done largely by undermining social safety nets to make the unions demand less from fear of unemployment. This also creates surpluses.

The US has been running a societal policy to transfer power from middle-class to upper-class by means of keeping wages from following productivity, while keeping up middle class consumption. This has been done largely by crushing unions while stimulating bubbles. This creates deficits.

In a technological world, industry is also power, so loosing industry is loosing power. The US has tried to keep control over industry by means of pushing ownership rights to plants and rights. This was succesfull with smaller asian nations but looks largely like a failure with China.

My point here is that in all these cases, the main driver is domestic policies. But these domestic policies creates large foreign policy consequences.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se

by A swedish kind of death on Wed Jul 20th, 2011 at 06:23:37 AM EST
[ Parent ]
So what are the Chinese trying to do?

Prevent a re-run of The Asian Debt Crisis® and keep US policy on some kind of leash through the potential threat to dump dollar reserves. The latter is probably better used as a threat than as an action.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed Jul 20th, 2011 at 09:05:54 AM EST
[ Parent ]
But the Eurozone as a whole has balanced external trade. If the Eurozone reduced its internal trade imbalances, the German surplus would go away.

In fact, the depression of the peripheral Euro economies works to keep the Euro valuation steady and external trade in balance. It's the price we pay for the success of the Euro. And German workers also pay a price in the form of depressed wages though the economy is closer to full employment there so normally there's no recession. But through the past decade Germany has been called "the sick man of Europe" for poor GDP growth. There may be something to that.

Economics is politics by other means

by Migeru (migeru at eurotrib dot com) on Tue Jul 19th, 2011 at 05:44:58 PM EST
[ Parent ]
So the crises in peripheral countries is keeping the Euro value down and allowing Germany to grow and maintain surpluses and feel all virtuous and superior about itself - and also keep it's nervous anxiety about recessions at bay.

The problem is - where do you invest your surpluses?   The USA is about to default.  China is actively looking for other outlets for its surpluses and to diversify out of the US.  There is a lot of money looking for a home shloshing around the world like a drink in a drunken hand.

Meanwhile demand is anaemic because of the enforced recessions in Peripheral countries creating a negative feedback loop diminishing all.

Sooner or later, someone is going to have to come up with the obvious solution - stop impoverishing everyone but an increasingly smaller elite who can only consume so much.

PS what is the impact of a US default on the Eurozone - is this what is driving panic in Germany?

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Tue Jul 19th, 2011 at 06:09:07 PM EST
[ Parent ]
... and nothing our own Austerians can't do for us, respectively.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Jul 19th, 2011 at 07:04:02 PM EST
[ Parent ]
There are, of course, alternative solutions to your "obvious" solution: for instance a military coup that would keep the rabble in place while gross poverty would spread. Kinda like Spain and Portugal in mid-20th century. And before somebody says that that is impossible please note that democracy has already been voluntary suspended in some countries (for instance, here the EU/ECB/IMF decided on little things like mobile phone regulation or big things like employment law)

While currently we see little social upheaval, if things get nasty we will probably see some new kind of politics emerging. It might be something more egalitarian like you seem to believe (and I would like), but it might also be something else...

by cagatacos on Wed Jul 20th, 2011 at 06:18:00 AM EST
[ Parent ]
I'm not disagreeing. This paragraph was in the first draft, but was quickly dropped:
The European publics continue to expect their governments to provide these kinds of economic guarantees and automatic stabilizers. In order to overcome public resistance, high officials of the EU Commission, the EcoFin and the ECB have first, in 2010, argued that the only way to preserve democracy was to institute austerity, "reform" and fiscal consolidation packages: there was no alternative for democracy was under threat otherwise. Now, in 2011, these same officials talk about "limited democracy", and about creating new EU officials able to overrule democratically elected governments' fiscal policies. The way that democracy was first the excuse for austerity and a year later it needs to be limited to enable austerity is rather ominous. If austerity was needed to protect democracy and a year later there are octogenarians in running battles with police over attempts to impose austerity from Brussels, something has gone terribly wrong.


Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Wed Jul 20th, 2011 at 06:19:53 AM EST
[ Parent ]
I can see why that paragraph was dropped from the first draft.  It's all very well having a debate about different economic schools of thought, and the different policy options they generate, but let's not point the finger too directly at the political and socio-economic consequences of all this: the impoverishment of the middle and working classes (and the generation of a large and youthful under-class of the unemployed) and the requirement to undermine, circumvent and superimpose onto national democracies such policies as would otherwise only be possible under fascism.

There used to be a lot of talk about the "democratic deficit" within the EU.  Now that the  most undemocratic body within the EU, the ECB, has effectively taken over running the show in the face of an irrelevant Parliament and ineffective Commission such talk is abolished and replaced by the alleged need for more top down coordinated policy decisions with additional powers to police the actions of National (democratically elected) Governments.

I would re-submit an article dealing specifically the the socio-economic and political implications of current developments on European Democracy and force them to explicitly reject that.  It would help to reveal what agendas are in play - and which are beyond the pale of permitted debate.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Wed Jul 20th, 2011 at 09:28:51 AM EST
[ Parent ]
You seem to have understood that Münchau rejected the paragraph, in fact kcurie dropped it at afew's suggestion as "not central to the argument" and I didn't put it back.

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Wed Jul 20th, 2011 at 09:37:39 AM EST
[ Parent ]
To be exact, I suggested that if the article had to be shortened, that paragraph was least central to the main argument. Which I still think.
by afew (afew(a in a circle)eurotrib_dot_com) on Wed Jul 20th, 2011 at 09:44:04 AM EST
[ Parent ]
It helped lower the total length from nearly 1400 words to closer to 1000, and I didn't put it back because I calculated it opened one too many fronts in the argument and I didn't want to be stridently political.

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Wed Jul 20th, 2011 at 09:47:18 AM EST
[ Parent ]
I imagine that you had no choice, but...

The political dimension is the main dimension. The rest is important, but a side show really.

by cagatacos on Wed Jul 20th, 2011 at 10:19:08 AM EST
[ Parent ]
You have to get there. But first you have to set the stage. The present column is relatively uncontroversial, and at the same time already skirts the Overton window. Also, see my signature.

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Wed Jul 20th, 2011 at 10:30:31 AM EST
[ Parent ]
I don't have a problem with that paragraph being dropped for the reasons you and others here have mentioned - it wasn't central to your argument and it deserves at least a 1000 word article all to itself.  But somehow, whenever economics is the starting or dominant frame of reference, the socio-economic and political implications always seem to come out as an unfortunate unintended side effect, rather that as a feature of the frame of reference being adopted.

If we started from the frame of reference that democratic legitimacy is all important; that a degree of egalitarianism or at least an attempt to at worst retain historic inequalities; that people, and especially young people coming into work age have a right to useful and rewarding employment; that European Union and cohesion requires that regional and class imbalances are gradually reduced; and that European educational, social, health and environmental standards and services are gradually harmonised - then we come up with an entirely different range of policy options, options more rooted in reality and human development, and options within which the ECB becomes a relatively marginal service provider rather than the main director of the enterprise.

Is it people or money which is at the centre of our thought universe?

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Wed Jul 20th, 2011 at 11:04:35 AM EST
[ Parent ]
There's our thought universe and there's their thought universe.

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Wed Jul 20th, 2011 at 11:06:23 AM EST
[ Parent ]
You can negotiate within the confines of their thought universe, point out some logical contradictions, and perhaps achieve some marginal adjustments. Or you can challenge their thought universe by imposing/proposing your own, point out the convergences and divergences with theirs, and explain why yours is more robust both in its assumptions and logical consequences and ultimate real world outcomes. This tends to lead to more paradigmatic and revolutionary change. Do you want to be the local college economics lecturer or the new Keynes?

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Wed Jul 20th, 2011 at 11:13:14 AM EST
[ Parent ]
Frank Schnittger:
you can challenge their thought universe by imposing/proposing your own,

That is what Mig is doing, Frank.

by afew (afew(a in a circle)eurotrib_dot_com) on Wed Jul 20th, 2011 at 11:14:53 AM EST
[ Parent ]
While I laud all the effort, I cannot avoid thinking that as soon as any success would be obtained, the effort would be trashed.

While some people might be honest intellectually, cynicism leads me to believe that as soon as this approach started to work, it would be cut down.

The genetic imprint of the current system is to support the financial classes. Deviation is only acceptable as long as it is inconsequential.

On the other hand, I can only wish good luck (and expect that I am wrong).

Bottom up approaches seem more appropriate, in my view.

But good luck. In the middle of the developing social, economic and political chaos the butterfly effect might actually make all this effort pay off. Indeed, now is the time.

by cagatacos on Wed Jul 20th, 2011 at 11:27:37 AM EST
[ Parent ]
cagatacos:
Bottom up approaches seem more appropriate, in my view.

Because a blogger writing a post on an economics site is supposed to be top-down?

by afew (afew(a in a circle)eurotrib_dot_com) on Wed Jul 20th, 2011 at 11:56:48 AM EST
[ Parent ]
His approach to change is institutional and top-down. He is trying to influence Wolfgang Munchau readers.

A bottom-up approach involves influencing the opinion and PRACTICE of a bus driver.

Contrast this with, say, the approach of the transition town movement.

I hope I have made it clear that I think it is a great piece of work. But lets not be blinded to target audience and approach.

This piece (and ET, by the way) is targeted at a certain intellectual elite. Other than trying to fake something of a more popular vein, I strongly suggest to all people that are comfortable with doing this work, that they should just embrace it. Just do not fool yourselves.

by cagatacos on Wed Jul 20th, 2011 at 12:16:29 PM EST
[ Parent ]
I don't have a quarrel with the transition town movement. I think they are necessary. I just don't personally have the temperament for (small-'c') community life.

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Wed Jul 20th, 2011 at 12:54:43 PM EST
[ Parent ]
This whole discussion stinks of "either-or" mentality somewhat pervasive in western thought. Most of it is essentially a non-discussion about things we agree. Say

  1. There are different approaches to the current problems

  2. Some people have different inclinations

I am just stating that:

  1. This is great work, but refers to a certain kind of approach. A certain kind of speech, a certain kind of audience.

  2. It deserves being encouraged.

  3. I personally do not believe that it will bear fruit.

  4. Points 2 and 3 ARE NOT inconsistent. A single minded approach is much less resilient that a "large-span" approach.

  5. People should do what they are most comfortable with. If it is writing LTEs to the FT, so be it!

I guess my final point is: if I am correct (big if), then there are other avenues you might try without failing into despair. ;)
by cagatacos on Thu Jul 21st, 2011 at 07:25:55 AM EST
[ Parent ]
  1. I don't think this discussion "stinks";

  2. I don't think you were misunderstood.
by afew (afew(a in a circle)eurotrib_dot_com) on Thu Jul 21st, 2011 at 11:09:30 AM EST
[ Parent ]
What we're doing here at ET is no doubt at some remove from attempting to influence the working class. But what does deeply influence the working class, other than the mass media we criticize and would hope to (eventually) have some influence on? Or the consumer society we also criticize?

I willingly hit the street in support of strikes, union action, social movements. I've just returned from an hour working for the locavore food association I help to run. But I'm aware of the limits of that type of action too. Addressing the intellectuals and communicators in society seems to me to be another type of action that can bring results, and I don't think it's any less worthy.

Neither do I think it's "elitist" or top-down, coming from a Web-based discussion community.

by afew (afew(a in a circle)eurotrib_dot_com) on Wed Jul 20th, 2011 at 01:36:14 PM EST
[ Parent ]
Perhaps, but it was Mig who renamed this thread Self-Censorship implying that he didn't really say what he wanted to say. Sometimes you have to prepare the ground and establish a reputation within existing paradigms, as you seem to suggest.  however if it is revolutionary to point our that surplus generating countries can only continue to generate surpluses if other countries generate larger and larger deficits and that at some point this system has to become unstable - then the present economic consensus has reached a height of stupidity difficult to fathom - if I may completely mix my metaphors.

Thomas Kuhn, in The Structure of Scientific Revolutions, pointed out that scientific or knowledge progress is rarely a smooth progression, is often characterised by abrupt discontinuities, and is generally led by outsiders to the existing thought establishment. Einstein notoriously ghardly pssed his school exam never mind worked his way of the academic hierarchy. I suggest the time is right for a completely new approach to economics, one based on entirely different assumptions, and one leading to better real world outcomes.  The contradictions of Austrian economics are just too glaring for that paradigm to survive.  We need a new real world approach to economics - one starting with assumptions about human rights rather than human "rationality" or greed, and one rooted in the ecosystem of the world we actually inhabit.

I suggest there are some on ET with the intellectual capabilities to help lead such a revolution.  Am I being too optimistic?

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Wed Jul 20th, 2011 at 11:34:01 AM EST
[ Parent ]
if it is revolutionary to point our that surplus generating countries can only continue to generate surpluses if other countries generate larger and larger deficits and that at some point this system has to become unstable - then the present economic consensus has reached a height of stupidity difficult to fathom - if I may completely mix my metaphors
A. You're right: If B then C

B. It is indeed outside the mainstream to point that out

Therefore C. the present economic consensus has reached unfathomable heights of stupidity

Economics is politics by other means

by Migeru (migeru at eurotrib dot com) on Wed Jul 20th, 2011 at 11:38:47 AM EST
[ Parent ]
We must keep in mind that the purpose of "the present economic consensus" is to preserve and further the present wealth distribution, not to provide a nuanced understanding that would allow clear evaluation of trade-offs and alternative approaches or allow deep and fruitful insights into the meaning and consequences of that distribution, let alone undermine it. The present economic consensus is the consensus of those who have the vast majority of wealth and those who work for them. The holders of wealth probably are concerned that even this lame "present system" reveals too much and as to any concerns that its weaknesses lead to bad results and make everyday economic functioning hard to deal with, well, that is why they pay their retainers as well as they do.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed Jul 20th, 2011 at 04:00:01 PM EST
[ Parent ]
 RE:  "preserve and further the present wealth distribution"

  this is, for them,  99% of the ballgame.  

We should keep it in mind, but too often we forget to.  The "system", rather than being "broken", from the point of view of those who reap the greatest benefits, is doing what it's supposed to do.

   Asset-bubbles may be unavoidable no matter what form or counter-measures a capitalist system may devise and put in place.

  Migeru's piece points out things which are both essential in importance and also too rarely discussed in the mass public news media; so he deserves much credit for that.

   At the same time, asset-bubbles are great for those who have the resources to take advantage of them and then drop out at the most opportune moment.  Rather than give that up without a fight, I suspect that these same would put up fierce resistance to so reasonable and public-spirited a plan since it would undermine one of their most lucrative opportunities.

   Still, the understanding, which should be beyond doubt or question in its validity, that, within the E.U., surpluses for Germany, for example, imply corresponding deficits somewhere else--that insight is absolutely of key importance and for the supposedly "top people" (PiP) to miss it or refuse it is nothing short of scandalous.

 

"In such an environment it is not surprising that the ills of technology should seem curable only through the application of more technology..." John W Aldridge

by proximity1 on Thu Jul 21st, 2011 at 08:15:58 AM EST
[ Parent ]
asset-bubbles are great for those who have the resources to take advantage of them and then drop out at the most opportune moment.

Asset bubbles are just a usually longer term variation of the old stock market "pump and dump". They are fueled by rentier profits and massively unequal income distribution. In the USA, since the 70s, serial bubbles have largely replaced, in fact, the old investment driven business cycle, even if this awkward fact is not acknowledged by "mainstream economics".

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Jul 21st, 2011 at 08:51:25 AM EST
[ Parent ]
Einstein notoriously ghardly pssed his school exam never mind worked his way of the academic hierarchy.

Meh, Einstein was among his time's leading experts in electromagnetic theory. He just didn't secure an academic career but he retained his academic contacts and could publish.

Economics is politics by other means

by Migeru (migeru at eurotrib dot com) on Wed Jul 20th, 2011 at 11:40:25 AM EST
[ Parent ]
He could publish at a very young age and before he had established a reputation because his theories explained observable phenomena in a way existing dominant theories could not. Much of his work was initially ridiculed outside a relatively small more receptive and enlightened circle

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Wed Jul 20th, 2011 at 11:56:34 AM EST
[ Parent ]
His problems were not related to being able to publish, but to being able to get a teaching position. Apparently he got his PhD in 1905, just before writing his ground-breaking papers and shortly after publishing his first paper. Before gettin ghis PhD he had spent time quallyfying himself as a teacher and got a job at the patent office to support himself. That doesn't sound like an outsider trajectory to me, nor was his work unconventional. The Papers by Planck on the photoelectric effect and by Lorentz on the Lorentz transformations were well known, mainstream results that Einstein built on.

Later, when he was formulating General Relativity he was competing with none other than David Hilbert to formulate a geometric theory of gravity. Again, not an unconventional pursuit.

Economics is politics by other means

by Migeru (migeru at eurotrib dot com) on Wed Jul 20th, 2011 at 12:12:19 PM EST
[ Parent ]
And I have no doubt that your points of departure would include Keynes and any number of well established thinkers (I hesitate to use the term economist as it is the construction of the "economy" that I am challenging).

Einstein wrote his first paper on magnetic fields aged 16 and had his first paper on Capillary forces published at age 22 around the same time as he got the patent job (through a friend) four years before he go his doctorate.

However let's not get sidetracked by Einstein.  What are you and Jake gonna do? :-)

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Wed Jul 20th, 2011 at 12:29:56 PM EST
[ Parent ]
 Denis Brian's biography of Einstein ( http://www.powells.com/biblio/17-9780471193623-4 ) goes into detail about Einstein's troubles in getting a teaching post--or any other sort of career advancement, post-university.  Essentially, they boiled down to something that is classic about the interactions of many people who are inflicted with what's called "genius" in their intelligence.  Einstein had little patience for those in places of influence who--had he ingratiated himself to them and their egos, which he decidedly did not do--could have and usually in such circumstances would have helped his career along to its next phases.

  But he didn't demonstrate that patience.  He displayed the same blunt and unwelcome frankness common to geniuses' personalities toward these influential people and, stung, they simply shut his advancement off; only much later and with the help of others who were for exrtraneous reasons much more patient and sympathetic, did E. find the support needed to break the effective boycott in academia.

"In such an environment it is not surprising that the ills of technology should seem curable only through the application of more technology..." John W Aldridge

by proximity1 on Thu Jul 21st, 2011 at 10:20:49 AM EST
[ Parent ]
He could publish at a very young age and before he had established a reputation because his theories explained observable phenomena in a way existing dominant theories could not.

And because physicists, whatever their other flaws, are working to improve their understanding of the observable universe.

Serious economists are not. They are playing power games, and that means that you need to do a whole lot more ass-kissing before your can start disseminating genuinely novel ideas.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed Jul 20th, 2011 at 12:15:04 PM EST
[ Parent ]
Frank Schnittger:
the present economic consensus has reached a height of stupidity

That's it. And that height of stupidity is presented as there-is-no-alternative TINA. Mig's article says there-are-real-alternatives TARA. In present circumstances, that is fairly revolutionary.

Frank Schnittger:

We need a new real world approach to economics - one starting with assumptions about human rights rather than human "rationality" or greed, and one rooted in the ecosystem of the world we actually inhabit.

Certainly we do. I'd have thought these had been preoccupations of most discourse on ET since it began. But communicating through different channels in a way that's appropriate to them isn't a form of denial of that, it's taking an opportunity to challenge conventional wisdom and move ideas forward. Or must we write a Manifesto and only communicate that?

by afew (afew(a in a circle)eurotrib_dot_com) on Wed Jul 20th, 2011 at 11:54:25 AM EST
[ Parent ]
afew:
Or must we write a Manifesto and only communicate that?

er, yes actually!

both/and... one prong with graphs for the economic wonks (heavily ref'd with nuggets of veblen, george, et al and one for the innumerate proles, preferably with cartoons to help explain.

the ignorance prevails because the Lie is unthinkably Big. while this essay lassoos the intellectual contingent, the manifesto must break down the wall between the perps and the rest of us doofuses, so we-of-little-brains may become privy to the arcane voodoo secrets that end up in poverty and war for the huddled masses outside the selected circles.

well done migeru! great synthesis.

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Wed Jul 20th, 2011 at 05:22:01 PM EST
[ Parent ]
Frank Schnittger:
surplus generating countries can only continue to generate surpluses if other countries generate larger and larger deficits and that at some point this system has to become unstable -

i think it's hard head rational to some bundesbankers to ditch the euro now, and go it alone.

they've tapped out the peripherals' markets, the PIIGS can't afford the silverware, let alone the meal, besides it's probably indigestible.

the china market is booming, and if the BRIC gaggle keep growing apace, the common currency is a drag to the financiers, those sleek, affectless robots could give a FF about the fate of the euro social engineering project, or the euro currency even. think of all the money to be scammed off changing back 5 countries' currencies! people made out like bandits in the confusion between stools, and guarans they'd do it again in reverse, hey even repeat the sentiment-charged scam again in 20-30 years.

the more shocks, the more doctrine... all europeans except the germans are to be discarded while the ubermenschen take their prideful place as the hardest, most rigorously blinkered of profit machines, assuring a permanent risk-free ride for banksters and austerity for those too ignorant to become Fine Young Cannibals too. austerity is a orwellian newspeak for penury, they can't give us the message without semantic sugar on it.

buckminster fuller had it right, the idea that governments are the dog, and pirates the tail have it exactly backwards, true since civilisation began, possibly.

the edges are where the action is, and prates know the shoals and can play the edges in ways no-one else can.


'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Wed Jul 20th, 2011 at 04:33:14 PM EST
[ Parent ]
Do you think Keynes started out by shouting heresy from the rooftops?

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Wed Jul 20th, 2011 at 11:32:50 AM EST
[ Parent ]
See my response to Afew above

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Wed Jul 20th, 2011 at 11:38:03 AM EST
[ Parent ]
Completely off-topic. One of these days somebody will have to explain me, very slowly, how Keynes is still appropriate in a post-industrial society that is going to suffer (is suffering) a rather strong shrinkage of its resource base (oil, food, water, general ecosystem, ...).

I fail to understand how it is possible to maintain the current western pattern of consumption. If think that we will get poorer. Currently because of re-distribution (from the middle to the top), but in the future due to sheer natural scarcity.

Not a subject of this thread, I know. But I could not help it ;)

by cagatacos on Wed Jul 20th, 2011 at 11:42:04 AM EST
[ Parent ]
Keynes cares about employment, and nominal GDP, not about real GDP or consumption.

So you could in theory continue to have employment and growing GDP with a shrinking resource base. You just have to employ a larger fraction of the population in activities with a low resource use.

The growth of the "service" or "tertiary" sector and the "information economy" are steps in that direction. It doesn't follow that people in the service or information economies should be high earners, but that pretty much arbitrary numbers of people can be employed in them and they will need to be if 5% of the population can produce food for everyone and industrial production of material goods gets less and less labour-intensive.

Economics is politics by other means

by Migeru (migeru at eurotrib dot com) on Wed Jul 20th, 2011 at 11:46:20 AM EST
[ Parent ]
I think I see your point.

The problem is that sometimes it passes (from some Keynesians that I read) that proper economic policy would be enough to maintain the status quo lifestyle. That state anti-cyclical intervention (and redistributive policies) would be enough to counter nature's limits. Indeed many of those keynesians ignore nature's limits (hence my comment on post-industrialism) and clearly talk about growth (in very real terms).

Any realistic politics for the future will have to consider a shrinkage of the resource base. That, by the way is more encouraging of redistributive policies: "trickle down" would only make sense in a infinite growth (real) scenario: If there are limits then if some get more and more that can only mean that others get less and less.

by cagatacos on Wed Jul 20th, 2011 at 12:08:15 PM EST
[ Parent ]
The way I see it, the current policies ban a fairly large proportion of society from accessing the means of production they need to be productive. All in the name of fighting the satanic forces of inflation.

Keynes on the other hand saw that unemployment is an evil as it destroys the unemployed, and therefore it is better to run unproductive public projects like pyramid building then to have unemployment. Even better is to produce things actually needed.

Keynes lived at a time when resource constraints was results of boycotts, not nature. But that does not invalidate his observations on unemployment, and in a resource constrained world more manual labor will be needed as we can no longer throw more resources at every problem.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se

by A swedish kind of death on Wed Jul 20th, 2011 at 02:03:19 PM EST
[ Parent ]
Migeru:
if 5% of the population can produce food for everyone

but what if we go back to 90% of people involved in farming like before? what's going to power those behemoth threshers and balers? galley slaves?

to imagine 5% are going to continue to produce the world's food for long... can you really believe that?

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Wed Jul 20th, 2011 at 05:03:03 PM EST
[ Parent ]
That would be a nice discussion to have. "Nice" is more like "must have" due to peaks and resource competition.
by cagatacos on Thu Jul 21st, 2011 at 07:12:12 AM EST
[ Parent ]
Impossible. Too many people starting from ideological positions and too much inconsistent data.
by Colman (colman at eurotrib.com) on Thu Jul 21st, 2011 at 07:14:36 AM EST
[ Parent ]
 Nature's inherent limits will "fix" those (supposed) problems and the "discussion" will take place--one way or another.  Would you rather it be primarily verbal or via other, non-verbal means?

   And, besides, "positions" are necessarily "ideological" --otherwise they contain no "ideas".  To pretend that there are any non-ideological "positions" is neither necessary nor helpful though it is, of course, possible to pretend this.

 --------------

  RE (ref. http://www.eurotrib.com/story/2011/7/19/15816/2580#66 ) :

  "You just have to employ a larger fraction of the population in activities with a low resource use."

   "Capitalisms" don't do this well or, so far, at all.  Instead, success is practically defined as "More, more, more, more, more."  Higher consumption, higher profits, higher "productivity", higher output, etc.  Capitalisms, in short, "succeed" by literally using everything up--completely.  

   In this vein, Jean-Jacques Salomon's points in his essay, Le destin technologique ( http://www.folio-lesite.fr/Folio/livre.action?codeProd=A32811 )

   where he describes a very arresting thought experiment.  It goes very roughly something like this:

   Imagine for a moment that the earth and its human populations one day reach their absolute limits--I know, you'll object that this can't and won't occur because one or more catastrophes will intervene before that limit arrives, but this only makes Salomon's point the more arresting since his scenario is the "good news", so to speak, since it takes for purposes of analysis the view that somehow humanity so controls and attenuates those intervening and population-limiting catastrophes that, in effect, populations go on growing until the earth's resources, and or technological capacities to "stretch" them also reach their limits--that, when you think in his terms (i.e., many thousands and thousands of years) has to occur eventually or, otherwise, of course, we become extinct as a species.

   In extrapolating, we arrive inescapably at the point where the only feasible operative possibility is literally "zero" growth, none, at all, because even the smallest measureable increase is beyond the capacity of physical resources to accomodate.

  It seems clear to me that before any future human society arrives at this extreme, we (or that future people, more able than are we to reason and act sensibly for their own survival) have essentially two courses open:

   one is to continue as we are until we eventually destroy ourselves in some combination of itentional and accidental folly;

  the other is to veer off our present course in ways which are so fundamental a departure from our present assumptions that they are as yet not welcome to imagine or discuss in most discussion fora.  The present insanity must be protected and preserved.

  And that's driving the current misery around us.

"In such an environment it is not surprising that the ills of technology should seem curable only through the application of more technology..." John W Aldridge

by proximity1 on Thu Jul 21st, 2011 at 10:08:44 AM EST
[ Parent ]
When a discussion ostensibly about the physical world is based in grossly incomplete data and mostly about validating participants political views, there's not much point, is there?

Take the proposition that the question "what's going to power those behemoth threshers and balers?" has no answer. We can spend hundreds of comments dealing with that and at the end of the day the gaia-is-going-to-punish-us-and-we-deserve-it crowd and the technology-will-save-us-all crowd will be just calling each other names. The discussion isn't really about what's possible, it's about other stuff.

by Colman (colman at eurotrib.com) on Thu Jul 21st, 2011 at 10:27:51 AM EST
[ Parent ]
Hmm. Pretty good set of reasons for not discussing anything, like climate change, energy, and certainly nothing to do with politics or economics.

Plus a fairly damaging assumption about the "crowds" in presence.

I suppose we could talk about sport, but I'm pretty sure you'd rather steer away from that, too?

by afew (afew(a in a circle)eurotrib_dot_com) on Thu Jul 21st, 2011 at 11:06:15 AM EST
[ Parent ]
 FIFY:

   "Pretty good set of reasons for not discussing anything one would rather not see addressed, like climate change, energy, and certainly nothing to do with politics or economics."

 Exactly---and that may be the point, after all.

"In such an environment it is not surprising that the ills of technology should seem curable only through the application of more technology..." John W Aldridge

by proximity1 on Fri Jul 22nd, 2011 at 08:54:21 AM EST
[ Parent ]
Well, I don't think it was Colman's point.
by afew (afew(a in a circle)eurotrib_dot_com) on Fri Jul 22nd, 2011 at 08:56:42 AM EST
[ Parent ]

  Hmm.  Then I've missed yours, in your comment, too.

"In such an environment it is not surprising that the ills of technology should seem curable only through the application of more technology..." John W Aldridge
by proximity1 on Fri Jul 22nd, 2011 at 08:59:55 AM EST
[ Parent ]
I responded to the ideas expressed, and though I did not indicate snark or humour, the remark was at once serious and light-hearted.

Also see my comment below.

by afew (afew(a in a circle)eurotrib_dot_com) on Fri Jul 22nd, 2011 at 09:04:01 AM EST
[ Parent ]
 
     I don't see why (and you haven't bothered to explain it) attempts to validate one's own political views and at the same time, defend them from others' critiques (or, failing that, to change them) are  pointless exercises.  I just have your unsupported word for this, which is about all you seem interested in offering.  You aren't interested in giving straight answers when it's apparently so much easier to dismiss the objections with a universally-applicable "It's no use, it'll never work.  People are too stuck in their ways."  (Something of which you seem determined to offer marveloous evidence, yourself.)  And we have once again your always-implied fatalistic underlying view that people are in so many of the most fundamental ways a hopelessly incorrigible lot.  Can't persuade 'em, can't kill 'em all, so the best that can be hoped for is to quibble over the trivial details at the far edges of issues, where it's supposed that tiny compromises can occasionally be found.

  And, then, strangely, at the same time, something hard--like actual political and economic events in the living world--seems to have brought you around to seeing the validity of what seems to me to be at least some the of left-ish political and economic criticisms which once upon a time in these threads I'd could read you opposing and denoucing--or maybe I'm just mistaken about that.

    Now we can read, for example, your valid objections to what you colorfully describe as the absurdly other-worldly habits of econ policy-makers imploring what amounts to throwing more virgins into the sacrificial volcano.  Just who demands and requires these virgins' routine sacrifice?  Surely it isn't the people whose economic beliefs you have in the past or currently still do disparage, is it?  That is, unless I'm mistaken about it, hard facts have wrought some changes in your formerly expressed economic & political beliefs.  This is also and perhaps even moreso true of Migeru who now can admit that the opponents of last several E.U. referenda votes (including what I'd call the Lisbon disgrace)  were after all at least partly right to oppose them--though he still can't quite credit them as being right for reasons which they themeselves understood.  Still, again, there's progress.

  So, you see?  There is such a thing as progress.

"In such an environment it is not surprising that the ills of technology should seem curable only through the application of more technology..." John W Aldridge

by proximity1 on Fri Jul 22nd, 2011 at 08:52:28 AM EST
[ Parent ]
If you want to settle scores in this debate, and in particular make them personal, I suggest you're wasting your time.

We have better things to do.

by afew (afew(a in a circle)eurotrib_dot_com) on Fri Jul 22nd, 2011 at 09:01:14 AM EST
[ Parent ]
At least having the discussion might force the people with definite starting points and data to lay them out.

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Fri Jul 22nd, 2011 at 07:49:04 AM EST
[ Parent ]
... ARRGH. I see this point made in every single discussion of peak resources. And it completely ignores that industrial agriculture has a resource consumption of near zero. Have you ever been on a farm? Industrial farming needs, in order:

  1. Land.
  2. Steel.
  3. Ammonia. (for fertilizers, and for fuel. Yes, you can run tractors and combines on ammonia. People do so already.)

.. and thats it. And none of it is going to run out before the sun enters its red gigant phase and swallows the earth. Enough ammonia to keep the agricultural sector fueled and fertilized can be made with the output of extremely modest hydro electric facilities, never mind types of renewables less than a century old.

grumble Doomers. Stop fantasizing about the apocalypse, pay a tiny bit of attention to what the actual constraints and possible/probable substitutes of our industrial ecology are, because all you are currently doing is destroying your own credibility. Which, to be honest.. go ahead, the less influence you have, the better for the planet.

by Thomas on Sat Jul 23rd, 2011 at 11:13:12 AM EST
[ Parent ]
So what has been your experience of farming, Thomas?
by afew (afew(a in a circle)eurotrib_dot_com) on Sat Jul 23rd, 2011 at 11:22:32 AM EST
[ Parent ]
Industrial farming needs, in order:

  1. Fresh water
  2. Land.
  3. Steel.
  4. Phosphates
  5. Ammonia. (for fertilizers, and for fuel. Yes, you can run tractors and combines on ammonia. People do so already.)

Fixed it for you.

#1 is already an issue, and #4 is going to be inside the present century.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Jul 23rd, 2011 at 11:25:05 AM EST
[ Parent ]
Well, if climate change makes the rain move away from prime farmland, yhea, a lot of people will starve to death. Modern farming has failure modes. None of which are adressed by reverting to having 90% of humanity take up being peasants again. Which is the assumption that makes me froth at the stupidity.
by Thomas on Sat Jul 23rd, 2011 at 11:45:13 AM EST
[ Parent ]
You are far too cornucopian. As usual. Factory farming as presently practised creates immense problems with run-off that poisons freshwater resources.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Jul 24th, 2011 at 12:08:39 PM EST
[ Parent ]
Its not cornucopicism, its merely the certainty that the future is not going to be a copy of the past in any way, shape or form. Peasant farming is far less productive, (and also far more ecologically destructive) than industrial farming is, and farmland under the plow is the limiting factor on our food production. I am not certain that the future will have enough food, I am merely certain that regardless of what happens its not going to involve regressing to primitive farming techniques. If climate change wrecks the grain belts- well war will provide for all, either in victory or in death.
by Thomas on Mon Jul 25th, 2011 at 10:34:14 AM EST
[ Parent ]
farmland under the plow is the limiting factor on our food production.

Well, no.

Under the present system, access to synthetic fertiliser is the first constraint that will really bite.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Mon Jul 25th, 2011 at 10:39:53 AM EST
[ Parent ]
.. Fertilizer are primarily needed for nitrogen fixation. That means ammonia. Ammonia is synthezied from hydrogen and nitrogen with modest pressure and heat -this means that the actually nessesary inputs are electricity, air and water. With no requirements whatsoever as to the quality of water, nor any pressing need for most of the electricity supplied to be reliable - for electrolysis intermittant power will do just fine as long as you have a tank to store hydrogen in.
The very first artificial fertilizer factory ever built ran off a single norwegian dam and supplied most of europe for decades. This is not a resource that is ever going to run short. The land squids farming the canadian shield in 1.5 billion years from now will not be short.
by Thomas on Mon Jul 25th, 2011 at 11:03:14 AM EST
[ Parent ]
Fertilizer are primarily needed for nitrogen fixation.

Phosphates would like a word.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Mon Jul 25th, 2011 at 11:27:31 AM EST
[ Parent ]
Thomas:
Peasant farming is far less productive, (and also far more ecologically destructive) than industrial farming is

Would you care to enlighten us on the ecological destruction caused by peasant farming?

by afew (afew(a in a circle)eurotrib_dot_com) on Mon Jul 25th, 2011 at 10:47:34 AM EST
[ Parent ]
The fertile crecent isnt so much anymore for a reason. Also, africa, south america.. Really, just look at anyplace that still practices it?
by Thomas on Mon Jul 25th, 2011 at 11:05:11 AM EST
[ Parent ]
What ecological destruction has actually been caused by peasant farming?

And how can you sidestep the ecological damage - toxic run-off to rivers and coastal areas, water-table pollution, excessive irrigation demands, soil erosion and decline of soil fertility, creation of specific pests and diseases through monoculture, destruction of biodiversity through same and through use of pesticides, flash-flooding and freak winds as a consequence of destruction of hedges and ditches, concentration on products of doubtful necessity like over-production of meat/dairy and their attendant maize, GHG emissions through excessive livestock production, rainforest destruction not carried out by small peasants - caused by industrial farming?

Or is your version of industrial farming some techno-wet-dream that will be happening in 1.5 billion years?

by afew (afew(a in a circle)eurotrib_dot_com) on Mon Jul 25th, 2011 at 12:31:42 PM EST
[ Parent ]
Really? Deforestation, hunting, overgrazing, soil erosion, and so on and so far. Peasant farmers are extremely bad news for the ecosystems they encroach upon - for a given output of food, much, much worse than industrial agriculture with even minimal enviormental regulations in place.

This is really simple: Primitive farming techniques are much less productive per square meter than advanced ones. This means that trying to feed any given number of people with lesser techniques means cultivating far more land. Which destroys the ecosystem that used to be there. We already have 7 billion people on the planet - if modern farming caves in, not a single one of them will go quitely into the night, but all of them will try to find things to eat. This would cause a mass extinction near total in scope of just about everything edible, and nearly everything is edible to humans hungry enough. Societial collapses nearly always take the nearby ecosystems down with them. This has happened many, many times. It still happens - Haiti doesnt really have a vibrant ecology anymore, for example. It will happen again if we should fail at maintaining our technosphere.  

Maybe I come across as very fond of technological fixes and somewhat panglossian, but the thing is, if we do not find technological fixes for the ecological issues facing us, it is not mankind that is screwed, it is the planet earth. This is for example why the reaction to fukushima pisses me the fuck off - Noone died, and people are still fleeing from one of the very few energy sources we have that has low ecological impacts. No nuclear accident is ever going to do anything of any significance whatsoever to the non-human bits of the ecology it happens in. The deathrates from cancers are so far down into the noise for wildlife that it is not even funny.

by Thomas on Tue Jul 26th, 2011 at 07:50:03 AM EST
[ Parent ]
And, fortunately, most of the US corn belt has excellent wind resources nearby, i.e. within a few hundred miles of either the front range of the Rocky Mountains or the Great Lakes, and generating ammonia is an excellent use for "stranded wind". Yet, while ammonia is used to a limited extent for mid-west US agriculture, almost all of it comes from petrochemical plants in Louisiana via barge up the Mississippi and Missouri rivers. But, strangely, there is no real effort to develop the wind and wind driven ammonia aspect of this asset.  

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat Jul 23rd, 2011 at 12:27:39 PM EST
[ Parent ]
Completely off-topic. One of these days somebody will have to explain me, very slowly, how Keynes is still appropriate in a post-industrial society that is going to suffer (is suffering) a rather strong shrinkage of its resource base (oil, food, water, general ecosystem, ...).

Because all the Very Serious People are Hooverians. Talking about genuine post-Keynesian economics would make heads explode.

And while we certainly have a more pressing need than in Keynes' times to not strangle our industrial plant by making it overly reliant on non-replenishing resources, it is not easy to see how such improvements can be brought about if we are busy strangling our industrial plant with golden fetters.

(Incidentally, I greatly dislike the term "post-industrial society" - it is usually little more than apologia for a vision of society where we make nothing but hamburgers, create nothing but lawyers and sell nothing but tax shelters.)

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed Jul 20th, 2011 at 12:26:42 PM EST
[ Parent ]
We are not in a "post-industrial" society. Most of the industry has gone to Asia, that's all.
by afew (afew(a in a circle)eurotrib_dot_com) on Wed Jul 20th, 2011 at 01:39:02 PM EST
[ Parent ]
But we are going in that direction due to resource scarcity: production efficiency (the 5% of pop for agriculture) is decreasing, not increasing. That is a tectonic shift.
by cagatacos on Thu Jul 21st, 2011 at 07:13:44 AM EST
[ Parent ]
No, that's not true. Productivity has increased over the past quarter century, and has only flatlined in the last decade. And this is largely due to deliberate policy choices, not because there is any technical reason that it had to.

Past performance is no guarantee of future performance, but so far the productivity loss has been purely self-inflicted, unless you consider the absence of competent policymakers a natural resource shortage.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu Jul 21st, 2011 at 10:54:12 PM EST
[ Parent ]
How disappointing.

[just a drive-by ad hominem... ;)]

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II

by eurogreen on Fri Jul 22nd, 2011 at 05:56:02 AM EST
[ Parent ]
No. Past performance does not guarantee future performance. I am simply pointing out that the resource crunch has not happened yet, and therefore can not serve as an excuse for impoverishing people. This impoverishment is, in fact, a deliberate political decision rather than an unavoidable fact of life.

It is possible that this is the last decade for which such a comment can be made. But this is now, and the future isn't quite here yet. And arguing that the neoliberal thirdworldisation policies were unavoidable when they were not plays directly into the hands of the very people who have been sitting with their thumbs up their asses for the last thirty years when we should have been doing something about the scarcities that are forecast to hit within the next decade or two.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Jul 22nd, 2011 at 12:01:45 PM EST
[ Parent ]
  ..."unless you consider the absence of competent policymakers a natural resource shortage."

     whether a natural resource or not, and, whether there's a "shortage" or not, somewhere, there's a problem:

     if better responses exist, the current crop of policy-makers is a bloody-minded lot who adamantly reject and refuse those better responses.  There are good reasons to believe that they're doing this for rationally sound reasons though for reasons which are morally corrupt. (With the most amazing nonchalance, they've dismissed the whole notion of moral hazard, once taught with such stern authoritarianism when the subjects and lessons had to do with third-world macro-economic thriftiness, as no longer being very important.)

    There are competent policy-analysts, and they're producing valid critiques and useful policy formulations which, ultimately, have been utterly ignored by the PiP.  In such circumstances, while it can be disputed as neither a natural resource nor a shortage, so far, one is hard-pressed to explain why it might not as well be desribed that way.

    Economic theories which have been thoroughly discredited remain in sway among lots of PiP.  Though good critiques are available, these make little impact on practical affairs.  So, our real troubles--as numerous analysts have repeated--are political failings more than failings of economic theory at this point.  Right?

 

"In such an environment it is not surprising that the ills of technology should seem curable only through the application of more technology..." John W Aldridge

by proximity1 on Fri Jul 22nd, 2011 at 08:23:12 AM EST
[ Parent ]
(With the most amazing nonchalance, they've dismissed the whole notion of moral hazard, once taught with such stern authoritarianism when the subjects and lessons had to do with third-world macro-economic thriftiness, as no longer being very important.)

No, no, you still see moral hazard trotted out to explain why Greece needs to be punished, cannot default, and cannot have its debt rolled over at a discount.

Moral hazard, like other economic concepts, is used selectively in support of political goals.

Economics is politics by other means

by Migeru (migeru at eurotrib dot com) on Fri Jul 22nd, 2011 at 08:59:51 AM EST
[ Parent ]

  At some point, the double-standards will collapse under their own weight, won't they?

 Q:  Who said (apparently not "famously"-enough)

    "Deficits don't matter!"

   A: Republican U.S. Vice-President Richard "Dick" Cheney.

"In such an environment it is not surprising that the ills of technology should seem curable only through the application of more technology..." John W Aldridge

by proximity1 on Fri Jul 22nd, 2011 at 09:05:09 AM EST
[ Parent ]
No, because the conservative mind can hold two contradictory thoughts, as long as it doesn't think them at the same time.

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Fri Jul 22nd, 2011 at 09:37:19 AM EST
[ Parent ]
the conservative mind can hold two contradictory thoughts, as long as it doesn't think them at the same time.

And especially if it is in their interest to confound the two thoughts because neither is in their immediate interest.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Jul 22nd, 2011 at 07:29:12 PM EST
[ Parent ]
At some point, the double-standards will collapse under their own weight, won't they?

What part of human history gives you cause for such unbridled optimism?

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Jul 22nd, 2011 at 12:04:03 PM EST
[ Parent ]
cagatacos:
how Keynes is still appropriate in a post-industrial society that is going to suffer (is suffering) a rather strong shrinkage of its resource base (oil, food, water, general ecosystem, ...).

afaik, keynes had little or no clue that hubbard's curve lay ahead, but imagining he were here today, i think he may guess that we would go to war again, because it makes more money for the rentier class and kills off the youth unemployed surplus who may make trouble in the domestic arena if not safely engaged with another propangandised 'enemy' somewhere preferably far away on some steppe or similarly godforsaken place.

like libya or the falklands...

anyways some could argue that the industrial expansion to gin up for war was a (perverted) keynesian solution to a problem...who's gonna whine about deficits when the future of democracy is at stake?

basically the iraq war was about digging holes and filling them up again, but with the added bonus of the gamble on commanding some of the richest petrochem real estate. either way they win... get paid for reconstruction afterwards too.

war is the age old solution to overpopulation, and dwindling bank profits.

of course if enough people realised there is another way, even the bankers could win, once they let go of the banana in the bottle.

true visionary keynes would be something like the new deal under fdr, but global in scope. something like the blueprints of the advanced western democracies, but even better greed-proofed, and geared to fix unemployment by facing the energy issue head-on, all hands on deck, 24/7, seven days a week, 365 days a year.
return energy generation to the Commons, and half the problems are solved. thanks to certain pioneers amongst us, this idea is gestating nicely, out on the edge, while the titans clash at the centre.

victory gardens are another old idea ready to be recycled anew... so many brilliant ideas, all held back because the lead boots of the status quo are afraid more than anything of what they would lose, and utterly blind to what we all could win.

waiting till we are backs to the wall is just immature.

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Wed Jul 20th, 2011 at 04:58:24 PM EST
[ Parent ]
One of these days somebody will have to explain me, very slowly, how Keynes is still appropriate in a post-industrial society that is going to suffer (is suffering) a rather strong shrinkage of its resource base (oil, food, water, general ecosystem, ...).

Keynes explored and explained the overall functioning of the economy of his time via an extended non-mathematical discourse and the understandings he crystallized remain valid for systems such as he described, i.e. national economies. His prescriptions for promoting employment and mitigating the effects of the business cycle have been shown to work. The problem is that those goals are at odds with the desires of elites to accumulate more and more for themselves. Those elites, through the application of their own money via think tanks and the media, discredited and de-legitimated the Keynesian consensus, (Richard Nixon - "We are all Keynesians now."), through propaganda repeated until it stuck, not through academic rigor. But they also supported the work of people like Milton Freedman and Fredrich Hayek.

The result was that, starting in the '70s with bogus claims that Keynesian prescriptions no longer worked, while ignoring the effect of US peak oil, banking regulation was repealed and national economic policy was turned on its head to successfully halt a one hundred and forty year economic history of rising real wages in the US. The goal was to increase the "take" for holders of capital. This naturally produced economic problems which they falsely blamed on the continuing effects of Keynesian policies and self servingly prescribed tax cuts for the rich and deregulation of business as the "solution". Then, through the elimination of controls on capital flows and efforts to de-legitimate such controls by other countries, they internationalized capital and business while leaving regulation on a national level. This made the application of Keynesian prescriptions on a national level highly problematic and, simultaneously, made international corporations largely ungovernable by nation states. In fact, multinational corporations have increasingly come to regulate what states can do. We are nearing the end point of that process.

Also, bear in mind that what passes for Keynes in the USA, (Hicks-Hansen synthesis plus Samuelson), is a bastardization of Keynes that attempted to recast some of his insights on money, interest and employment into mathematical formalisms, something Keynes had deliberately avoided, and, thereby, promote a perception of precision and control that was unwarranted. Keynes always emphasized the unknowability of the future and our inability to accurately assess risk.

At Bretton Woods in 1946 Keynes proposed an international financial flow clearing system that had taxes on both trade surpluses and deficits that would have prevented most of the fiascoes we have seen in international finance, but the USA rejected it. So naturally, after bastardizing his system, rejecting outright some of his best suggestions and rendering inpossible most of his techniques for controlling national economies, when things blow up they want to blame it on Keynes. Still.

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

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed Jul 20th, 2011 at 05:00:38 PM EST
[ Parent ]
Oh, and add Lyndon Baines Johnson's insistence on having both "guns and butter" - the Vietnam War and more social programs such as Medicare - to the list of things that were ignored or blamed on "Keynesianism".

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed Jul 20th, 2011 at 05:03:41 PM EST
[ Parent ]
But somehow, whenever economics is the starting or dominant frame of reference, the socio-economic and political implications always seem to come out as an unfortunate unintended side effect, rather that as a feature of the frame of reference being adopted.

That's the point of most economic models. They are Jesuit logic designed to make your preferred social policies look as though they fall out of some rigorous formal and objective theory purely by happenstance.

Or, as Mig has put it more concisely: Economics is about bullshit mathematical arguments to support one's ideological policy choices.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed Jul 20th, 2011 at 11:22:07 AM EST
[ Parent ]
  "Or, as Mig has put it more concisely: 'Economics is about bullshit mathematical arguments to support one's ideological policy choices.' "

  Very well.  Then this point must be hammered home again and again and, most of all, where it counts: among the "Jesuits", i.e. the annointed up-and-coming class trained in the Seminaries known as graduate schools of business administration.

   Another, related, but no less important point (for another thread on another day) is that, with the election of Barack Obama, we have one of probably many examples to come of the "pay-off" for literally decades of patient and determined econo-political indoctrination of the public.  Obama is the flesh-and-blood culmination of dragging the accepted political spectrum so far to the "Right" that he is thought of as the embodiment of a Leftist.  Again, that's is almost the whole ballgame before the first pitch is thrown.  It's important to bear in mind that this sea-change didn't come about by magic.  It's the result of enormous and determined long labors.  And, against it, the supposed representatives and care-takers of the opposed views have done essentially nothing at all.  No one should be surprised, then, if the landscape of econo-political opinion offers practically nothing in a publicly-understood alternative to the socially destructive neo-liberal approach.

  But the simple fact is that nowhere is the point (mentioned above) being hammered home--not among the graduate schools' MBA candidates and not among any notable general public.

  As Serge Halimi points out in an front-page article in the current issue of Le Monde Diplomatique,

 

    "Economique mais aussi démocratique, la crise européenne soulève quatre questions principales. Pourquoi des politiques dont la banqueroute est assurée sont-elles néanmoins déployées dans trois pays (Irlande, Portugal, Grèce) avec une férocité remarquée ? Les architectes de ces choix sont-ils des illuminés pour que chaque échec -- prévisible -- de leur médication les conduise à en décupler la dose ? Dans des systèmes démocratiques, comment expliquer que les peuples victimes de telles ordonnances semblent n'avoir d'autre recours que de remplacer un gouvernement qui a failli par un autre idéologiquement jumeau et déterminé à pratiquer la même « thérapie de choc » ?
  Enfin, est-il possible de faire autrement ?

     "La réponse aux deux premières questions s'impose sitôt qu'on s'affranchit du verbiage publicitaire sur l'« intérêt général », les « valeurs partagées de l'Europe », le « vivre ensemble ». Loin d'être folles, les politiques mises en oeuvre sont rationnelles. Et, pour l'essentiel, elles atteignent leur objectif. Seulement, celui-ci n'est pas de mettre un terme à la crise économique et financière, mais d'en recueillir les fruits, incroyablement juteux. Une crise qui permet de supprimer des centaines de milliers de postes de fonctionnaires (en Grèce, neuf départs à la retraite sur dix ne seront pas remplacés), d'amputer leurs traitements et la durée de leurs congés payés, de brader des pans entiers de l'économie au profit d'intérêts privés, de remettre en cause le droit du travail, d'augmenter les impôts indirects (les plus inégalitaires), de relever les tarifs des services publics, de réduire le remboursement des soins de santé, d'exaucer en somme le rêve d'une société de marché -- cette crise-là constitue la providence des libéraux. En temps ordinaire, la moindre des mesures prises les aurait contraints à un combat incertain et acharné ; ici, tout vient d'un coup. Pourquoi souhaiteraient-ils donc la sortie d'un tunnel qui ressemble pour eux à une autoroute vers la Terre promise ?"

  http://www.monde-diplomatique.fr/2011/07/HALIMI/20760

  -------------

  Economic as well as democratic, the European crisis raises four main questions.  Why are policies which amount to a sure road to bankruptcy nonetheless put into effect in three countries (Ireland, Portugal, Greece) with a ferocity such as has been observed?  Can we call the architects of such choices enlightened when the result --the predictable result-- of each of  their treatments lead to a multiplication of doses?  How is it to be explained under democratic systems that the victims of such prescriptions have no other recourse than to replace one such failed government with another--an ideological twin, detemined to practice the same "shock therapy"?   And, ultimately, could it be otherwise?

     The answers to the first two questions become evident as soon as we depart from the publicity verbiage of 'the general interest,' 'the shared values of Europe,' and 'living together.'   Far from being crazy, the policies being put in place are rational.  And, for the most part, they attain their objective.  It's just that this objective is not to put an end to the economic and financial crises, but to reap the incredibly juicy fruits of these crises.  A crisis which permits the suppression of thousands of public posts (in Greece, nine out of ten departures in retirement will not be replaced), which shortens  salaries and the length of paid leave, which sells off whole sectors of the economy to the benefit of private interests, which placces in question the right to work, which raises indirect taxes (the most inequitable kind), which raises the fees applied to public services, reduces the coverage of public health care, which, in short, realizes the dream of a market society--this crisis is providential for neo-liberals and for attaining their neo-liberal objectives.  In ordinary times, any such measures taken would have forced an uncertain and hard struggle; here, they come all of a sudden. Why would they seek the end of a tunnel that looks like a highway for them to the Promised Land?' "

 



"In such an environment it is not surprising that the ills of technology should seem curable only through the application of more technology..." John W Aldridge
by proximity1 on Thu Jul 21st, 2011 at 09:19:46 AM EST
[ Parent ]
Frank Schnittger:
It's all very well having a debate about different economic schools of thought, and the different policy options they generate, but let's not point the finger

In my view, this is an exceptionally useful article in that it offers a different economic frame to the overwhelmingly common wisdom, with policy options to match - without pointing fingers.

A piece about the implications for democracy and society would probably be better aimed at another outlet than Eurointelligence, which is very focused on economics.

by afew (afew(a in a circle)eurotrib_dot_com) on Wed Jul 20th, 2011 at 09:52:51 AM EST
[ Parent ]
Please see my response to Migs comment above

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Wed Jul 20th, 2011 at 11:06:55 AM EST
[ Parent ]

A piece about the implications for democracy and society would probably be better aimed at another outlet than Eurointelligence, which is very focused on economics.

It is a bit like coming to the European Tribune and suggesting bottom-up, non-institutional solutions. ;)

I am not being sarcastic or negative. Just making a statement of fact. Migs effort is the best possible for the venue at hand. It should be highly commended for that, even from us who do not believe on that path.

by cagatacos on Wed Jul 20th, 2011 at 11:33:25 AM EST
[ Parent ]
Frank Schnittger:
I don't have a problem with that paragraph being dropped for the reasons you and others here have mentioned - it wasn't central to your argument and it deserves at least a 1000 word article all to itself.  

Perhaps I haven't been sufficiently clear.  I'm not knocking Mig or his article - I entitled my comment "Well done". I just think he, and others here, are capable of so much more and want to goad them to have the ambition and courage to do it.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Wed Jul 20th, 2011 at 12:03:04 PM EST
[ Parent ]
Well, go goad somebody who appreciates being goaded, then.

I'm sick of "you could do so much more". I do what I do.

Economics is politics by other means

by Migeru (migeru at eurotrib dot com) on Wed Jul 20th, 2011 at 06:19:28 PM EST
[ Parent ]
I meant it as a compliment.

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Wed Jul 20th, 2011 at 07:40:40 PM EST
[ Parent ]
That is the best summary I've ever read of the situation.
by cagatacos on Wed Jul 20th, 2011 at 10:20:52 AM EST
[ Parent ]
Frank Schnittger:
There is a lot of money looking for a home shloshing around the world like a drink in a drunken hand.

Landing in financialisation and speculation bubbles of different kinds. Driving up prices of food and other basic items is in particular devastating.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se

by A swedish kind of death on Wed Jul 20th, 2011 at 06:26:55 AM EST
[ Parent ]
This is a mirror of the problem faced by British manufacturers in the late 19th Century, analyzed so brilliantly by J.A. Hobson in Imperialism. The solution to accumulating as profits money that should have gone to British labor was to use that money in India and elsewhere to create cash cow monopolies such as railroads.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed Jul 20th, 2011 at 09:11:08 AM EST
[ Parent ]
succinct and readable.

Now, we need to address the sharing of the blame, and of the pain. The transformation of a vicious surplus recycling system into a virtuous one.

The people of the surplus countries need to realise that their politicians and bankers have failed them : accumulating absurd surpluses at the expense of real, concrete prosperity, and wasting these surpluses in a profligate manner. The bad loans will never be repaid : they never should have been made.

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II

by eurogreen on Wed Jul 20th, 2011 at 06:23:35 AM EST
Writing down those loans will at once set the stage for actual recovery and reduce to size those who made the bad loans. Not a bad outcome, nor does it preclude heads on spikes.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed Jul 20th, 2011 at 09:13:03 AM EST
[ Parent ]
"Trade Imbalances Lead to Debt Imbalances" or Why Mercantilist Nations Shouldn't Beef About Their "Profligate" Customers  naked capitalism

Yves discusses, excerpts from and links to an on point article by Michael Pettis.

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

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed Jul 20th, 2011 at 08:43:59 PM EST
By Internetional, a Swedish personal page; and Progressive-Economy, an Irish blog attached to the TASC Think Tank for Action on Social Change.

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Wed Jul 27th, 2011 at 05:34:30 AM EST
Migeru:
By Internetional, a Swedish personal page;

It appears to be a quote collection and resource site for Rolf Englund blog.

Peak oil kommer att sänka vår levnadsstandard - Artikel av Rolf Englund - Newsmill Peak oil will lower our standard of living - Article by Rolf Englund - Newsmill
Civilekonom, tidigare på Timbro, en av grundarna av Medborgare mot EMU.MBA, formerly at Timbro, a founder of Citizens Against EMU.

Timbro is tha main neo-liberal think-tank in Sweden. Checking the blog, I would call him a reality-based rightwinger. One might note that one of his fears is that EMU will usher in a european treasury and eurobonds.

An interesting conclusion from the swedish EMU-debate was that rightwing against and leftwing for EMU shared largely the same view of what would happen (EU treasury etc) while rightwing for and leftwing against EMU also shared the sam view (financial discipline, downwards pressure on salaries aka fighting inflation).

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se

by A swedish kind of death on Wed Jul 27th, 2011 at 02:25:43 PM EST
[ Parent ]


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