Politics

The Fallacy Of Stimulus vs Austerity

Samuel Hooper1 Comment

We are now six years into our global economic crisis which began in 2008, and from which most western countries still suffer acutely to varying degrees. And yet our political leaders are still having the same argument that they were having when the crisis began. The argument has not matured, developed or sprung new offshoots; it remains exactly the same.

Austerity versus Stimulus. With deficits exploding as government revenues collapsed during the great recession, should we spend more taxpayer money to create new demand in the economy, or tighten our belts and trust that an immediate return to fiscal rectitude would be the answer? Should we be Keynesians or not? And, whatever ones personal point of view, we have pretty much stuck to them since that time; and by and large we have trodden a middle ground that has delivered at best anaemic growth rates and jobless recoveries, or at worst has failed to stem the tide altogether.

Those on the left, such as Guardian columnist Polly Toynbee, castigate the British conservative-led government’s efforts to do anything to reduce the deficit – not to eliminate it so as to begin paying down the national debt, but just to reduce the deficit – as heartless and cruel. Not a day goes by without some new stricture on the harm that government spending cuts (read: reductions in the rate of increased government spending) will cause to the weakest and most vulnerable in our society.

Conservative politicians on the right, such as German Chancellor Angela Merkel, bristle at being labelled dispassionate and unsympathetic to those in need, and claim that their harsh medicine is the only way of saving the ailing economic patient.

Semi-partisan people such as myself tread an unpopular middle ground, arguing that this time of weak to negative growth is the worst possible time to be cutting spending (though radical rethinking of spending priorities is certainly needed), but worrying that moderate left-wingers and fair weather conservatives will not fulfill their end of the bargain and actually begin rolling back government spending and the boundaries of the state when healthy economic growth is eventually restored.

And so we all sit in our respective ideological trenches, lobbing the occasional rhetorical grenade into no-man’s land, and nothing changes.

Enter Shinzo Abe, prime minister of Japan.

Japan has been wrestling with stagnation and it’s terrible consequences for much longer than most western countries, and after 20 or so lost years, have come up with a new solution which might just actually work.

The Guardian reports:

Japan’s central bank has been ordered to print money at twice the rate that even the US is doing, to go on more spending by government and private firms. It must get inflation up by two percentage points at once. Firms must increase wages. Taxes will come down before rising to ease the deficit. Structural change will impede inflation and short-term debt may rise, but the risk must be taken. The economy must grow, at all costs.

Wow, growth at all costs rather than half-hearted measures and finger-pointing when it doesn’t work.  What a novel idea. The report continues:

As David Graeber put it in the Guardian this week, austerity is no longer an economic policy but a moral one in which someone must be found to pay for past profligacy. It is “a politics of crime and punishment, sin and atonement”. It seems almost to appeal to Protestant countries. They regard Greeks and Cypriots as singular sinners, but are all guilty.

Britain has less excuse. It could print money, inflate like Japan and let the exchange rate take the pressure. The government has already printed about £375bn, but has given the money exclusively to banks. The money has vanished on boosting bank reserves, inflating the stock market and buying more government debt. None of it has “pumped”, or even leaked, into the productive economy, whatever Bank of England handouts say.

If every pound George Osborne had printed had gone on consumer spending, it defies belief that the British economy would be still be in acute recession. As in Japan, sales would be rising, order books filling, jobs returning, tax revenues expanding and the deficit shrinking. Banks are not stupid. They lend against profits, not against Vince Cable speeches. Their retail customers need real rising demand to restock, instead of relying for turnover on benefit recipients. Austerity in recession is the nadir of economic illiteracy.

The wisest words on economic policy that I have heard in a long time, and I have to hear them from a left-leaning newspaper. Conservative outlets, talking heads and think tanks should be ashamed.

The reason that “stimulus” has failed (or at least has not resulted in a return to robust growth) is because we have been attempting to stimulate the wrong thing. If we are going to print money and run the risk of inflation, is it not far better to put that money into the hands of actual citizens, taxpayers, who need it and who will immediately go out and spend it, rather than using it to shore up the balance sheet of a bank that was probably involved in all manner of dodgy activities leading up to the financial crisis, and which has no intention of lending that money to individuals and businesses who want it?

But the killer lines from the article are these:

Japan is taking a gamble. The gamble is not with inflation but whether state spending and bank lending will actually get money into rapid circulation. The country’s past experience with big infrastructure projects (as favoured by Osborne) is that they yield little short-term stimulus. More roads and railways are a glacier when what is needed is a torrent. The torrent comes from consumer wallets, filled by lower taxes and higher wages. It comes from the fastest possible cash infusion. Any resulting inflation is a problem for the day after tomorrow.

The joy of a country with its own currency is that it can handle it as it wishes, not as eurozone leaders wish. It need not increase government debt but just print money to distribute for as long as it thinks necessary. This could be through higher benefits, higher wages, higher tax thresholds or lower VAT. For that matter, the Treasury could add £10,000 to every adult’s bank balance – a giant version of the pensioners’ Christmas fuel allowance – and still have spent less than it has handed to the banks in the past four years.

Think on that for a minute. If the government had given all the money it gave to the banks over the last four years to private individuals instead, it would be the equivalent to putting £10,000 into the bank account of every adult in the UK. Even if you argue that the financial sector required a cash injection in order to prevent a calamitous collapse of the system, if the government had lavished just half as much on the banks, we could all be receiving a £5,000 cheque in the mail.

Yes, there are arguments to be had about how we put the newly printed money into the hands and bank accounts of the citizenry. Should it be equally per person (no), equally per taxpayer (no), based somehow on one’s past tax contributions (yes, probably), or some other means of allocation? We can have those arguments once we accept the reality that the current course of action is not working, and as we move to follow Japan’s lead and implement their real stimulus policy. We need to face facts and acknowledge that printing money and giving it to the banks has not worked; perhaps giving the money directly to the consumer will.

The economic news emanating from the US and the UK continues to be bleak, and our leaders keep offering the same solutions and hammering out the same compromises between themselves.

In the final, desperate hope of avoiding another lost decade, let us at long last now try something new.

The Cowardice Of The American Right

Samuel HooperLeave a comment

It was recently confirmed that Dzhokhar Tsarnaev, the surviving suspect in the Boston Marathon bombing investigation, has been presented with criminal charges for his actions.

Predictably, this has made many people on the American right wing very unhappy indeed.

Fox News had devoted hours of coverage post-capture to whether or not Tsarnaev should be read his miranda rights, and the talking heads are not pleased with this turn of events, which will see the suspect given access to legal advice and representation if he chooses to avail himself of it.

The ever-opportunistic Lindsey Graham has been vigorously agitating for Tsarnaev to be treated as an enemy combatant, despite being a United States citizen detained on US soil.

And Donald Trump – whom Republicans actually toyed with the idea of making their presidential nominee in 2012 – took to Twitter in high outrage, and was already dusting off his waterboard in order to torture the suspect before the criminal charges were filed.

All of these things happened, and were easily predictable, because the Republicans are the ones with the strong national security credentials, right? They are the ones that make the tough decisions required to keep us safe.

No. All of these things happened because the Republicans who espouse these views are cowards.

Cowards, cowards, cowards.

Of course, this form of cowardice has to masquerade as macho strength and firmness, but cowardice is what it is, and cowardice is what I will call it today.

There is no evidence as yet that the evil plot to kill and maim innocent civilians as they watched and ran in the Boston Marathon was part of a wider international conspiracy. It may be the case that the suspects acted under foreign direction, or received their radicalisation or training from abroad, but no evidence of this has yet been presented.

Neither is there any credible intelligence that these attacks were the first action of a broader wave of related strikes on the US mainland. Yes, there followed some suspicious mail packages in the following days, as happened after 9/11, but these are not thought to be related.

Nor does anyone yet know the motivations for the attack (not that this should matter – as with capriciously invented “hate crimes”, we should be punishing the act, not the motivation), whether it be jihadist in nature, domestic grievances or the alienation and evil act of specific individuals acting alone.

None of this is known.

And yet the Republican party – this group of people who routinely and unabashedly wrap themselves in the American flag and proclaim themselves the only real “patriots” and defenders of the constitution, would happily, eagerly, throw away some of the most fundamental rights granted to US citizens under the constitution.

It is absolutely astonishing that no one calls out the GOP for the rank hypocrisy which has emanated from the mouths of some of their members in the aftermath of the Boston Marathon bombings.

That the same party who proclaimed “I Stand With Rand” when Senator Rand Paul mounted his laudable filibuster to register his objection to the idea of aerial drone strikes being used to kill US citizens on US soil denied those very same principles and agitated for the government to strip those same citizens of the right to a civilian trial.

These are the people, remember, who like to pump up their base with talk of second amendment remedies – because if you can’t beat Obama at the ballot box, the answer, of course, is to strap on your guns, rise up and overthrow his democratic mandate by force.

This is the party that says “you can pry my rifle from my cold dead hands” whenever anyone questions the modern applicability of, or limits to, the Second Amendment.

These are the people who take the fight to the enemy, who pre-emptively launch wars in order to “fight them over there so we don’t have to fight them over here”.

In other words, those on the neo-conservative right in America like to play the hard man, and strut around as though there were a very large, impressive appendage between their legs whenever they talk about foreign policy or national security. Right up until the moment that something happens to spook them close to their own back yard.

But when the nation suffers an attack such as that which took place last Monday in Boston, all of the tough talk disappears and these Republican armchair warriors rush to shelter behind the legs of the Big Government that they love to trash at all other times, and they urge that erstwhile-“tyrannical” government to use the full weight of its vast might, plus an added heap of unconstitutionally appropriated power, to hurt the Bad People and make them go away. Even if the Bad People are US citizens. It’s pathetic.

Weak, weak, weak.

Andrew Sullivan says it best today on his blog, and I quote in full:

The first US citizen, Jose Padilla, was captured on US soil, detained without formal charges, accused of plotting a dirty bomb, and then brutally tortured until he was a human wreck. Eventually, the dirty bomb charges were dropped in the legal process. And there was a serious question about whether, after such brutal torture and isolation, he had been psychologically brutalized by his own government to the point of insanity.

Tsarnaev, in contrast, was formally charged this morning, will be tried in a civilian court, go through due process, and face a weight of evidence against him.

This is why we elected Obama. To bring America back. To defend this country without betraying its core principles.

Hear, hear.

The Spirituality of the European Union

Samuel HooperLeave a comment

EU church religion

 

St George’s Day brings yet another wildly misguided and inappropriate intervention from a Church of England bishop, this time the Rt Rev Michael Langrish, Bishop of Exeter.

While back-handedly praising Prime Minister David Cameron for the zeal of some of his reforming efforts, he goes on to expound at length on the question of whether Cameron might be – wittingly or unwittingly – undermining the “deep spiritual roots” of the European Union.

From The Telegraph:

The Rt Rev Michael Langrish, who sits in the House of Lords, told Peers that he was concerned that Mr Cameron’s policies could contribute to the “loss of the European soul”.

He told how the European project has “deep spiritual roots” and said the Church of England “engages with the EU itself through its own representation and structures”.

The Bishop of Exeter is, of course, a Lord Spiritual, one of those Church of England bishops given the right and authority – unique among leaders of all other religions and denominations in this country – to sit in the upper house of the British parliament and meddle in our lawmaking. The Telegraph continues:

Speaking in the House of Lords this week the Rt Rev Langrish insisted that the Church of England has a “European perspective”.

“It may be thought that the Church of England does not have a particularly European perspective, but that is far from being the case,” he said. “Through its diocese in Europe it is present in all the member states of the EU. It has effective links with other churches throughout Europe and is active in the Conference of European Churches. Together with our partner churches, we are also deeply aware of some of the roots of the EU and the vision of its founders in Catholic social teaching.”

First of all – deep spiritual roots? Really? I am not wholly ignorant of Catholic social teaching, and I am probably better informed than most about the history and development of the European project from its humble beginnings as the European Coal & Steel Community. In my misguided undergraduate days I curated a half-hearted, rightly neglected website called the Pro-European Alliance which aimed to explain some of this history and spin it in a way that case favourable light on the modern-day European Union.

Bishop Langrish’s attempt to describe the institutions, mechanisms and workings of the EU as having any spiritual dimension to them whatsoever seem to be a rhetorical step too far. That is not to say that there was or is nothing noble in the idea and reality of the EU. Binding the fractious nations of Europe together through increased trade, some common institutions and a mechanism to resolve local disputes was undoubtedly a good thing. So potentially a tenuous argument could be made that the existence of an organisation such as the EU served or serves some spiritual goal.

But the European Parliament? The Council of Ministers? The Commission, which hasn’t produced an audit-worthy budget and financial statements for years beyond counting? The European Courts? How do any of these inefficient, undemocratic, self-serving institutions, created by bureaucrats to serve the interests of bureaucrats, nourish the roots of spirituality? In any way?

The only way that one can see any spiritual element to any of this is if one subscribes to the view that the nation state and international institutions are the most suitable – or only acceptable – forums for key aspects of the modern welfare state such as regulation, income redistribution and the like to be administered. That people are inherently selfish, thoroughly unaltruistic, and that only through government coercion (either at a national or European level) can we make ourselves administer fair justice and look after the weak and vulnerable in our societies.

And of course this is exactly what large swathes (though not all) of the Church of England does believe today – see “Christ would not privatise our NHS” as just another recent, damning example. Build and maintain a big state sector to do all of the things that humans are too selfish or wicked to do of their own volition for the good of their fellow men, and criticise anyone who holds opposing views from the pulpit every Sunday.

The Bishop concludes:

“I hope that the failure of successive British Governments to articulate a coherent and constructive policy towards our European partners and to manage to take public opinion along with this will not contribute to that loss of the European soul.”

When the Bishop of Exeter defends the spiritual roots of the European Union and attacks David Cameron for seeking to repatriate powers from the EU and return them to the nation state or to the individual, not only is he wrong, but in so doing he is no less than abdicating his own Church’s spiritual roots and its responsibility to empower and enlighten the individual.

Death Of A Prime Minister

Samuel Hooper1 Comment

“After the storm, of a life lived in the heat of political controversy, there is a great calm”.

The excellent sermon given at the funeral yesterday of Baroness Thatcher, given by the Bishop of London at St. Paul’s Cathedral:

 

I was particularly pleased to hear the misinterpretation of Thatcher’s famous “there’s no such thing as society” quotation being so publicly corrected and presented in its fuller, Christian context by such a respected authority.

But indeed the whole sermon stands out as one of the best in recent memory, struck exactly the right note and was the high point of an exceptionally well-choreographed and well-executed ceremonial funeral.

“Margaret: Death Of A Revolutionary”

Samuel HooperLeave a comment

A documentary is just starting on UK’s Channel 4 TV (Saturday 13th April, 7PM), entitled “Margaret: Death of a Revolutionary”.

My interest was piqued when I saw that Channel 4 was showing a documentary about Baroness Thatcher – their news channel is skewed so far to the left that it defies belief, so I was curious to see what they would have to say about Britain’s post-war saviour.

But it was the description of the programme in my Sky TV guide that really affronted me:

“Martin Durkin presents his radical thesis: that Margaret Thatcher was a working class revolutionary, and that she believed capitalism was in the interests of ordinary people, not the toffs.”

Everything wrong with the British left-wing encapsulated in one sentence.

Where to start?

Why is this a “radical thesis”? I think that we are supposed to take this line of nonsense as a piece of magnanimity from the left – that the holier-than-thou leftists among us are willing to grant that maybe Thatcher was (albeit misguidedly) trying to help the less fortunate in society, and not just the “toffs” (don’t get me started on that word) that we all assume were the only people she really cared about.

What nonsense.

Of course Thatcher believed that capitalism was in the interests of the ordinary people. Because it is. This isn’t a “radical thesis”. The ignorant left may have accepted the nonsensical trope that capitalism benefits only the wealthy Monopoly-men style captains of industry and the “toffs”, but the rest of us sure haven’t.

We of sound mind know that capitalism (as opposed to corporatism, which is entirely different, and which Thatcher promoted no more than any other British politician) inevitably helps the “ordinary people”.

And did the person who wrote the programme description lose their mind? Who does he think the Right-to-Buy scheme benefited? The “toffs” weren’t the ones living in state-owned council housing, who were suddenly given the opportunity to buy their houses and move into the ranks of the middle class. Who did the deregulation and privatisation of failing state-owned industries benefit? Yes, wealthy people who had money sloshing around and could afford to snap up shares did well, but so did many middle-class people, as did the whole population who no longer had to deal with fuel crises and substandard products.

Yes, of course Margaret Thatcher believed that capitalism benefits “ordinary people”. Because it does. Nationalised, state-owned industries sure didn’t benefit us. Three day working weeks didn’t benefit us. Power cuts, garbage piling up, dead bodies laying unburied, industrial unrest, the country being run by the unions, none of these things benefited us.

And Channel 4 has the nerve to present their quirky notion that maybe Thatcher had the interests of “ordinary people” at heart as a radical thesis. That in fact perhaps Margaret Thatcher, the grocer’s daughter from Grantham, wasn’t actually in the pocket of the landed gentry and the “toffs” after all.

I despair of the left sometimes.