Editor's note: While the author's choice of title does paint a spaghetti western showdown portrait, we the editors believe a better choice may have been Kakistocracy or perhaps some variation of Koproscracy. This may have saved much typing and reading time. Please accept our apologies.
The United Kingdom is a paradox and this year's general election campaign is no exception. A 21st century parliamentary democracy where the Queen has to hop a chopper from palace to palace to give her consent to an unelected Prime Minister to dissolve a parliament in which some still wear tights and wigs. The monarchy has seen its royal power eroded over time ever since Charles I was beheaded in 1649, replaced by a parliamentary system which theoretically puts the power of government in the hands of the people. This year's whirlwind month-long campaign got a little bit of American updating, well to 1960 at least, as for the first time a series of live televised debates were held between the party leaders to help the attention-span challenged masses decide whether to take the red or blue pill.
The election call had been long expected. Ever since assuming the prime ministerial office from Tony Blair, analysts had been watching the polls trying to determine when Labour's Gordon Brown would pull the trigger. Unfortunately for him, an election must take place at least every five years, a window that would have closed in June. Therefore, despite still trailing David Cameron's Conservative party, on April 6th Brown revealed "the least well-kept secret of recent years", elections would be held exactly a month later. Up until the first of three debates, the term coalition government didn't even have any meaning in UK politics. Instead, when talk of the possibility of neither the Conservative or Labour party attaining 50% of the seats in the parliamentary elections came up, the term 'hung parliament' was used - and still is as a scare tactic. The last time no majority was heldby either party ABBA had just burst onto the music scene, it was 1974 and Ronald Reagan was just some former actor governing California and Margaret Thatcher was the Education Secretary. Fast forward to 2010 and it could be #NickCleggsFault that the world they helped create is facing it's Waterloo.
It's been 30 years since Margaret Thatcher and Ronald Reagan revolutionized politics on both sides of the pond. Their one-two punch of anti-communist rhetoric and pro-market fundamentalism, warped the political spectrum for a generation. The center veered wildly right leaving Democrats in America and the Labour Party in the UK floundering for nearly a decade. Yes, I'm looking at you Michael Dukakis and Neil Kinnock. Margaret Thatcher's landslide reelection in the 1983 general election and Reagan's crushing victory that saw him reelected in 1984 left the Democratic and Labour Parties in shambles. Reagan didn't just beat Walter Mondale, he humiliated the 'left' winning the most electoral votes in history, 525 out of a possible 538, taking 58.8% of the popular vote to Mondale's 40.6%. Meanwhile, Thatcher won the the most decisive victory in a British general election since 1945. Labour lost 3 million votes and had their worst performance since 1918. Suddenly, what was known as the political left was scrambling, looking for a new way to get elected while it's voting base was being destroyed.
Lucky there was an answer. Neoliberalism. There, I said it. Just mentioning the word has probably scared off half of the readers. Part of the ease with which this ideology's proponents are able to deny its very existence stems from the difficulty in defining it. Making it even harder is the American/European split on the definition of its root - in the US a liberal is usually someone with an overriding belief in state intervention as a cure for social problems and market inefficiencies, but in the European tradition a liberal is committed, above all, to personal freedom, including a belief in free competitive markets as a means to this end.
Who would've believed that a meeting in a Swiss spa resort called Mont Pelerin in 1947 would lay the foundations for the most successful propaganda campaign of all time. The society, which took it's name from the spa, was founded by Friedrich von Hayek who knew that the battle for ideas would take at least a generation to win, but he knew that his intellectual army would attract powerful backers. Its philosophy accorded with the interests of the ultra-rich, so the ultra-rich would pay for it. Money poured in from oligarchs and their foundations. Think-tanks such as the Heritage Foundation, the Hoover Institute and the American Enterprise Institute were set up in the US along with the Institute of Economic Affairs, the Centre for Policy Studies and the Adam Smith Institute in the UK; business schools were founded while university economics departments were transformed into bastions of near-totalitarian neoliberal thinking.
The evidence of the success of this indoctrination program is disheartening scary. Not only have we seen a generation of our brightest minds funneled into MBA programs, producing a legion of quants and analysts whose main economic activity is the destruction of wealth thus leaving other fields barren of talent, we simply don't have an alternative it seems, no other viable system ready to replace the broken one. Other ideas and ways of thinking have been relegated to the fringes, openly mocked and derided. Even the financial meltdown wasn't enough to shake us from our stupor, as instead of questioning the system, we simply propped it up by backing a truck up to the taxpayer to bail out the banks and clear their gambling debts. Sure the US has a few voices of near-sanity, Paul Krugman, Joseph Stiglitz and Elizabeth Warren come to mind, but the intellectual silence of the left is deafening in the UK. Whisper the word socialism and before you know it you'll find yourself branded a fascist. In fact, I consider us lucky that no charismatic political leader from the far-right has emerged, fortunately the sound of Sarah Palin's voice is enough to push many into contemplating suicide while someone like Cameron has about as much personality as unbuttered toast.
As the Golden Age of high economic growth that followed WWII suddenly collapsed in 1973 with the oil shocks, stagflation and the breaking of the gold standard, Keynsian economics with its stress on social democracy and central planning gave way to those concerned with liberating corporate and business power and re-establishing market freedoms. Neoliberalism is most closely related to the adoption of the doctrines of the aforementioned Austrian-born Friedrich Hayek, the 20th-century economist turned political philosopher best embodied in his magnum opus The Constitution of Liberty. This is the book that Margaret Thatcher famously banged down on the table at a meeting with her staff in 1975, saying, “This is what we believe”.
Thatcher and Reagan, well let's be honest, really their advisors such as Keith Joseph in the UK and Donald Regan in the US, carved out their nations' industrial bases and sold them off to Wall Street and the City respectively (oh, and China for cheap stuff). Union busting, privatisation and free trade combined to cripple productive employment creating a new permanently out of work underclass. Instead of admitting flaws, a neoliberal simply changes the definition of employment (32 times by Thatcher and Major in the 80's) to try to soften the picture. Despite this, the official rate of unemployment in the United Kingdom increased to 9.1% in the years 1979-89 after it had been 3.4% between 1973–79 and 1.9% between 1960-73. Another good way to lower the roll call of the eligible workforce is to put them behind bars. Prison populations have exploded due in part to market incentives driving prison providers to influence (read: bribe) judges to incarcerate more and more people. All the while prisons are being built by private contractors and filling them with bodies sent to them by their judges. The US has the largest prison population in the world while the UK has easily the largest in western Europe.
Predictably, this pain was masked by foreign policy adventures, most notably the Falklands War whose victory helped Thatcher expand her majority in the 1983 general election. The Iron Lady cultivated the special relationship with the United States and president Ronald Reagan, backing defense policies championed by Reagan, including the doctrine of nuclear deterrence in the Cold War. Yes, it's their Trident missiles being renewed today under both Labour and Conservative plans, at a cost of more than £80 billion, a decision the Lib Dems want reviewed at the very least. A strong proponent of NATO, Thatcher supported the 1979 decision to base nuclear-armed cruise missiles in the United Kingdom, a controversial move that aroused mass protests in Britain. Yeah, they were also marching on the street against Blair's Iraq big lie. In 1986, Thatcher permitted U.S. military forces to launch bombing raids against Libya from British air bases. In our times, there are more rendition stopovers.
It's no wonder the British media are giving Clegg the Obama treatment. From his Iowa moment a couple a weeks ago to comparisons with JFK in 1960, UK politics and culture is intricately linked with it's "special" partner. It may not be Friends or The West Wing, but maybe hope and change could actually work if the Lib Dems can just gain enough seats in the Parliament. There's the problem though, believe it or not, having to ask the queen's permission to hold an election isn't even the biggest problem with the British electoral system. The UK's first past the post electoral system features 650 ridings. Not only does such a plurality system produce a two party system thanks to Duverger's Law, additionally, the ridings are skewed in favour of the incumbent big two, Tory and Labour, with a concentration of seats in their respective strongholds which will force the Lib Dems, whose support is more spread out, to get a higher percentage of the total vote to win enough seats to form a government. If you have the time, check out the BBC's election seat calculator. By sliding the percentages around, it's easy to see approximately how many seats each party will win with varying percentages of the total vote.It's possible for Labour to wind up in 3rd in the total vote but winning the most seats! As you can imagine, true electoral reform isn't at the top of the priority list for the big two parties but will likely be a Lib Dem demand in any coalition talks.
The scared animal reaction to the Lib Dem surge by the vested interests is sadly predictable, releasing the dogs of war, the media. Former chancellor Ken Clarke ominously insinuated, no wait, not insinuated, screamed, that the financial markets would collapse, you know as a result of a hung parliament: "Bond markets won't wait," the shadow business secretary said of the likely City reaction to post-election backroom deals at Westminster. "Sterling will wobble". Too bad he sorta has a point there. IMF intervention will be necessary to bring the UK's finances under control, but it's the old tired party duopoly that brought us to this point.
The claim that either Labour or Tory could be the party of change or progress is laughable. Measurements such as teenage pregnancy rates, debt levels, living standards, income mobility, educational achievement and number of wars currently being fought are supposed to move in the opposite direction they currently are. I was a bit surprised to hear Clegg make a reference to the Iraq war in his opening comments in the 2nd debate which was based on international affairs for the first half. By most accounts he fought the debate to a draw with Cameron while Brown at least managed to get one prepared "squabbling at bathtime" line to remind the electorate how much younger his rivals are. Chances are most are most debate TV viewers are Peter Griffined thanks to their TV viewing:
The TV, in a weird twist, might break the Murdoch headlock on politics. His cross-Atlantic control came thanks in large part to their Iraq war coverage which somehow legitimized Fox News as a news organization and as always, sold newspapers. Thanks to the concentration of media ownership that comes with the absurd increase in concentration of wealth, it seemed Murdoch's forces would be able to anoint Cameron as the next Prime Minister. Yet the TV debates let people see and hear the difference in an easier to digest format despite, maybe even thanks to, the rules. Up until now, most of the electorate hadn't had a chance to even be exposed to Clegg and the Lib Dems.
Of course the dominant theme of the past decade has been the governing powers along with their media allies continuously playing the fear card to maintain the status quo. David Cameron's "I thought I'd never utter these words, but I agree with Gordon" (25:15) remark in the 2nd debate was a lame attempt at humour to cover up the evil overtones of their two parties' overlapping military vision. It's hard to remember, but Labour dropped their policy of Unilateral Nuclear Disarmament along with other key policy differences with the Conservatives such as their policies of re-nationalisation of public utilities and Trade Union rights. Funny how Democrats and Republicans also agree the best thing to do is keep killing brown people. What will make people safer in the United Kingdom? The "war on terror" has made the UK and the world less safe than we were when it began. How will we fight this open-ended war where the fire is constantly being stoked by stirring the embers and watching as hot spots develop around the world? Well, the second debate also featured Clegg's quip about Brown and Cameron that "The more they attack each other the more they sound the same" so we know spending hundreds of billions renewing the cold war Trident nuclear missile system and Euro fighter Typhoon is their plan.
The real propaganda victory though is the ability to convince people who are victimized by this very system to support the system and see it as a good. Somehow supporting bank profits through worrying about our credit ratings so we can more productively use the equity we've built up through years of hard work became more important than actually producing anything. The trick is to wake people from their stupor in places like Liverpool Riverside where they perennially have the lowest voter turnout in the UK, which results in as few as 34.1% of the voting population bothering to cast votes for Labour time after time despite half their children living in poverty. Don't get me going on income inequality, but thanks to the New Labour/Tory policies of the past, Danny Dorling shows that the UK is the fourth most unequal country in the developed world - only Singapore, the US and Portugal being more unequal. The wealth of the top ten percent is worth on average 13.8 times that of the bottom ten percent across the UK. London is the most unequal city in the Western world with levels of inequality which even put the rest of the UK to shame. The top ten percent living in London have wealth worth on average £933,563, while the poorest ten percent have on average £3,420, you know, some 273 times less. An equitable society is one is which there is an equal opportunity to become unequal. This simply isn't the case anymore as exemplified by the growth of charter schools in the US and the fact that in the UK 25% of education goes to the 7% of students attending private schools, higher than anywhere else in the world except Chile.
Ah, Chile, where it all really got going. Where Pinochet and the Chicago Boys had to use death squads to take away the Chileans' choice, Britain got New Labour while the US got Government Sachs. Bruised and confused by four election defeats, the Labour party of the 1980's needed to respond to the success of Thatcherism and the changing nature of the economy and society. New Labour emerged and became dominant for many reasons. The supposed left wing alternative was left with a reduced voter base and desperately needed an alternative to Big Labo(u)r union support so they whored themselves to Big Finance. They simply adopted the belief that every social institution should be based on market exchange seeing no reason why services that are very different in nature should be supplied in some other way. The New Labour project was based on the belief and corresponding electoral strategy that Labour must appeal to ‘natural’ Tory voters in middle England or it faced the prospect of permanent opposition.
In order to do this the Labour Party was transformed starting in 1987 through a series of Policy Reviews, each presented to party conferences as a fait accompli with the accompanying free media coverage. Gradually, planned action by government was replaced with market solutions as the idea that the market was a good servant but a bad master was abandoned. In contrast to previous Labour thinking, the market was now both self-regulating and self-correcting. Following Labour's 1997 election victory Blair said "the post-war Keynesian dream is well and truly buried". Never mind that different goods meet different human needs, and the idea that we always need choice or worse, we always behave rationally, is silly. People don't pick and choose their rail service or prisons the way we pick our coffee at the supermarket, so why do we treat them the same? Rail privatisation has delivered a worse and more expensive service at a higher price in subsidy. The notion that public services are there to mimic market choice has lodged itself in the minds of a generation of politicians and voters and they are incapable of thinking in any other way.
Markets sprang up everywhere they hadn't previously existed, from education to health care as the quango was born providing near virgin territory and the perfect breeding ground for the pursuit of greed and profit as exemplified by the growth in the financial industry's share of both the US' and UK's total economy. This has continued despite obvious signs that unfettered markets cause more harm than good as we see what happens when finance corrupts every sector of the economy along with politics. The Savings and Loan scandal and the Keating Five, Enron, Long Term Capital Management, and on and on and on in the US along with their share in the UK with the likes of Barings,BCCI and the parliamentary expense scandal. By 2002, the ideological shift was complete, with Labour MP and current First Secretary of State (basically a deputy Prime Minister) Peter Mandelson famously declaring that "we are all Thatcherites now" and that "No serious challenge on the left exists to third way thinking anywhere in the world"! Today the same man is warning if you "flirt with Nick Clegg and you will end up married to David Cameron".
Oh, and don't get me wrong, while the 'Good' is having another option, in the UK election represented by Nick Clegg's Lib Dems, the 'Bad' is same old Brown and New Labour, the 'Ugly' is definitely Cameron and a return to Conservative rule. His botoxed smoothness may cover his forehead wrinkles but you don't have to look too far under the surface to see the same old Tory hate. While Clegg's 'earned route to citizenship' plan doesn't sound like a panacea to the UK's immigration problem and Brown's Bigot-gate has provided cover for Cameron, the Conservatives will surely speed the draconian slide of the country toward Arizona status. When branded anti-European and called out on his party's European Parliament alliances with fascists in Latvia, gay elephant (and non-elephant) bashers in Poland and ex-Czech Prime Ministers who party with Berlusconi... naked...with 17 year olds, David Cameron defended his alliance at the 35:35 mark of the 2nd debate: "One of our main allies is the party of the Polish president who tragically died in that accident who both of the politicians standing next to me praised as a great patriot and great statesman so I think we can hear no more of that." So, because Brown and Clegg paid their respects to someone who died in a horrible plane crash we're not allowed to question the friends he chooses to keep in Europe. Gotchya. Seems Schopenhauer was right, martyrdom is the only way a man can become famous without ability.
You don't need the TV to be repulsed by Cameron's party's policies, unless you like class war that is. We know the Tories do, for as Warren Buffet put it "There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning." David's blue-blood (seriously, he's a direct descendant of King William IV while his wife's clan came via King Charles II) his Eton education, and his party's monied membership would like nothing more than to increase their share of the pie all the while trying to convince us that they're just like us. He will give a £1.2 billion inheritance tax cut to the richest 2% in Britain, with the benefits going to the 3,000 wealthiest estates worth more than £2 million (including his wife's). Then he promises to end the 50% top rate of tax, giving another £2.4 billion to the richest 1%. Furthermore, he has pledged to cut taxes on the pensions of the richest, handing another £3.2 billion to the same folks. Adding insult to injury, his marriage tax relief policies will give 13 times more to the rich than the poor. To pay for this, he will slash programmes for the middle and the poor, like the Child Trust Fund, SureStart and state schools.
Paradoxically, Brown, leader of the party who led his nation into its unholy alliance with finance, was favoured to win the final TV debate that was to focus on the economy. Despite being the Chancellor of the Exchequer who was the financial architect of the New Labour party that helped destroy the financial world, he's still trying to convince the voters that he is the man to navigate today's rocky economic waters. Sure, we can blame the banks, after all they did purposely set people's homes on fire by packaging loans in such a way that they'd fail, then sold them to the investing public while taking short positions in order to profit when the securities crashed. They bet against our cities and states instead of performing the socially beneficial role of capital allocation. Today's financial markets rent seeking behavior more often than not leads them to destroy value. The banks insatiable appetite has grown to country-sized proportions, and with the UK's debt rivaling that of Greece, there's no guarantee that having maintained the pound will serve as a defense once the PIGS have been consumed.
Both Clegg and Cameron picked up on the populist anti-bank meme in their final debate, referring to them as casinos, yet, the worst actor of all in this saga has been the governments. The Conservative leader got it right, saying at the 29:48 mark, "if you look at the Labour record over the last 13 years, they did very much hitch the fortunes of the economy to the city of London. And we got in a situation where we ended up with the whole economy having to serve the banks rather than the other way around." Fortunately, Clegg reminded the viewers at 30:51 that "both Conservative and Labour governments now for ages have been far too close to the City, basically preferring the interests of one square mile of the city of London rather than 100,000 square miles of the United Kingdom." No matter how much the Conservativespin doctorstry to hide it, Cameron and his team are the broken system. A system that has been rigged by the people in charge, it's not regulation that's bad, it's the neoliberal policy of global capitalism through government/military interventionism to protect the interests of multinational corporations.
Regulatory capture was invented by the railroads but perfected by the financial industry. A financial world of capitalism without capital was enabled by Wall Street's friendly takeover of the US Treasury; Regan came from Merrill Lynch to be followed by the likes of Robert Rubin, Lawrence Summers, Henry Paulson and little Timmy Geithner, men who have made immense fortunes thanks to the rules they helped create. Brown's Labour promises to maintain the status quo and Cameron's Conservative plan to further enrich the banks don't address the problem. When RBS failed in 2008, it had a balance sheet worth roughly 1.5 times the UK economy, do we really want to see what happens when even bigger banks fail? Yet even today, the plutocrats are aware that we still have the power to change the system. Smaller states have to fall in line or face regime change, but for the first time in a long time, the British electorate have the opportunity to attain change through the ballot box. First they ignore us, then they laugh at us, then they fight us. Then we win.
All this makes the UK's May 6th election actually matter. Not in the fake American lackey kinda way in order to "punch above its weight" on the international stage, but in the real change the world kind. With a mid-term election coming up in the US, perhaps a UK upset result could somehow manage to get a bit of press coverage, doubtful I know, but I can dream. Without some kind of wake up call, the world will continue to be subjected to a system that it has lost confidence in, slaving away to maintain your bank credit rating while paying taxes to support their socialized system of profit and loss. Here in Poland, the voter is basically given the same no choice, a fundamentalist PiS or corporatist PO. In Hungary we've just seen a dramatic gain in parliamentary elections for the neo-fascist Jobbik party while Greece has forced the world to chip in to maintain their debt payments to those banks. What the UK and world need is not more of the same; a new way of seeing things is needed to tackle the growing threats of climate change, terrorism, oil dependency, overpopulation, resource depletion, access to clean water and TBTF banks with their global reach and implications. Choice disappeared when Tony Blair and Bill Clinton entered 10 Downing Street and 1600 Pennsylvania Avenue respectively, it's time to break loose from the straight jacket. Who knows how it'll all turn out, who even knows if Clegg will even bring any change, but it's worth finding out, there's still time. After all the UK still isn't in quite the state of the States, but they certainly have been trying their best.
As in David Nutt, (former) chairman of the Advisory Committee on the Misuse of Drugs (ACMD) in the UK, has been fired for doing his job. Isn't it great to know that we haven't made any progress since Galileo was forced to renounce his work and writings concerning the theories of Nicolaus Copernicus, who had suggested that the sun, not the Earth, was the center of the universe almost 400 years ago? Somehow this case seems even more totalitarian. A scientist, whose job is to give advice on drug law, has lost his job for giving the advice he was hired to give because it doesn't fit in with the government's get tough on drugs sales pitch to the deluded public. Yes, it's not only America where you have to blow the populist trumpet hoping that the semi-literate masses will vote for you come election day, the UK it seems is every bit as bad.
It's even worse knowing that things weren't always so bad for the Labour Party and the UK. In fact it was only 2004 when the government actually listened to the advice given to them by their drug experts and downgraded cannabis from a Class B to C (the UK uses a system where A is the most harmful illegal drug and C the least). Since the reclassification didn't result in an upswing of smokers and in fact saved an estimated 199,000 police hours, this action had its predictable reaction - the tabloid press hard sell along the lines of "drugs are bad, how can you be doing this to our children? Will someone please think of the children!" - this time mostly revolving around a scare story involving new and improved skunk weed which was so potent it caused psychosis. Enter a new British PM losing popularity by the day who is easily influenced by the polling numbers and suddenly you had the leader of a nation saying things like, "I think people know my view about cannabis and particularly about this lethal version of it, skunk." Before you know it, the UK found itself back where it started, busting 72-year-old milkmen for delivering weed to old ladies as the government re-upgraded cannabis to Class B in January earlier this year. Of course this move came despite a report at the time from the ACMD recommending that cannabis remain a Class C drug.
So, what do you do when you are a scientist whose job it is to help formulate drug policy by providing unbiased scientific evidence only to see your work ignored? You try to draw attention to your cause, attempting to influence public opinion with facts and evidence; much to the dismay of the British government, David Nutt has been quite good at this. He was head of the team who devised a radical new system for classifying drugs - one based on harm to individuals and society instead of old-wives tales. Ultimately, it was this stance that forced Nutt's resignation as he once again tried to remind people that drugs such as alcohol and tobacco are more harmful than LSD, ecstasy or cannabis. Additionally, he released a paper pointing out that ecstasy, a Class A drug, is in fact more benign activity than equestrianism. This latter report earned him a rebuke from his boss in the government, Jacqui Smith, the Home Secretary at the time.
The influence of the tabloid press in Britain is something I don't claim to understand very well. I picture it as having a British version of the Fox News effect in the US, an important tool in ensuring that the semi-literate view the world through a haze of confusion. In the correspondence between Nutt and Home Secretary Alan Johnson, the man responsible for demanding Nutt's resignation, Johnson practically admitted that misinforming the public is part of the plan. Johnson's letter to Nutt stated, "I cannot have public confusion between scientific advice and policy and have therefore lost confidence in your ability to advise me as chair of the ACMD." Huh? Really? If ministers care so little for independent scientific advice, maybe they should save public money by sacking the entire group of experts and instead appoint a committee of tabloid editors. After all, rags like the Daily Mail are onside with the firing, publishing an article comparing Agassi smoking crystal meth to the 'nutty' Professor Nutt. Why do they love that term drug tsar so much?
Protectionism. And Poland and Poznan, where I call home these days. While waiting for the tram the other day I noticed an ad for a popular magazine in these parts, Wprost, kind of a Polish version of Time if you will. My rudimentary Polish allowed me to decipher the gist of the cover story, which basically boiled down to "Buy Polish". A subtle sign, but, in case you missed it, protectionism is back and ready to reek havoc on the globalization dream of the neo-liberal economic movement. P is also for patriotism, a bullet proof cloak that protectionists love to drape around themselves, especially in times of crisis. It may sound strange for me to admit it, but one thing the neolibs have right in theory is that the free flow of goods and services around the globe can benefit the world. Without open markets each country wastes resources producing goods in which it has a comparative disadvantage, and consumes too little of imported goods. Of course we've never actually got to the point of true free trade, all trade is managed, but the pendulum is about to start swinging toward protectionism again.
When the Group of 20 countries met in mid-November, everyone agreed to "refrain from raising new barriers" to trade or investment over the following 12 months. Showing how much the agreement meant, India increased tariffs on steel, iron and soybeans a few days later. The APEC leaders made a similar pledge that same month. However, promises quickly lose their authority when the world seems to be collapsing and workers are being thrown out of work en masse. Recent economic downturns have had global trade as a major engine of growth to help pull the world's economies out of recession, Japan in the 80's, China after 9/11, however, this time is different. The similarities to 1931 keep popping up, this time it's trade barriers.
While it's a stretch to compare the current US stimulus package with the Smoot-Hawley Tariff Act of 1930, which raised tariffs on over 20,000 imported goods, there is a clause that raises alarm bells. The stimulus package contains a "Buy American" rider, the American Steel First Act, which would ensure that only US-made steel will be used in $64 billion of federally funded infrastructure projects. The as-yet-unpassed senate bill is even worse as it stipulates that all stimulus-funded projects use only American-made equipment and goods. Trade war anyone? Combine this with the anti-NAFTA rhetoric thrown around during the election campaign and we've got a recipe for disaster. There's already rumblings up north about the clause as Canadians feel they're being unfairly left out of the bidding extravaganza. Along with the rest of the world, they see the move as another example of the US trying to force the world to follow one set of rules while creating another rulebook for themselves. The tipping point will come and the resulting domino effect of retaliatory trade barriers will prove disastrous for world trade and the global economy.
Back in December the World Bank released a forecast that world trade would fall for the first time since 1982, 2.1%, compared to growth of almost 10% in 2006 and the estimated 6.2% for 2008. Smoot-Harley wreaked havoc on trade, with US imports from Europe declining from a 1929 high of $1,334 million to just $390 million in 1932, while U.S. exports to Europe fell from $2,341 million in 1929 to $784 million in 1932. Overall, world trade declined by some 66% between 1929 and 1934. Need an effect to match with the cause? US unemployment in 1930, before the passage of the bill was at 7.8% in 1930, jumped to 16.3% in 1931, 24.9% in 1932, and 25.1% in 1933. The latest US unemployment number, 7.2%. Add to that the importance of international trade to the economy today compared to then. In 1930 global trade as a percentage of GDP was in the single digits, it hit $16 trillion in 2007, equal to 31 percent of world GDP. Another factor was brought up in Davos on Satuday by British PM Gordon Brown. The Institute of International Finance predicted capital flows to emerging markets would slow to $165 billion in 2009 from a record $929 billion two years ago. “What you’re seeing is a form of financial protectionism where banks retreat to their home base,” Brown said. French finance minister Christine Lagarde said at a Jan. 31 press conference in Davos that bank bailouts and fiscal stimulus plans are “implicit protectionism.” Additionally, the binge of new borrowing by the US and other central governments will surely put a squeeze on on other borrowers, in terms of a shortage of available financing and higher long term interest rates.
Much of the world is focusing their attention on China as countries look for ways to boost national economies. With America and the world already pointing fingers at what is perceived to be currency manipulation to maintain an exporting edge, Chinese officials announced a series of measures to boost domestic production last month. State banks are being directed to lend more to exporters, government research funds are being set up and a measure to provide $12 billion worth of letters of credit to Hong Kong exporters. This comes at a time when American quotas on many Chinese garments have just expired on the heels of a WTO challenge in which the US accuses China of providing illegal subsidies. Meanwhile Indonesia has imposed a series of measures that will make it harder to import Chinese goods. Train producers are crying foul, claiming the Chinese market is closed to importers while at the same time Chinese manufacturers are using technology acquired from western companies on the condition it not be used in production meant for export for just that purpose.
There are many other signs sprouting up of the growing tide of protectionist policies. Ecuador announced it was lifting tariffs across the board, with the levy on imported meat jumping from 25% to 85.5%. India raised steel tariffs and Russia has boosted levies on imported cars. France has pledged $7.6 billion to shield home industry from "foreign predators". "British jobs for British workers", a slip of the tongue by British PM Gordon Brown a couple of years back is coming back to haunt him as strikes rage across Britain, with much of the fury aimed at foreigners. France was paralyzed on Thursday by a nationwide strike, Greece has seen mass riots along with a few other EU members. You may be asking yourself where is the WTO in all this? I thought we had agreements in place to stop just such a thing from happening. Nope. The rules have too many loopholes such as not requiring government stimulus plans to be open to all bidders.
The next meeting of the so-called Group of 20 comes in April. By then the world should have erected enough barriers of trade to make the Great Wall look like child's play. True free trade with an even playing field creates certain economic advantages. Unfortunately, what has been created over the past 60 years courtesy of GATT through the WTO, along with the World Bank and the IMF, is a playing field so tilted that it finally fell over. Sadly, instead of ending a system where an EU cow receives more in government subsidies than half of the world's population earns in daily wages, about $2, the focus will continue to be on throwing money at the banking system. Of course the WTO is trying to maintain calm, releasing a 14-page report last week claiming "there has been only limited evidence so far of increases in tariffs or non-tariff barriers, or increased resort to trade remedy actions"; the EU and China are pretending to play nice, while doing exactly what the WTO claims isn't happening, placing new duties and lodging anti-dumping complaints, the Doha dream suddenly seems beyond reach.
Some idea of the vicious circle of these protectionist measures can be illustrated by the increase in tariffs being imposed by the EU on Chinese fasteners. Duties will rise from 63% to 87% on 200 different kinds of screws and bolts. So not only could China consider retaliatory measures, but the cost of producing everything using those fasteners in Europe will go up, from cars to DIY projects. This increases the price to the ultimate consumer, leaving them poorer than they would have been without the duties, thus reducing their spending on other goods. While the Obama administration is seen by the world as a breath of fresh air, there is a waft of the musty, protectionist policies of the past. Anti-NAFTA talk, and Chinese currency manipulation were themes of his campaign while Treasury Secretary-designate Timothy Geithner is an outspoken critic of China's yuan policy. Aid to US auto-makers and now the stimulus package with it's "buy American" clause, a flag waving, trade war instigating, global economy killer. Could it be that the Democrats really don't know how economics works? Well, I suppose that would make them just like the rest of us.
Part-time recluse, part-time rockstar,full-time ranter. Paying the bills teaching English in the wild west of capitalism.
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The United Kingdom is a paradox and this year's general election campaign is no exception. A 21st century parliamentary democracy where the Queen has to hop a chopper from palace to palace to give her consent to an unelected Prime Minister to dissolve a parliament in which some still wear tights and wigs. The monarchy has seen its royal power eroded over time ever since Charles I was beheaded in 1649, replaced by a parliamentary system which theoretically puts the power of government in the hands of the people. This year's whirlwind month-long campaign got a little bit of American updating, well to 1960 at least, as for the first time a series of live televised debates were held between the party leaders to help the attention-span challenged masses decide whether to take the red or blue pill.
It's been 30 years since Margaret Thatcher and Ronald Reagan revolutionized politics on both sides of the pond. Their one-two punch of anti-communist rhetoric and pro-market fundamentalism, warped the political spectrum for a generation. The center veered wildly right leaving Democrats in America and the Labour Party in the UK floundering for nearly a decade. Yes, I'm looking at you Michael Dukakis and Neil Kinnock. Margaret Thatcher's landslide reelection in the 1983 general election and Reagan's crushing victory that saw him reelected in 1984 left the Democratic and Labour Parties in shambles. Reagan didn't just beat Walter Mondale, he humiliated the 'left' winning the most electoral votes in history, 525 out of a possible 538, taking 58.8% of the popular vote to Mondale's 40.6%. Meanwhile, Thatcher won the the most decisive victory in a British general election since 1945. Labour lost 3 million votes and had their worst performance since 1918. Suddenly, what was known as the political left was scrambling, looking for a new way to get elected while it's voting base was being destroyed.
The evidence of the success of this indoctrination program is 
It's no wonder the British media are giving Clegg the Obama treatment. From his Iowa moment a couple a weeks ago to comparisons with JFK in 1960, UK politics and culture is intricately linked with it's "special" partner. It may not be Friends or The West Wing, but maybe hope and change could actually work if the Lib Dems can just gain enough seats in the Parliament. There's the problem though, believe it or not, having to ask the queen's permission to hold an election isn't even the biggest problem with the British electoral system. The UK's first past the post electoral system features 650 ridings. Not only does such a plurality system produce a two party system thanks to Duverger's Law, additionally, the ridings are skewed in favour of the incumbent big two, Tory and Labour, with a concentration of seats in their respective strongholds which will force the Lib Dems, whose support is more spread out, to get a higher percentage of the total vote to win enough seats to form a government. If you have the time, check out the BBC's election seat calculator. By sliding the percentages around, it's easy to see approximately how many seats each party will win with varying percentages of the total vote.It's possible for Labour to wind up in 3rd in the total vote but winning the most seats! As you can imagine, true electoral reform isn't at the top of the priority list for the big two parties but will likely be a Lib Dem demand in any coalition talks.
The TV, in a weird twist, might break the Murdoch headlock on politics. His cross-Atlantic control came thanks in large part to their Iraq war coverage which somehow legitimized Fox News as a news organization and as always, sold newspapers. Thanks to the concentration of media ownership that comes with the absurd increase in concentration of wealth, it seemed Murdoch's forces would be able to anoint Cameron as the next Prime Minister. Yet the TV debates let people see and hear the difference in an easier to digest format despite, maybe even thanks to, the rules. Up until now, most of the electorate hadn't had a chance to even be exposed to Clegg and the Lib Dems.
Of course the dominant theme of the past decade has been the governing powers along with their media allies continuously playing the fear card to maintain the status quo. David Cameron's "I thought I'd never utter these words, but I agree with Gordon" (25:15) remark in the 2nd debate was a lame attempt at humour to cover up the evil overtones of their two parties' overlapping military vision. It's hard to remember, but Labour dropped their policy of Unilateral Nuclear Disarmament along with other key policy differences with the Conservatives such as their policies of re-nationalisation of public utilities and Trade Union rights. Funny how Democrats and Republicans also agree the best thing to do is keep killing brown people. What will make people safer in the United Kingdom? The "war on terror" has made the UK and the world less safe than we were when it began. How will we fight this open-ended war where the fire is constantly being stoked by stirring the embers and watching as hot spots develop around the world? Well, the second debate also featured Clegg's quip about Brown and Cameron that "The more they attack each other the more they sound the same" so we know spending hundreds of billions renewing the cold war Trident nuclear missile system and Euro fighter Typhoon is their plan.
Oh, and don't get me wrong, while the 'Good' is having another option, in the UK election represented by Nick Clegg's Lib Dems, the 'Bad' is same old Brown and New Labour, the 'Ugly' is definitely Cameron and a return to Conservative rule. His botoxed smoothness may cover his forehead wrinkles but you don't have to look too far under the surface to see the same old Tory hate. While Clegg's 'earned route to citizenship' plan doesn't sound like a panacea to the UK's immigration problem and Brown's Bigot-gate has provided cover for Cameron, the Conservatives will surely speed the draconian slide of the country toward Arizona status. When branded anti-European and called out on his party's European Parliament alliances with fascists in Latvia, gay elephant (and non-elephant) bashers in Poland and ex-Czech Prime Ministers who party with Berlusconi... naked...with 17 year olds, David Cameron defended his alliance at the 35:35 mark of the 2nd debate: "One of our main allies is the party of the Polish president who tragically died in that accident who both of the politicians standing next to me praised as a great patriot and great statesman so I think we can hear no more of that." So, because Brown and Clegg paid their respects to someone who died in a horrible plane crash we're not allowed to question the friends he chooses to keep in Europe. Gotchya. Seems Schopenhauer was right, martyrdom is the only way a man can become famous without ability.
In case you missed it, while the world has been focusing on those PIGS, the CDS spreads (Credit Default Swaps - hedge bets to protect holders of debt in case of default) have been widening on UK debt, outpacing even Spain, signalling the market's loss of confidence in their ability to repay their debt. No wonder, the UK's deficit for calender 2009 hit £159.2 billion, 11.5% of GDP, a figure higher than Spain and Portugal. Sovereign defaults usually occur after a frenzied run up in debt, on average a 40% increase over four years, coincidentally the exact amount estimated for Greece between 2007 and 2011. Meanwhile, Britain's debt will increase by 44% over the same period. A Conservative win will put Cameron's Bullingdon Club buddy George Osborne in charge of the economy, just what the country needs at a time of crisis. Somewhat surprisingly for those who still write-off the Lib Dems as short on policy, in a debate between the aspiring Chancellors of the Exchequers, Lib Dem Vince Cable outperformed both the incumbent Alistair Darling and the Shallow Chancellor, George Osborne.
Both Clegg and Cameron picked up on the populist anti-bank meme in their final debate, referring to them as casinos, yet, the worst actor of all in this saga has been the governments. The Conservative leader got it right, saying at the 29:48 mark, "if you look at the Labour record over the last 13 years, they did very much hitch the fortunes of the economy to the city of London. And we got in a situation where we ended up with the whole economy having to serve the banks rather than the other way around." Fortunately, Clegg reminded the viewers at 30:51 that "both Conservative and Labour governments now for ages have been far too close to the City, basically preferring the interests of one square mile of the city of London rather than 100,000 square miles of the United Kingdom." No matter how much the Conservative spin doctors try to hide it, Cameron and his team are the broken system. A system that has been rigged by the people in charge, it's not regulation that's bad, it's the neoliberal policy of global capitalism through government/military interventionism to protect the interests of multinational corporations.
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