No one wishes for hardship. But as we pick through the economic rubble, we may find that our riches have buried our treasures. Money does not buy happiness; Scripture asserts this, research confirms it. Once you reach the median level of income, roughly $50,000 a year, wealth and contentment go their separate ways, and studies find that a millionaire is no more likely to be happy than someone earning one-twentieth as much. Now a third of people polled say they are spending more time with family and friends, and nearly four times as many people say their relations with their kids have gotten better during this crisis than say they have gotten worse.The underlying mood of the article, and the personal anecdotes that accompany the article, is one of defeat and resignation. Quite simply, the subtext that underlies much of the piece is that of a belief in a decline that is beyond reversal. A similar mood can be found in another article from Anatole Kaletsky in the Times, discussing the dire state of the UK economy. His answer is simply to continue borrowing and hope:
If, on the other hand, the economy remains paralysed for much longer or experiences only a feeble recovery when growth resumes, then it won't matter what tax or spending measures Mr Darling announces: public borrowing will grow like Topsy and, in the end, the Government's only recourse will be to inflate away its debts by ordering the Bank of England to print money without limit.He later puts a more positive gloss on the situation, but there is no hiding from the paragraph that is quoted above. As one of the great optimists for government interventions, his contemplation of financial Armageddon comes as a profoundly shocking admission of the fragility of the current situation.
With all of the news of great economic events, it may seem curious to focus in on the mood of the US and UK, but I believe that this is something that we should not ignore. Economics is about more than just numbers, but is also about culture, drive, expectations and many other less tangible factors. The mood that is being expressed belies the recent sprinkling of false optimism, and is a mood of defeat and resignation.
Perhaps the most telling part is in the stories of individuals and families that can be found in the Time article. The tone and mood tallies with some of the commentators on the blog. There is a rejection of the striving, the desire to make more money, a diminishing sense of ambition. It is a rejection of wealth and the culture of consumption.
I will leave it for others to determine whether this shift is a good thing, but will instead discuss what this might mean in economic terms. I have spoken before about the working culture in China, which I have seen first hand. I believe I once gave the example of a couple working endless hours in a tiny food stall, and how their basic motivation was to provide a future for their children. Their absolute determination and willingness to sacrifice themselves was quite astonishing.
If this example from China is compared with that of the West, it is apparent that there is an alternative to the consumption culture that is currently being rejected in the West. The couple working on the food stall are not working to buy the latest gadgets, or to buy a new car. They are working and saving, with a view to their future security and providing for their children. Whilst a consumption culture is growing in China, saving and security is still dominant.
This is the challenge that is facing the West, and it is not just in China that such values and ambition hold sway. It is the Asian approach, and it provides a driver for their economic development.
When I started the blog, my aim was to not only comment on the current situation, but was also to encourage a view amongst readers that reform was needed to pull the UK (in particular) back from the precipice over which the country is now starting to fall. To this end, I have written several posts on ideas for reform of UK institutions, and these can be found in the links at the left of the blog. When writing the posts on reform, I always kept in mind the reality of the competition from China and the other emerging economies. As such, I sought to balance the best of the existing UK system with a move to greater individual responsibility.
As I look at the shifting of the mood of the UK, and also the US, I see a shift which is still not accepting the reality of the situation (the need for reform), and still not accepting that we must actually face the new competition in the world. For example, Kaletsky's argues that, whatever happens, government deficits will balloon, with or without further stimuli. The one thing he does not contemplate is the deep reform of the systems and structure of the economy. In his mind, whatever happens, the government will still continue to spend money that it does not have and, if recovery does not come soon, whatever happens the government will print money to the destruction of the economy. Kaletsky is not alone. Ambrose Evans-Pritchard has the following to say of the US:
One thing is clear: Beijing suspects that the US Federal Reserve is engineering a covert default on America's debt by printing money.Whilst attributing the view to China, it is possible to guess that he too is finally accepting that the massive printing of money to purchase debt is simply a default by stealth. Despite this, no complaint is made, and the reality of the default is simply accepted. In the meantime, China's importance in the world economy grows larger by the day, with this from a Telegraph article:
Nevertheless, China remains the strongest economy among the major nations, with the Organization for Economic Cooperation and Development predicting a 6.3pc expansion this year, compared with a 4pc contraction in the U.S. and a 6.6pc decline in Japan. China is likely to shortly overtake Japan as the world's second-largest economy.Returning to the article of Ambrose Evans-Pritchard, he talks of the purchase of copper by China, and the possibility of a commodity backed reserve currency. By implication, his article is now suggesting the RMB will be the new reserve currency. On the 2nd of March, I had the following to say:
However, the analyst makes a basic error in thinking that China would have to take an all or nothing approach. He does not consider that China might spread their reserves over a wide range of assets, and this is my best guess for the direction of China's policy. If they follow this strategy, and implement it with care, China has the potential to rapidly jump towards becoming the world's most powerful economy.I went on to say:
The first step is to manage the sale of US treasuries with the greatest of care, such that they gain as much value of the sales as possible before the $US collapses. As they move out of $US they would likely buy as many precious metals as possible without driving the price too high, as well as buying into emerging market, European and Japanese bonds. In doing so, they will be taking risks but with the benefit that they will be positioning the RMB as the next reserve currency. Furthermore, it is no secret that China has been trying to buy into various commodity companies (or natural resource companies), such as the ongoing saga of the Chinalco purchase of Rio Tinto or their wider expansion of investments in this sector.You may wish to read the original article, as it was a speculative piece about how China might become the economic power in the world. They seem to be following a similar strategy to that which I guessed/proposed that they would follow. In other words, they are on the path to success.
The point in listing all of these articles is that there is increasingly the smell of defeat in the air. China's growth appears to be an accepted fact, with no attempt to address the rise from the West. For example, the US has now backed down on the issue of the manipulation of the RMB:
In all of this, in the articles I have quoted, in the reality of China's expansion on the world economic stage, there is the smell of defeat. Quite simply, the West has given up.President Obama repeatedly accused China of outright currency manipulation during the presidential campaign, and Mr. Geithner echoed that opinion during his confirmation proceedings.
But in a new report to Congress, Mr. Geithner not only refrained from such accusations, but praised China for its economic stimulus program and its move toward a more realistic exchange rate for the yuan.
“China has taken steps to enhance exchange rate flexibility,” Mr. Geithner wrote in a statement accompanying the new report.
Both the governments and the people of the US and UK are quietly folding their hands, and abandoning the game to China. All the while the US and UK governments rack up greater and greater debts that they can never hope to repay. There is a resignation to the defeat, alongside a terrible denial of the reality of the situation. There is a belief that somehow it is possible to endlessly conjure wealth from thin air, through more borrowing or the printing press. There is a belief that it is possible for governments to still provide, to still offer salvation, even while they set about the process of destroying the economies that might provide such salvation. There is a denial of the reality of China.
A few months ago, I predicted the collapse of the $US and £GB, and the deadline for my prediction is now very close. It looks like my prediction was premature - I was wrong. However, for those who might point out that I was 'wrong', take a look around you.
Do you really believe that we can emerge from this crisis?
From the recent faux optimism, the maneuvering of China into economic supremacy, the unending bailouts and stimuli being made with borrowed or printed money, the dogmatic spending by governments that refuse to reform, it becomes clear that is impossible that it can go on much longer.
We are defeated, because we have given up on the one thing that might pull us from the crisis. That 'thing' is the willingness to accept reality, to wake up, and to earn our place in the world. Instead, we continue to delude ourselves, continue to think that it will be better one day, but make no effort to change the situation. We have given up on our belief that our own situation is in our own hands, and believe that government can rescue us, that China can rescue us, that the world can rescue us.
Somehow, it will all come right in the end.....
My answer to this view is simple. It will not come right. If the $US and £GB survive another month, or another two, or another three, it does not alter their final trajectory. If we sit in an oasis of calm for the moment, it is only at the cost of a greater disruption - greater catastrophe - later. Yes, it appears possible for reality to be delayed, but economics does not work by magic. One way or another, the root of economic success is about the creation of real wealth - not the faux wealth of printed money and borrowing. Printing money and borrowing may delay, but they do not create the wealth that will change reality, they simply destroy that wealth. They may keep the economy moving for a while, but only at the cost of a more painful halt later.
On that very gloomy note, I will end the post.
Note 1: In light of the fact that I have now (probably) called the collapse of the $US wrongly, I was tempted to list all of the things that I have got right. However, I am not sure that this would not just be about flattering my own vanity, so decided against it. Also, as one of the 'big movers' in the world economy, calling the state of the $US wrongly probably eclipses the points that I have been correct about.
Note 2: Tiberius - I also read the story about Goldman Sachs going after a blogger. Hopefully my blogs are general enough to avoid such troubles, but I hope I would in any case still publish and be damned if the need arose. However, I do not think that I would attract such attention as things stand.
Note 3: I have read a long report on the state of the commodity markets. It is a report that has been lent to me, such that I can not quote it. However, it outlines a period of stagnation in the metals markets. By contrast, if Ambrose Evans-Pritchard is correct, it is quite possible that there will be some shifts in commodity prices in the coming months, and the trajectory will be upwards.
Note 4: I talked recently about the need for oil to be traded in RMB if the RMB was to become a reserve currency. I suggested that a back door for China to start this process might be Venezuelan oil. This from the NY Times:
This could be coincidence, but the article also deals with wider expansion of Chinese influence throughout Latin America. From my perspective, it is simply China positioning itself for the the crisis that will emerge with the collapse of the $US.In February, China’s vice president, Xi Jinping, traveled to Caracas to meet with President Hugo Chávez. The two men announced that a Chinese-backed development fund based here would grow to $12 billion from $6 billion, giving Venezuela access to hard currency while agreeing to increase oil shipments to China to one million barrels a day from a level of about 380,000 barrels.
Mr. Chávez’s government contends the Chinese aid differs from other multilateral loans because it comes without strings attached, like scrutiny of internal finances. But the Chinese fund has generated criticism among his opponents, who view it as an affront to Venezuela’s sovereignty.
“The fund is a swindle to the nation,” said Luis Díaz, a lawmaker who claims that China locked in low prices for the oil Venezuela is using as repayment.
Note 5: Retail sales in the UK were up, according to a report in the Telegraph. If I remember correctly, it was in my last post that I mentioned that inflationary impacts might be reported in positive terms, giving the example of renewed asset price growth. It is therefore to the credit of the Telegraph that they reported the rise in sales as follows:
Last month was the first time since May that clothing sales rose. Sales were strongest in women's and childrenswear, as shoppers were attracted by the new spring and summer ranges. The value of food sales also rose, partly driven by inflation.The important point is at the end of the quote; yes, if inflation is increasing then it is quite possible that there will be an increase in sales in monetary terms, but this is not a cause for celebration. Expect to see more examples of inflation feeding into figures.....I hope to write on inflation figures in the near future (events allowing).
Note 5: I have had a message from a commentator that a comment was not published. I am not sure why this was the case. If anyone else has had similar problems, please let me know. I am not sure what I can do, but if I know it is a widespread problem, perhaps I can find out the possible causes. As such, if you could let me know what you 'did' and what went wrong, it would be a great help.
A wise and fittingly grim post. I suspect the US dollar's continued strength is only symptomatic of the irrationality thar governs the global economy, and as such was probably impossible to pre-determine.
ReplyDeleteI find your example of the Chinese couple working hard for their kids' future compelling. I believe this is precisely the extent of what humans do well.
Anything beyond subsistence motivated by the needs of our closest family is inevitably prone to our less noble monkey traits: meddling and corruption. Indeed, the more complex and divorced from our immediate needs the economic activity, the more likely it is to be fatally flawed by our human frailty. This much we have surely learned from recent events.
For the sake of our wellbeing as a species and the survival of the biosphere, I would welcome the end of ambition, but supect it is only a hiatus. Someone, elsewhere, will run with the model of capitalism which, through sleight of (hidden?) hand, allows toxicity to glister like gold...
As you may know, a popular slogan for the current economic situation in the UK is 'Keep Calm and Carry On'. This is taken from a WWII poster that was intended to be used if the UK suffered occupation by Germany.
ReplyDeletePerhaps the average British person's 'defeatism' is in fact a form of stoicism as the country finds itself in an economic 'Blitz'!
Keeping on a war theme...do you think, as some have suggested, that this whole mess could end in another war? And that this might be the only viable way out of the crisis?
Cynicus, you have underlined in this post the deep seated malaise that goes way beyond the economic collapse. The economic global collapse that has been triggered by the Western hemisphere is a symptom and not the cause of this malaise.
ReplyDeleteIt is no coincidence that the 21st century has started with an explosion of chaos. To those who only have a smidgen of understanding (like me) of of postmodern philosophy, this chaos we are all witnessing can be immediately attributed to the mess we (Western civilisation) are in.
Postmodern Liberal politics have morphed into a global totalitarian monster of which Britain and America are the architects, what we see is the manifestation of this philosophy, once you know this and can see it operating then the rest slots into place.
To sum up, life as we have known it (Western civilisation) has been earmarked for destruction, or perhaps as the postmodernist would say - deconstruction.
Until the thinkers on this blog address this phenomena, (Postmodernism) you will for ever be pushing and pulling levers and knobs in ever increasing desperation to no effect or understanding.
I'm just an ordinary chap struggling to articulate this story. When the history of this century is recorded it will read like science fiction.
I am enthused by the fact that I find myself in the rare position of disagreeing with you about something.
ReplyDeleteI reject the idea that the Chinese have a work ethic that dwarfs that of the UK. But I do appreciate why you think that is the case. Let me explain.
It is true that complacency breeds contempt. Life got too easy and as that happened some (and SOME is the operative word) UK people let their engines idle. But in my opinion, the one thing that 'defines' the UK is its work ethic and that is still there, alive and well, slumbering fitfully in some.
The problems we have experienced with society, in particular with young men, comes from there being not enough to 'work for', not enough to 'achieve'. This is pertinent in the UK *because* we have this powerful work ethic, not because of a lack of it. When the outlet to excel is taken away, it creates resentment and anger.
I still know many, many, many people who work incredibly long hours. People with careers they want to advance or (more often) people who are self-employed. In those settings the British work every bit as long and as hard as the Chinese.
The culture difference between Britain and the Chinese has nothing to do with the work ethic you talk about. Its about achievement. British people wont work themselves to death unless there is something to be achieved from it. For too long, that hasn't been the case. But all that is changing.
You are right that China is on the rise. But as they rise their own "lot" will improve and their people will get less poor and less desperate. Once that happens their own malaise will set in.
Meanwhile, our people are rediscoving the need to strive, work and excel. Emerging from their gadget-ridden cells into a bleary but welcome light of necessity. Its scary and its worrying and its uncertain. But in a strange way that nobody is quite willing to mention or talk about for fear or being pilloried .. its exciting.
This is what the articles you mention are saying. That's not the defeatism you think it is. That's fighting talk, disguised by accident because even the journlists aren't quite sure what they are seeing. Families getting on better? That's because there's something to DO again. Something to work for.
So here's my own prediction. Things are going to get very, very tough. Not only is the worst not over, it cannot BE over until we begin to address the actual problems, not the media-perceived ones.
But once the current government are gone, and a few dramatic events shock the new government into reality, the UK will surprise you with its ability to adapt, overcome and prosper. It wont be pretty, it wont be gentle, but it will not be the foregone conclusion you suspect.
"I'm just an ordinary chap struggling to articulate this story. When the history of this century is recorded it will read like science fiction."
ReplyDeleteMaybe we should look up Hari Seldon in the phone book and send a Cyberdyne Systems T-800 to take care of him.
What we need on this blog is more hope and less nihilistic scare mongering.
ReplyDeleteI think God had a hand in getting Obama elected so he could save the economies of the west. No more stupid white men I say.
Arrived yesterday in Europe after a several week long trip to China. One moment that stood out for me was being in the Shanghai Urban Planning Museum and seeing the huge model of Shanghai in the future. I started to cry a little when I first saw it, later on I got furious that we in the West squandared our lead so cheaply. Just thirty years ago, China was on par with Vietnam and Bolivia, if that. Now even second and third cities are building up infrastructure. Granted they have many poor people, but what I can guarantee now is that within striking distance they will have some 200m people living a very good life by Western standards. Who is going to work in those shiny, new buildings, who is going to live in the new apartements? Chinese people are. Their biggest problem is the huge overpopulation, which causes low productivity, low wages and thus high inequality but living costs are low and they've only been on the capitalist route for a measly thirty years.
ReplyDeleteWhat's worse is that the political divide seems to be getting wider and wider every day in the West, between those that are productive and pay taxes and those that receive. They're about equally strong in numbers now, with the receivers probably being larger if you include governmental workers. That is scary as the day of reckoning can't be much further away, tea parties are already spreading and media coverage has been very partisan.
If I had been living in Sweden I may have been inclined to pay their tax rates as their health care, education and society in general are fine. But as of now, the only thing standing between me and the pitchfork crew is the desire and possibility of leaving the West after graduating. I have given up hope on the West, we've lost our way.
A perfect storm is rapidly approaching the West, I don't even want to list all the problems brewing as it's that sickening.
As far as the $US collapse is concerned, collapses usually take their time, don't make the mistake of questioning your argument because of a failure in market timing, timing the market is almost impossible as a small player.
The Chinese couple you mentioned, they're everywhere. When I lived in Beijing the family running the store close to our place was working almost full-time, the mother seemed to be always there. They were living in the store, had their TV etc inside...
There are definitely a lot of people putting their time in the West, but the difference is that there's too much 'dead weight' (economically speaking) dragging their efforts down.
I can only hope that this does not end in War but if all you have is a hammer....
CE,
ReplyDeleteAn interesting post that is provoking. I am addicted to your posts despite not agreeing with very much in them. I think your discussions are compelling.
Regardless, I wanted to make the following points.
1.
You remind me of my young cousin who thinks Newcastle is going to win the premiership next year. Everything that happens is to their advantage. This is like you and China. It sounds like you support China and are bitter towards the western countries. China is growing extremely fast, even during this global downturn. That I cannot argue with. But we must not look beyond the US. The US has a super economy because if it’s culture. It is extremely dynamic, open and the culture is that you must make it for yourself. No other country has that. China is communist, and it is BIG government. I cannot understand how you criticise western governments for interfering in the economy with stimulus but ignore the fact that in China the government controls the economy including extreme control on its currency. I really think that your bias towards China prevents you from seeing the truth. You must not forget that capitalism and communism CANNOT work. The next 15 years will almost prove this correct. Maybe China is a type of bubble.
2.
You are also completely wrong about inflation. In the states now, deflation is the main problem. Printing money does not create inflation, if the velocity of money is too low (Quantity Theory of Money). In fact the US could print massive amounts of money now, but it still would be near impossible to create inflation. The US economy will deflate for the foreseeable future. Quantitative Easing will make things no better or worse (yet). The UK economy will deflate also. The only thing preventing this is the weak currency importing inflation. But, in general QE will not stop the negative inflation almost certain later this year. Inflation now is not mathematically possible. (Search Quantity Theory of Money in Google - it’s the most important theory for in 2009).
3.
Collapse of the $US. Finally, the dollar WILL NOT COLLAPSE within the next 5 or 10 years. Beyond that nobody knows. My reason is in my first point. America always recovers because it is the most capitalist country, making it’s currency very resilient. Right now in America, entrepreneurs are rubbing their hands together knowing that this latest bout of Creative Destruction could place them at the forefront, and they will still be doing business in dollars. It is also worth nothing that some experts have been predicting the collapse of the dollar since Jimmy Carter was in office. In fact, I believe the dollar was much weaker then with double digit inflation than it is now.
Sorry for such a long reply, but I hope you will welcome my views.
@Steve Tierney: I have close relatives in the UK and I hope you are correct.
ReplyDeleteUnfortunately, I think consumer culture, with it's attendant forces of advertising and commodification of everything, has changed the national psyche.
People were tough in the '30's but now I don't think the relentless, hard work of subistence is familiar to many in the uk. (I speak from recent practical experience).
And you can't make eggs out of an omelette.
......"As much as the know-it-all pundits will mock Perry’s raising of the Texas flag, a serious secession movement in the US, based on regionalist sentiment, is not all that hard to imagine. A nation is, after all, more than a state: it derives its identity from a common culture, one that is largely shared by all citizens, including not only language but a certain mindset rooted in custom and economic convenience. However, when this cohesion is lacking – when tax-eating states, say, are arrayed against tax-producing states; or, to put it another way, when red states come up against blue states – longstanding allegiances are called into question and old bonds begin to dissolve.
ReplyDeleteIs this how the American empire will end – an implosion on the home front, even as its armies advance across the face of Central Asia and take up their positions in Afghanistan and Pakistan? Given the history of the world since 1989, and especially in the context of the current economic meltdown, what happened to the old Soviet Union is not such an implausible scenario for us".......read
http://original.antiwar.com/justin/these-united-states-too-big-to-fail/
I don't think Chinese leaders have a choice: China has to emerge victorious from this crisis. Imagine how Chinese citizens would react if they discovered that all they got in return for their sacrifices were trillions of (then worthless) US$.
ReplyDelete@lagan
ReplyDeleteHave some faith!
>>Unfortunately, I think consumer culture, with it's attendant forces of advertising and commodification of everything, has changed the national psyche.<<
You cannot change a national psyche in a few decades. Even if everybody had fed on cake and cream, in floating chairs above a sun-kissed sea, there would remain the undercurrent that millenia have created.
I believe that people actually resent the opulence that has come upon them. They don't articulate it that way or realise quite what they are feeling, but it's there nonetheless.
>>People were tough in the '30's but now I don't think the relentless, hard work of subistence is familiar to many in the uk.<<
We are about to get some "relentless, hard work of subsistence" thanks to the economic joy ride we are on. Like I said, I think you'll be surprised. When it's in the nature of a people to work, it's like riding a bike. You never forget.
Yes, we have lived in a 'blessed' society of plenty (for some). But our parents, or their parents, did not. Those ancestors passed their wisdom to us. Try as we might to escape the lessons, they remain with us.
Wait and see. I'm confident about this. Times are going to get extremely hard, I don't deny it. The West, or more pertinently Great Britain, will come through it stronger. When? No idea. How long is a piece of string.
(Purely out of interest.. who on Earth would want to make eggs out of an omelet? Same calorific value. Same protein. Same fat. Nicer taste. Let's just get on and eat the omelet.)
Hi
ReplyDeleteI just got back from Taiwan...a 2 week trip in that country was so refreshing compared to living here in Strasbourg, France.
Young people..all wanting to learn and happy to go to school and volunteer for weekend activities.
People are very keen to do business with the west and the demand for western concepts/products is incredible.
There is much talk of falling exports but unemployment is only 5.5% because everyone is doing so many jobs and the life not too expensive.
Cheerio
R
Steve Tierney
ReplyDeleteWhile I have not been to China - I have spent extended periods in England and Singapore - my experience tells me you are very wide of the mark in your opinion of the UK workforce. (BTW I accept that a discussion based on general impressions can only be of limited value).
The UK/US have hugely reduced socially mobility and workers in lower paid jobs know how limited their prospects have become -- incentives for hard work have been removed for those on the mid-lower rungs. Working your way up is largely a myth, a thing of the past. A possibility that has been destroyed by BOTH of the main political parties in the UK (and US). Family wealth leads to further education leads to the better jobs, so that success is a kind of gated-community.
You believe that a work ethic defines Britain. I disagree, the main model of how success is defined in our culture is these X-Factor type TV games which creates one lucky winner and hundreds of losers - but keeps everyone dreaming of a 'lottery win'.
A friend of mine runs a chain of clothes shops, she tells me that a large majority of her staff (early 20's mostly) wish and expect to be discovered somehow and magically made famous, and thus resent their pay and conditions (perhaps rightly) making unfavorable comparisons with what is fed through the TV.
Maybe its my prejudice as a person in my thirties but that generation looks to me to be in deep sh*t without the mental resources to deal with the new economic environment we are about to find ourselves in.
You want to be a politician, so of course the people you know are ambitious and no doubt all workaholics, that's a pretty poor sample for judging the state of a nation - - you have a huge stake in the fruits of your labour, whereas a lot of these McJobbers got nothing in return, except access to credit and now that that's gone, what is the point?
Also -- I believe that CE has underestimated the scope of the vast labour oversupply we are beginning to see the start of. He frames it MAINLY in terms of cheap foreign labour replacing expensive Western labour, to my my mind this process we are seeing disguises an even bigger shock that is emerging in the coming decade: a devastating removal of the need for human labour by technology.
The world doesn't need the West's lazy, expensive and resentful workers, and soon it won't need many of its Chinese and Indian cheap and hard-working ones either.
@ST: Thank you for the considered reply.
ReplyDeleteRe: 'faith' - I think the strange benefit I have derived from this crisis is a loss of faith - like a dark enlightenment. I now see true human success bound to a narrow layer of activity, pretty much centred on the production of food, clothes and shelter. Everything beyond that is an elaborate exercise in flawed futility.
Re: modern UK worth ethic - I read once that during WW2 a number of miners were commandeered for the 'dig for victory' effort and set to work on the land. Apparently, these tough, tough men struggled for weeks to adapt to the rigours of agricultural labour.
I think this illustrates the problems ahead. I'm engaged in the cultivation of six acres of land at present and I can testify to the intensity of the effort required.
Despite the powerful opiate of consumerism, I accept that there will still be a germ of resilience in the UK citizen, but there's also a problem of timing in all of this. People are not ready. (And the ratio of population to productive land in the UK is dire).
I suspect - to develop one of Cynicus's old metaphors - the waters are now out on Phuket beach and if you're still scratching your head and not on the higher ground by now, you're gone.
I saw a graph of house prices just over 18 months ago and decided to quit the UK and, to all intents and purposes, the market economy. Despite working flat out to achieve some sort of self-sufficiency ever since, I'm still nowhere near ready...
In answer to Tarquil Johnson, please read this:
ReplyDeletewww.globalresearch.ca/index.php?context=va&aid=13183
It is becoming painfully obvious that far from a "saviour" of the West, Obama is cosying up to the same old clique of powerful politicians/bankers/money-men who have effectively saddled the west with $Trillions debt and are being bailed out by the taxpayer, especially the US & UK.
Incredibly, the very people that caused this mess are prospering. Obama has essentially sold out to them.
In trying to determine the reason for the delay in your predictions on the collapse of the US $ and UK £, you should publish who is lending them the money in buying government bonds. It certainly is no longer overseas or private investors.
ReplyDeleteMy view is that it is the recently nationalised domestic banks buying these government bonds with fractional reserve banking inflated money from governement loans and capital injections. Most depositors have withdrawn their deposits leaving the governments topping up the bank deposits that facilitate multiple lending.
In effect the governments are borrowing from themselves via inflated fractional reserve banking money, plus forcing the pensions providers to buy local bonds that will bankrupt pensioners when the governments defuafult.
This is the bigest Ponzi scheme ever and our leaders should be prosecuted.
Tarquil Johnson said...
ReplyDeleteWhat we need on this blog is more hope and less nihilistic scare mongering.
....I don't know what you need Tarquil. I need CE's blog because it has opened my eyes to opinions outside the mainstream and encouraged me to look elsewhere.
I think God had a hand in getting Obama elected so he could save the economies of the west. No more stupid white men I say.
Oh dear. Well, in desperate times I should imagine there'll be a few claiming the coming crisis as God's punishment on our profligacy nd decadence. I'm afraid even your God won't sort this meess out in a hurry.
I cannot understand how you criticise western governments for interfering in the economy with stimulus but ignore the fact that in China the government controls the economy including extreme control on its currency. I really think that your bias towards China prevents you from seeing the truth.
......Mark can stick up for himself, I'm sure, but I think you have either misread these blogs entirely or not read enough of them.
I think Mark's overall point is that for capitalism to work ALL govt intervention must be discouraged.
Here I disagree with him as I think capitalism will always end up with greater power and wealth in fewer and fewer hands but I respect and understand his opinion.
http://www.leap2020.eu/GEAB-N-34-is-available!-Summer-2009-The-international-monetary-system-s-breakdown-is-underway_a3129.html
ReplyDeleteThis link ties in very closely with a number of your predictions.
Yes Lord Sidcup this is true. Part of the problem is jobs that dont create real wealth. How can the wealth be distributed, and yet allow people to work not longer and harder but more efficiently and equitably?
ReplyDelete@Lord Sidcup
ReplyDeleteYou wont get any arguments from me about reality TV or 'get rich quick' or the fascination with vague celebrity.
You might just wonder WHY this bizarre surety that fame will come knocking and this asanine assumption that this is a good way to live has come about?
People want to excel. The ways they are able to excel have been taken away from them. They find other ways. In my opinion (and of course it is JUST an opinion) all the things that upset you (and ME too, actually) about the recent generation are a symptom of the same problem. The need to achieve and make their mark.
The point I was making was that at some level people still know this. And that we'll see it return, out of necessity, but then with joy. I know that's a bit positive, given the doom-laden situation we talk about here, but it's what I believe. Nonetheless, its a dark road to get there. I do not deny it.
In regards to my "wanting to be a politician", you are correct I do. But I'm not a 'professional politician' or somebody from a certain type of privileged family or background. I'm from a working class family. I lived in council houses (and in caravans). I have lived in a squat. I have built a business from two peanuts and little more into something that could feed my family (but I'm by no means 'rich'). And the people I know, until very recently, were ordinary people (insofar as there is such a thing, which I doubt.)
I know lots of political people *now* of course. They are much the same as all the other people I know. Everybody just trying to make their way and do their best in life. By all means be cynical, but don't become *just* a cynic. It's no fun.
Did you catch this one:
ReplyDelete04.03.2009] 16h08m / By Felipe Maciel*
Sinopec-Petrobras Partnership
Petrobras has initiated negotiations with the China Development Bank (CDB) – the largest economic promotion bank in the world — which could lead to a US$ 10 billion line of financing. The funds would be used for exploration in Brazil’s pre-salt area with participation of the Chinese state oil company Sinopec.
A memorandum of understanding was signed in February during the visit to Brazil of China’s vice president, Xi Jinping. According to the president of Petrobras, José Sérgio Gabrielli, the details of the contract will be decided upon by May, for a signing ceremony during the visit of President Luiz Inácio Lula da Silva to China.
Besides the partnership and exploring for oil in Brazil, the agreement signed between Petrobras and Sinopec calls for the supply of 60,000 barrels/day (b/d) to 100,000 b/d starting already in 2009. Also memorandum of understanding was negotiated the government owned China National Petroleum Corporation (CNPC) for the supply of 40,000 b/d – 60,000 b/d.
“These are two important commercial agreements and a possible financing agreement, demonstrating the possibilities of obtaining new ways of financing Petrobras’ investments,” stated Gabrielli.
Lord Sidcup
ReplyDeleteYou say
"...to my my mind this process we are seeing disguises an even bigger shock that is emerging in the coming decade: a devastating removal of the need for human labour by technology.
The world doesn't need the West's lazy, expensive and resentful workers, and soon it won't need many of its Chinese and Indian cheap and hard-working ones either."
I find this an amazing statement. Are you really saying that people only exist to work, and that the invention of technology to relieve them of that work is a bad thing? And that "the world" exists as a thing outside of all of its workers?
Your comment, and some of the others, struck a chord with me as I have just been reading this article:
The Gospel of Consumptionhttp://www.orionmagazine.org/index.php/articles/article/2962
It makes the heretical point that the working day should be reduced for all of our benefit; working hours have actually risen over the years, destroying everyone's lives in the process, and that we could all get by on a lower 'standard of living'.
One of the comments to the article talks about the lack of statutory vacation time in the US, meaning that many US workers take no vacation at all during the year. Mark, as a proponent of the free markets you presumably don't agree with the idea of statutory paid vacation: if the market decides that vacation is a good thing then it will spontaneously appear, with firms vying with each other to hire the brightest candidates by offering more time off than their rivals, plus they'll all realise that vacations make for happy refreshed workers... Except that I don't think that would ever happen. Without statutory limits on working hours I don't think that the free market could possibly support such an indulgence, even if it ground itself and its workers into the dust in the process.
The other day I posted a rushed comment on the notion that Adam Smith's ideas might be just as valid (or not) when applied to political democracy, and that therefore government interventions in the markets might be viewed as just another form of the Invisible Hand - and I was feeling a bit embarrassed about it - but the above article also discusses ideas such as:
"...the choices available in the polling booth are akin to those at the department store; both should consist of a limited set of offerings that are carefully determined by what Bernays called an “invisible government” of public-relations experts and advertisers working on behalf of business leaders."
http://www.leap2020.eu/GEAB-N-34-is-available!-Summer-2009-The-international-monetary-system-s-breakdown-is-underway_a3129.html
ReplyDeleteHas the question been addressed on this blog as to why the West, America particularly, was instrumental in relocating (transferring) a large proportion of its industrial base to China and India?
ReplyDeleteAs far back as the '70's America were making overtures to China come out and join the capitalist system. From that moment on, America have cosied up to China to persuade them to become the workshop of the World.
That moment has come to pass.
The effects on the American economy are plain to see, the industrial economic void was filled by the service economy, consumerism and the property sub prime scam.
America effectively committed suicide - Why?
Were all of these events some random natural evolving forces at play or was there something more far reaching intended?
Somewhere in all of this is that Western civilisation is being taken down and being merged into the third world, or to turn it on its head, the third world is being handed the keys to the West.
Can anybody get a handle on all of this?
I tend to agree about the general lazyness of the UK workforce.
ReplyDeleteI've worked in two open plan offices in my career in the video games industry and often I've been amazed by the lack of work ethic...people seem to spend at least half the day chattering about what they did at the weekend or just sit there laughing and joking with each other. Now lots of work is increasingly being outsourced to countries like India and China. Someone told me that at their last company they tried outsourcing some artwork creation for a video game to India and it came back the next day absolutely perfect and exactly like the designs.
Anyway, the Chinese people have shown themselves throughout history to be extremely hard working and capable of achieving amazing things, eg creating the Teracotta army in the 2nd century BC or the great wall in the 15th century. I think its obvious that the 21st century is their time again to show the world what they are capable of and I think its a case of "you aint seen nothing yet"
Here's an interesting article mulling the idea of parts of the USA seceding: http://original.antiwar.com/justin/these-united-states-too-big-to-fail/
ReplyDeleteApparently some states are economically reasonably healthy, and are starting to resent their tax dollars going to other parts of the country. Early days yet, but may we see the US implode?
'Both the governments and the people of the US and UK are quietly folding their hands, and abandoning the game to China.'
ReplyDeleteThis is certainly true of the governments, but I suspect that few of the people realise that this is what is going on. Anyone who broadly believes what the MSM are telling us would fail to realise the folly and possible consequences of our governments' actions. The Times today (Sat 18 April) carries a number of articles suggesting that recovery from the recession is now within sight.
Even although I and many others amongst your commentators agree with your viewpoint I do not see we can do other than be dragged down by the actions of our governments. Our personal financial responsibility is scarcely even a drop in the ocean compared to the national debt.
CE
ReplyDeleteYou mentioned sometime ago the word "mercantilism" when describing China's approach to oversead realtionships and trade. So i looked it up on wikipedia and it so rings true for China and probably Russia too.
I recently watched a TV programme where 2 contestants were facing each other and there was a pot of £100,000 to be won. If they both selected STEAL then neither won, if they both selected SHARE then they got £50k each. If 1 selected SHARE and the other STEAL then STEAL got the lot and the other got nothing. Now thats how I envision Mercantilism works in internationl trade. China adopts a mercantilist approach to the rest of the world whilst the rest of the world adopts free bilateral trade and reduce trade barriers opening up their own markets. So we have a situation where the countries allow access to their internal markets and allow free trade and the Chinese use this to have a surging economy based on exports whlst also making it very difficult for foreign companies to reciprocate and buy into Chinese industries or allow imports. Then ultimately China wins and the rest of us lose.
Surely the rest of the world will have to move towards mercantilism. And that way it becomes a STEAL STEAL situation in which everyone loses. But thats better than having the mercantilist country/ies win.
I also have this theme in my head about the international corporations who owe no alliegance to any country and who will move production to any country regardless of the damage this may do to its "home" country. I'm thinking of Boeing. They've been hollowed out into an assembly companies and are even allowing the wings (the holy grail of plane production) to be made in Japan.
I think that Open free trade and these international corporations have rapidly brought us to the point where the West is on its knees economically. We import too much, weve lost the technology skill base, (we also spend too much) so how will we rebuild our industries? How will we make anything like enough money to pay our countries bills?
I would love to know your thoughts on the theme of Mercantilism. Probably much more succinct than mine.
All the Best
Lemming
ReplyDeleteYou're right, I phrased that poorly - I should have written "our present economic system doesn't need the West's lazy, expensive and resentful workers, and soon it won't need many of its Chinese and Indian cheap and hard-working ones either."I disagree with the logic of your statement that
". . . the invention of technology to relieve [people] of work . . . " This has never been the main impetus behind the invention of any technology I know of, (try the profit motive (reduction of labour coats) / war as the forces that fuel innovation. I have never heard of a technology being developed and introduced out of altruistic feelings towards the worker. Wanting to be rid of them or deskill an industrial process is a more likely logic.
F.eks: Labour-saving devices in the kitchen meant more work in the kitchen for housewives in the 50's & 60's. Laptops and blackberries etc mean that people work much more hours (being "always on") rather than less and waste much time responding to comments on blogs etc!
That's a good article in the link.
One of the interesting bits in Marx's Capital is his analysis of "The working day" and why our capitalist cannot shorten it to allow a lot of people to share the work and the wealth and relax more.
Steve Tierney
I agree that we largely agree.
I don't think it's cynical of me to suggest that politicians are generally more hardworking or ambitious than the (perhaps nonexistent) average citizen.
My own country (Ireland) is perhaps an exception: one of the few still led by boozy wasters.
Here's where I am cynical though: From your posts I would guess that your are intelligent, open-minded, intellectually curious and undogmatic. To my mind these qualities are 95% incompatible with ambitions in the power structures of party-politics.
If the UK population has such a hidden work ethic, why was it possible for up to 1 million Poles and other Eastern Europeans to come here within a few years and 99% of them find work?
ReplyDeleteIt couldn't possibly be that the UK worker now finds certain types of work 'beneath' him or her could it?
The only way a work ethic could be reintroduced to the UK would be to cut the benefits available for not working, probably by time limit, such that after a year or 2, if you didn't work, you would starve. That might focus the mind a little. This is after all a reality for well over 50% of the worlds population.
What makes us think that we deserve to avoid the harsh realities of life?
@Lord Sidcup
ReplyDelete>>From your posts I would guess that your are intelligent, open-minded, intellectually curious and undogmatic. To my mind these qualities are 95% incompatible with ambitions in the power structures of party-politics.<<
Thank you for your kind compliment. I would agree that party politics isn't doing itself many favours lately, but things change. Of course, they only change when we work to change them. If I (and many others) were to accept defeat or bow down to the rigid party line in every circumstance, all that would do is perpetuate the problem. There is an opportunity in crisis because the status quo is challenged and the public are motivated to open their hearts and minds to a fresh start. Democracy is an immensely powerful force and it is far from dead.
@Sobers
>>If the UK population has such a hidden work ethic, why was it possible for up to 1 million Poles and other Eastern Europeans to come here within a few years and 99% of them find work? <<
Give people a house and a TV and a plate of pizza for free and they tend to sit down, watch and eat. This would be just as true in China, or Poland, were the situation to arise there. Then, they atrophy and wither (mentally and physically) convincing themselves that they are happy with their lot because it seems like they should be. Warmth, Shelter, Entertainment, Food, what's not to like? It's an illusion which has the effect of either killing the soul, or pushing the individual to find other outlets for their need to do something and be someone.
When the free ride disappears and people have to work again, its a big shock. It hurts. It's miserable and difficult and inspires sullen resentment. But quietly, in the background, it heals. Human beings are a tribal animal. We have a need to contribute and achieve hard-wired into us. People in the UK have centuries of history being creative, hard-working and contributory. It's all still there.
Your "solution" to help people out of their malaise, while stated simply, is perfectly reasonable. The fact that you can see a possible solution suggests that you can sense the work ethic is still there underneath our current demeanour, which is exactly what I was saying.
You asked:-
>>What makes us think that we deserve to avoid the harsh realities of life?<<
Nothing at all. I never said that we did.
Anonymous said...
ReplyDeleteHas the question been addressed on this blog as to why the West, America particularly, was instrumental in relocating (transferring) a large proportion of its industrial base to China and India?
...China clearly controls its economy but those corporations in the West do wha they want - there's no policy in it from an American/British perspective.
In simply terms it's about making more profit. Globalisation allows companies to take production wherever they want and they will, naturally go where its cheapest.
All of the working rights we have fought for over the past 150 years - health and safety law, paid sick pay, union rights, maternity pay, etc - are all expensive for those who want to make as much profit as possible.
We're going to have some tough decisions to make over the next few years about whether we can keep those rights. We certainly can't if we keep wanting to consume as much stuff as we have been.
@stevetierney: what you're suggesting is not so much a work ethic, more a basic fact of life. Ie if you do not work, you do not eat. I would suggest that the existence of a work ethic in the psyche of a nation would mean that people actively preferred to work rather than accept any free handouts that were going. Or the shame associated with not working was so large that to be unemployed was unthinkable. Whether any nations exist where benefits are freely available, but not largely taken up, I could not say.
ReplyDeleteI think we as a nation have had 50+ years of socialism since WW2, where the ratchet has worked only one way - less self reliance, more State provision and control. If you were born in 1945 you would have had kids by 1970, they would have had kids by 2000. So we are 3 generations into a national sense of 'Cradle to Grave' provision. That's a deep rooted sense of entitlement for democratic politicians to confront. It will only be faced if politicians finally hit the buffers with a lack of cash to pay for it (which I think is coming soon)
http://tickerforum.org/cgi-ticker/akcs-www?post=90263
ReplyDelete"A high profile Chinese economist has begun circulating a new plan under which the U.S. government would guarantee foreign investments, so foreign nations with large dollar holdings in U.S. Treasury debt could convert that debt into equity to buy and own U.S. assets or invest in the nation's infrastructure without risk of loss, Jerome Corsi's Red Alert reports.
In the process, much of U.S. industry and infrastructure would be sold to the Chinese.
In the Financial Times of London, Yu Qiao, a professor of economics in the School of Public Policy and Management at Tsighua University in Beijing, proposed a plan for the U.S. government to guarantee foreign investments in the United States."
Now THAT is worrying considering the Chinese launch new policys through such channels.
I've just spotted a rather intriguing article about a conspiracy theory involving Special Drawing Rights and the Basel II accords.
ReplyDeleteI don't know nearly enough about the subject matter to know what to make of it, but I'm sure some of the people here certainly will.
It's certainly a diverting read if nothing else.
@Sobers
ReplyDelete>>what you're suggesting is not so much a work ethic, more a basic fact of life.<<
It is a fact of life in some places and more than that in others. I think the UK is one of the 'others'.
>> Ie if you do not work, you do not eat. I would suggest that the existence of a work ethic in the psyche of a nation would mean that people actively preferred to work rather than accept any free handouts that were going.<<
I agree. Except that I believe the UK people DO prefer to work.
Its just that some of us have been tricked into thinking otherwise. It's why so many people are unhappy. It's why there are problems with our youth. It's the "why" to a lot of our problems.
Amongst the countries of Europe we work the longest hours. We are more likely to have second jobs. We stubbornly resist the working-time directive in the face of EU hostility.
What sets us apart is that while we like to achieve and be productive, we do not like being taken for a ride. We are an obstinate, difficult people. It's one of our better qualities.
Just when you thought the UK had given UpThe only solution to the current crisis is large-scale industrial policy to rebuild the industries of the UK and the US.
ReplyDeleteApparently, New Labour has turned to precisely this policy:
New Labour will today abandon 12 years of support for market forces by unveiling an interventionist strategy under which the Government will subsidise the growth industries of the future .... It could lead to hundreds of millions of pounds of taxpayers' money being used to fund the expansion of "green" industry. Projects funded could include wind, wave and nuclear power, and electric and hybrid cars. Digital communications, pharmaceuticals, life sciences, aerospace, business services and electronics may also be in line for such "green" funding. As well as providing direct aid, all government departments will shape tax and regulatory policies to help these firms.http://www.independent.co.uk/news/uk/politics/labours-industrial-revolution-1671315.html
There is little doubt that a full blown media offensive has been launched to talk up the recession's recovery, "it'll all be over by Christmas" says Darling.
ReplyDeleteI've lost count of the number of initiatives dreamed up by labour on the back of a fag packet. Anything they say has no credence in the real world, oh! except anti terror rhetoric of course.
On a more serious note, Britain is entering a post work era, jobs are are being shed at an alarming rate, same as America.
It really does seem that the PTB have no other idea than return to what was.
Meanwhile immigration continues on an industrial scale.
More on the UK's Move Towards Industrial PolicyI don't have much sympathy for New Labour, but at least they are finally abandoning neo-liberalism:
ReplyDeleteGordon Brown and Lord Mandelson will tomorrow break with the past by unveiling plans for an interventionist industrial policy under which the state will assist high-tech manufacturing firms ... Insiders say the likely list of six sectors is: low-carbon businesses, such as renewable energy; health and life sciences; high-tech manufacturing, such as microchips; high-value services, including logistics; creative industries, such as music and computer games; and emerging technologies, such as “nanotechnology” and plastic electronics.http://business.timesonline.co.uk/tol/business/industry_sectors/industrials/article6122198.ece
If you want to understand why the UK and the US are are in such deep trouble, you don't have to look far: idiotic financial deregulation and 30 years of neo-liberalism, policies which countries like China have explicitly rejected.
We in the West didn't get rich through free trade or pure laissez faire economics at all: in the
18th and 19th centuries we mainly used infant industry protectionism.
(even the British cotton textile industry - the backbone of the industrial revoluion in the UK - only developed because of massive protectionism in the 18th century.
Those countries that got rich after 1945 (South Korea, Japan, Taiwan, and now China) did the same thing but with far greater state intervention, such as direct state allocation of investment, radical industrial policy, protectionism, and state funding of R&D.
See Ha-Joon Chang, Kicking Away the Ladder: The “Real” History of Free Trade
http://www.fpif.org/pdf/papers/SRtrade2003.pdf.
If the UK and the US want to rebuild themselves, then we need to return to the policies that work, not mythical free market economic ideas that never worked in the past and have led us to the current disaster.
Reply to Anonymous on PostmodernismAre you saying that postmodernism caused the mess or that it predicted it?
ReplyDeleteI see no reason whatsoever why postmodernism has anything to do with the economic crisis.
This bizarre philosophy takes one of its central ideas from that utter clown Jacques Derrida, who argued that the author of any work has no actual control over its meaning, and that there is no coherent meaning in any text: that is, all attempts to find a coherent, correct meaning in a written work are doomed to failure.
The consequence is that there is no such thing as objective truth.
Any philosophy that says that there is no objective truth (which postmodernism certainly does) is self-refuting: it has nothing of any significance to say about anything. Ever.
Reply to Sobers on SocialismIf a generous welfare state caused industrial collapse and ruin, Sweden would have collapsed long ago.
ReplyDeleteNot only has it not, but it has done well as an economy for decades, depsite some problems in the 1990s.
It even has a trade surplus (more than you can say for the US, which doesn't even have national health care for its citizens).
Furthermore, under the so-called "socialist" era of post-war Western Europe (1945-1980) growth rates were much better than anything we have had over the past 30 years of neo-liberalism.
The only way a work ethic could be reintroduced to the UK would be to cut the benefits available for not working, probably by time limit, such that after a year or 2, if you didn't work, you would starve.Wonderful. So people would have any no right to live, except what they can win on the free market.
It's Malthusian ideas like this that lead to communism and fascism.
The world you envisage would be so filled with hatred and barbarity that no sane human being would want to live in it - and rightly so.
What makes us think that we deserve to avoid the harsh realities of life?The idea that a country cannot have full employment, generous welfare and strong economic growth is a complete myth. Nobody ever needs to starve to death or live on the street with the amount of wealth in Western economies.
@Nigel
ReplyDelete"Keeping on a war theme...do you think, as some have suggested, that this whole mess could end in another war? And that this might be the only viable way out of the crisis?"
I can't think of any other reason that Obama's first military budget would surpass Bush's by $20 B.
As well as pouring more troops in Afghansistan, the current policy seems to involve trying to needle Pakistan into some kind of conflict:
Despite threats of retaliation from Pakistani militants, senior administration officials said Monday that the United States intended to step up its use of drones to strike militants in Pakistan’s tribal areas and might extend them to a different sanctuary deeper inside the country. Sad to say, but America seems to be lining up to heap more misery on the 'unpeople' of this world.
I cannot speak for the UK but here in the US we do still maintain a work ethic (of sorts). Whereas my Depression-era grandparents worked often back-breaking jobs for nothing more than the days meal, the working class of today seem to expect master's wages for entry-level work. The "entitlement society" is what I generally refer to it as and it does not mean that Americans are against a hard days work-more that they refuse to put that work in for the commensurate wage that work commands. I feel that the best example to date is our election of the first truly "entitlement" president. The Messiah who will spend in extremis while cutting taxes for 95% of the population (or so he says, although math disagrees).
ReplyDeleteThe other, almost uniquely western (in my opinion) concept that prosperity has allowed us in earlier times is that we must, by statute, expect each new generation to do far better than the previous generation, in perpetuity. At some point, as in every society from the Roman Republic to the German Democratic Republic, it must cease to be the rule.
A great example of this, this sense of uninformed optimism, is a close friend who in 2000 confided in me that he was considering an offer of $20 million for the business he had spent years building up. His optimism, in spite of a changing political climate that jeopardized his many Federal accounts, along with greed and a sense that he somehow deserved to succeed, ruined him within two years as the US Dept of HUD under the newly elected President Bush cancelled nearly every account his company held. I spoke to him less than two weeks ago and he currently lives with his wife and 2 children in an apartment in his mother's basement.
The point is simple. Americans do not mind hard work but feel entitled to success. The idea that we could fail is not even discussed, which makes those failures all the worse. And, sadly, when we lose hope we begin looking for a saviour, which is what happened this November past. There is no historical precedence set in the history of mankind that says we must succeed forever because we feel we should. Much tougher times and frightening realizations await both the US and the UK in the near future.
Cynicus,
ReplyDeletere "In light of the fact that I have now (probably) called the collapse of the $US wrongly"
You were just a couple of months too early if the folks at Leap2020 are to be believed.
Cynicus,
ReplyDeletere China
You might find this interesting also.
Reply to Sobers 2: 1981-2009: An era of Socialism?I think we as a nation have had 50+ years of socialism since WW2, where the ratchet has worked only one way - less self reliance, more State provision and control.Ever since Reagan and Thatcher, the US and other Western countries have had 30 years of deregulation, cuts to welfare, cuts to public spending, privatisation, financial liberalisation, abolition of capital controls, free floating exchange rates, attacks on trade unions and collapse of union membership, and you say we have had 50+ of 'socialism'?
ReplyDeleteIn the 1960s, when the welfare state was much more generous than it is now, the average unemployment rate was still much lower than it has been over the past 30 years.
So whatever is responsible for higher rates of unemployment and the deindustrialisation of the West since 1980, it certainly isn't the welfare state or a bad 'work ethic'.
Booming with comments this one, seems to have struck a nerve.
ReplyDeleteAs far as globalization and free-trade is concerned, the mantra and standard economic reasoning basically comes down to comparative advantage.
Unfortunately the theory is meaningless as some key assumptions don't hold true in the real world.
Things will be produced where it's most effective. If you're a company you will move to the place that offers the best environment.
But you don't need free trade to **** up an economy. Look at the tax rates for small business and the incentives set for wealth creation.
@Cynicus
Wouldn't you say that Japan would have gone through a massive depression would it not have been for government spending? I am dead against government spending as it only artificially keeps the numbers up but that's one point you might add in the future, how by adding debt we're artificially trying to avoid a depression (i.e. 10% decrease in GDP). How can GDP fall if the government keeps on spending with 10%+ budget deficits each year?
In that way it's pointless to be glad if Britain's economy contracts by 'only' 3.5% this year, had it not been for government spending it would have been much larger. They're just avoiding the pain now.
As far as US/GBP collapse is concerned, both countries gdp/debt ratio still looks okay and the bond market seems to bet on some sort of recovery, the dislocation will take place once the ratio is above 90% with no sight of future clamping down on deficits, so it could still take years for the collapse to happen. Right now it really is just a matter of confidence and timing. There doesn't seem to be any way out, though.
As one commentator observes, this post seems to have touched a nerve.
ReplyDeleteI have watched with great interest as the debate unfolds, and one source of links to the blog noted the high quality of debate in the comments section. For this I am very grateful.
The underlying problem with the argument over work ethic is that it is so subjective. We all know hard working people who contradict the view of a poor work ethic, and we can all see examples of those who take advantage of a system of benefits.
I sit somewhere in the middle, and my benefits reform tries to meet this middle ground. A safety net is a good thing, but it should not create incentives for abuse.
Above all, I see a world in which competition has intensified.
We may wish for a kinder and gentler world economy, but the situation we now confront can not be wished away. I gave an example of the hard working Chinese couple. However, even within China I have seen people who are not so motivated. The difference is that there is very little available to carry such people, such that they must make some kind of effort.
The other side of this is that the system in China takes no account of simple misfortune, where a person might work hard and, through no fault of their own, fall upon hard times. As such, the Chinese system is not the solution.
However, we can not afford to carry those in society that make no effort; those that rely on the work of others with no will/intention to support themselves.
This was a luxury that Western society could afford to support. However, I do not believe that this can be supported now.
My ideas for reform are aimed at resolving this dilemma. Whether they would work in practice is a matter that can be debated. However, I am convinced that reform is essential, and do not believe that current systems can be sustained.
Sorry, I forgot to mention. Some very interesting posts on China. I found the original article in the FT on the proposal for security for Chinese investment. It is a symptom of the concern of China, and the worries of China regarding the US policies. However, I can not see that it can be implemented in any way. Perhaps, it might be another warning to the US.
ReplyDeleteI note from the link to the GEAB article; Chinese purchase of treasuries are slowing their purchases growth, but not yet slowing purchases overall (perhaps).
http://www.leap2020.eu/GEAB-N-34-is-available!-Summer-2009-The-international-monetary-system-s-breakdown-is-underway_a3129.html
(sourced from the NY Times)
As a note, I often get links from GEAB and have checked the page 'About Us':
http://www.leap2020.eu/What-is-GEAB_a188.html
You may note that the page tells nothing about who they are. This worries me. For example, I make clear that I am an amateur, and advertise my limitations, in the 'About me' section. I am not sure why GEAB does not do the same. As such, I treat this source with some caution.
This is not to say that there is anything wrong with the site, but rather that I would advise some care. Some of their ideas are very interesting, if curiously worded, and therefore I always follow the links to the site.
On another subject, I have been trying to find out who is purchasing UK bonds at the moment. As yet, I have found lots of worrying news on the success of the bond auctions, but little on who are still in the market.
My concern here is whether the state controlled banks are supporting the auctions.....
The DMO does issue this information, but the quarterly review is not due for some time yet. If anyone has different sources, please feel free to post links/information.
Note for Steve Tierney: I am pleased to see that you retain your optimism. I can only hope that you are correct.
Acrobat_747: I am always happy to have dissenting views. Your comment is appreciated, and I only wish I had time to address your points. As a general point, all comments are published subject to the caveats above, though one commentator has reported two lost comments (reason unknown).
General: There are many comments here overall that I would like to respond to, but there are (pleasingly) just too many. Thanks to all for such an excellent contribution. I may return to some of the comments if time allows.
Lord Keynes Reply to Anonymous on Postmodernism. Are you saying that postmodernism caused the mess or that it predicted it?
ReplyDeleteApril 20, 2009 12:19 AM
As I have said, neo-Liberalism's no holds barred capitalism (Right) is the response to Postmodern ideology.
Which in turn, is in response to Neo-Liberalism's (Left) political social Cultural Marxism. This ideology is now entrenched throughout every government in the West.
* Cultural Marxism = political correctness, multiculturalism, mass immigration.
Both neo-Liberal capitalism and neo-Liberal cultural Marxism are the two sides of the same postmodern liberal coin.
IOW, Unrestrained freedom in the social (cultural Marxism) sphere, and ditto in the political left economic sphere.
Please note. Consensual politics rules ok!. The right say (to left) you can have your multicultural dream if we can have our sub prime scam, unrestricted global movement of people and capital.
Major objective of both Right and Left - Globalisation (NWO)
Logic. Doesn't matter which party you vote for, it's like turkeys voting for Christmas. NWO is done deal.
White Western civilisation is seen as resistant to the Utopian global multicultural village - Western civ. has gotta go.
The combined assault of these two modern 'isms have Western civilisation by the throat, our civilisation is in survival mode.
This is a hurried post I'm afraid, hence a bit rough around the edges.
Cynicus,
ReplyDeletere Leap 2020
"Some of their ideas are very interesting"
I agree, and if one goes through their archive, they seem to have been pretty accurate thus far.
"if curiously worded"
They are French!
Allowing sweeping generalisations for a moment, the French language seems to lend itself to a more abstract style of writing that sometimes doesn't translate well into English (especially when discussing economics where we want things as plain-speaking as possible).
Factor into this, some quite poor editing of the translations, and
yeah, it can be quite annoying to read - but the content seems to be strong.
"and therefore I always follow the links to the site."
Which are generally to credible sources.
Personally, I've been quite impressed by the standard of I've read so far. The only thing that lets them down is that (unlike Cynicus) they are charging $200 Euros for their insights!
@ brownfield said...
ReplyDeleteThe point is simple. Americans do not mind hard work but feel entitled to success. The idea that we could fail is not even discussed, which makes those failures all the worse.
...there probably is a degree of this in the UK too, but I am far more inclined to have a positive view of people's desire to work. Just not sure it works in the de-skilled service economy we live in.
I'm sure Mark will forgive me for bringing Marx into the debate ;o) but our education system turns out large numbers of poorly educated people - they can read and count (ish) but can't THINK (and this may be by design). The real opportunities for these people are incredibly limited. I don't know what some of you do for a living but for a lot of poorer people jobs are incredibly mundane - call centre work, fast food, retail to name but three that have boomed in the last 20 years. It's fairly classic alienation - people so seperated from anything meaningful, creative or requiring any skill. It's no great surprise if people would rather not bother.
We make work define our lives ("So, what do you do?" being the classic opening to any conversation with someone you've just met)Yet, most people seem dissatisfied with what they spend most of their time doing. Our society preaches material consumption as the only thing that is any measure of success. The obsession with footballers, celebrities and the lottery offering the majority their only possible escape route. And yes, I also have friends who've built up businesses from nothing (before everyone throws their examples in of the neo-liberal's favourite "self-made man") but, by God it's the exception.
By the way, anyone who thinks benefits are cushy should try living on job seekers allowance of £60.50 a week.
@ Anonymous
* Cultural Marxism = political correctness, multiculturalism, mass immigration.
...sorry, but just putting words on a forum doesn't make them true - is their any logic behind this at all?
White Western civilisation is seen as resistant to the Utopian global multicultural village - Western civ. has gotta go.
....this is just rambling nonsense. IF there is a NWO coming (and it's the biggest IF ever) I should think the chances of it being dominated by people who aren't white and western about as likely as people making sense of your post.
I think it's far more likely that Western capitalists have got way too greedy and capitalist states have forgotten that one of their key roles was to ensure capitalism didn't eat itself, so that we don't all notice and get very, very angry. Right now they're desperately trying everything to re-start it but the engine's blown and soon there'll be no more fuel.
I don't know what's going to happen - I expect we will all pay for this and the rich will try to remove from us all of those 'expensive' rights - crazy things like paid holiday and sick pay, union rights (hell even universal suffrage, who knows)that we fought for for over 150 years on the grounds that we 'can't compete' despite their vast profits. But how we'll then afford to buy the tat that makes them rich I don't know!
But the idea that a bunch of lefty multi-culturalists are behind it all would make me laugh out loud if I didn't think fascists will use that kind of rubbish to propogate racism across the West very soon.
In addition to my 20 April 2009 5:50 AM
ReplyDeleteI've just come across this, The Roots of Revolution by Reginald Firehammer
http://gunnyg.wordpress.com/2007/09/17/all-you-need-to-know-about-cultural-marxism-psychology-sociology-education-humanism-etc/
The article starts.....
"In the opening article to this series, ” Marxist Revolution of the West,” I explained that the revolution that has all but destroyed Western civilization, and is in its final stages in every aspect of Western society and culture, though explicitly planned and initiated by avowed Marxists, it was contributions of other individuals, movements, and institutions that made it possible for the revolution to be so spectacularly pulled off. The interrelationships between these various contributors to the revolution is very complex. There are six major threads of influence which I have identified and in terms of which all the complexity of that revolution can be explained.
Six Anti-Western Anti-civlizing Threads
The six threads are: 1. Cultural Marxism; 2. Post Modernism; 3. Psychology; 4. Sociology; 5. Education; and 6. Humanism."
I haven't read very far yet but it looks like it can shed some light to any interested reader.
BTW, I should have said postmodern ism is a philosophy rather than an ideology.
Steve Tierney, as an instinctive pessimist I enjoy, and feel encouraged by, your positive outlook.
ReplyDeleteI do agree that 'People want to excel. The ways they are able to excel have been taken away from them.' Also it is so true that when 'warmth, shelter, entertainment and food' come too easily the effect is either to 'kill the soul' or push the individual to find other outlets for their energies'.
I took early retirement when made redundant a few years ago. After doing much that I had always wanted to do, but never had time, I found the effortless warmth, shelter etc did not satisfy and so I took up working for a charity where I earn much less than I did before.
Such opportunities are not easily available, and here lies the rub. The more deprived one's circumstances are the harder it is to escape the soul destroying loss of the chance to excel.
For many in the UK it is not just the chance to excel that has been taken away from them but the chance to find genuinely productive employment. With this loss of opportunity comes the loss of hope. Successfully to fight back against this demands great resilience and determination - qualities that are destroyed along with the soul.
Can we, as a nation, fight back and win again that which we have lost? I don't know, but I hope your optimism proves justified.
CE,
ReplyDeleteYour post is on YouTube. I also recommend The Modern Mystic's channel for economic stuff.
On this particular video has has read your post aloud.
The link is:-
http://www.youtube.com/watch?v=oY1BRPxv7xM&feature=channel_page
Regards
If you want to hear more from Franck Biancheri, the person behind Leap 2020, you could try this hour-long interview with Bonnie Faulkner on KPFA radio's "Guns and Butter" programme:
ReplyDeletehttp://www.kpfa.org/archive/id/49464
This is his most recent interview, although he has been interviewed on the programme before.
ChasH:-
ReplyDelete>>Can we, as a nation, fight back and win again that which we have lost? I don't know, but I hope your optimism proves justified.<<
You are living proof that we can do exactly that, Chas.
You found yourself without motivation, so you went out and got movitated.
Some people find it easy to do that. Others need to be shaken out of their malaise by necessity.
In the long run, just about everyone benefits from being productive, useful and valued. We can get back to that and when we do we will begin to mend things.
@Everyone Else
Several people have called me "optimistic" which is funny because generally that's not the way I'm viewed. It's a mark of how incredibly pessimistic people on this blog are that I (of all people) am the optimist! : )
I must stress that (and I've said this several times) I share the majority opinion here that we live in very bleak times and those times are not going to get better quickly. My glasses are not rose-tinted. I just think, if only we can get rid of Gordon Brown and his cronies, there is some chance of recovery in our future.
My evidence? Our history.
Deflation in UK is official. This is using RPI however, and the BoE still has to target CPI which is at 2.9%
ReplyDeletehttp://www.guardian.co.uk/business/2009/apr/21/deflation-returns-rpi-negative
The spin over the interest figures are likely to ramp up again as they want to keep a positive outlook to boost the economy. The difference in the levels and movement of the two indexes is not making things clear on how things are going to play out in the economy as a whole.
Taking out the slump in housing, RPIX is at 2.2% So given that the money printing seems to be targeting a deflation that hasn't happened in large areas of the economy (including the index it is officially targeting), what do you think is going to happen to real economy even if the bailouts and debt defaults actually succeeded in their aims and stabilise the financial sector?
Lefty Feep
I've just come across this, The Roots of Revolution by Reginald Firehammer
ReplyDeletehttp://gunnyg.wordpress.com/2007/09/17/all-you-need-to-know-about-cultural-marxism-psychology-sociology-education-humanism-etc/
...yes and it's about as nonsensical as blog as it's possibel to find on line. It does explain where you got the inspiration for your style however.
He just conflates everything he seems to hate - Marxism (which he patently doesn't understand), Environmentalism, Sociology, Atheism, Pscychology in one crazed conspiracy theory.
Not interesting at all. Just rather sad.
Sorry, had to also post. He seems to regard David Hume as the root of this conspiracy theory. Ha, ha, ha, ha, ha, ha!!!!!
ReplyDeleteGenius.
Mark
ReplyDeleteYour readers may be interested in this chap - Michael Hudson. clearly a chap of the left, but a serious economist.
He has popped up a lot on the Renegade Economist (Fred Harrison) pieces on You Tube which you may have seen.
Both he and Harrison argue for a land tax reform. A range of his articles are below and, whilst some of the analysis is similar to yours his view of some causes (and solutions naturally) are a little different. Think you might find it challenging and interesting
Try this one first...
The Financial Sector: "A House Burning Down"
Ben Bernanke’s False Analogy
By Prof. Michael Hudson
http://michael-hudson.com/
Did any of the UK posters here catch this week's Dispatches on Channel 4?
ReplyDeleteCalled "Crash - How the Banks Went Bust" it was narrated and (I think) written by the journalist Will Hutton.
Though most of the issues discussed will be familiar to readers here, Hutton did offer a quite a good narrative to recent events. He also did not mind sticking it to Gordon Brown at evey opportunity!
Second part is next week.
Info on the programme can be found here. UK viewers can watch it online here.
"One way or another, the root of economic success is about the creation of real wealth"Hi Mark.
ReplyDeleteWe have discussed in the past the definition of "wealth" and I don't think it is misrepresenting your views too much if it is summarised as "anything which people are prepared to pay for"..?
Have we ever discussed the question of 'vices' in this?
The government often takes a view on certain things which people are prepared to pay a lot for, such as gambling and drugs, and restricts or bans them. How does this fit into your views on what is wealth?
Unless you advocate a completely laissez faire approach to life then you would, presumably, ban the sale of crack cocaine. How about sales of cigarettes and alcohol to children? How about a super-casino in every town?
I'm not trying to get you to admit that you, too, would always advocate some market intervention, but to ask why our 'legitimate' economy is, in principle, any better than the market in the obvious vices.
The Adam Smith philosophy is that people are always looking out for their own self-interest, so gambling or drug addiction will be self-limiting, yet instinctively we know that is not the case. Why should people's addiction to fast cars or designer handbags be any different? Is the economy really just built on ordinary people's addiction to things they don't need rather than "wealth"?
Anonymous said, "...I've just come across this, The Roots of Revolution by Reginald Firehammer
ReplyDeletehttp://gunnyg.wordpress.com/2007/09/17/all-you-need-to-know-about-cultural-marxism-psychology-sociology-education-humanism-etc/"
-----------------
My lord, if you think Erich Fromm believed what it says he does, you are sorely mistaken.
Steve Tierney said, "I just think, if only we can get rid of Gordon Brown and his cronies, there is some chance of recovery in our future."
ReplyDelete--------
And replace the fools them wwho? Please don't say a Tory government!
Guido seems to have caught on, at least partially, and some of the comments seem more informed than I would have suspected.
ReplyDeletehttp://www.order-order.com/2009/04/bailout-gordons-14-trillion-fail/
Just back in the UK after three weeks in the US. Over there I noted two things. First, in the huge outlet malls in California, announcements are now in English and Mandarin. Second, my real estate business friends reported Chinese buyers flying into LAX, spending a few days looking at the market, then typically buying ten repossessed houses en bloc and flying out again leaving them to let under management. The buy-up is beginning at every level, I suspect.
ReplyDeleteRe Derrida, as one who spent ten years as an academic philosopher I cannot resist sticking my oar in: he is indeed an utter clown as Lord K succinctly observes. Did you know he deliberately inserted random meaningless sentences into his 'writings'? Not to imply by this that the deliberately composed ones were meaningful.