Friday, February 27, 2015

Wednesday, February 25, 2015

Half full or half empty

The deal was done. Syriza and the EU 'institutions' found a compromise. It is a big compromise on Syriza's behalf, but a bank run made a weak bargaining position even weaker. The old left were quick to shout betrayal and more thoughtful doubts have been expressed by Costas Lapavitsas and, in the UK, by Paul Mason, who sees the possibility of Greece leaving the Euro in a managed exit further down the line.

Making this type of criticism is far easier than managing the reality of tough negotiations with the risk of dramatic consequences if they fail and, for the time being anyway, Syriza's negotiating position is being supported by a majority of Greeks. So, here are three pieces by sympathetic economists in support of the deal.

First, Duncan Weldon stresses the importance of buying time - in defence of 'kicking the can down the road'. And he makes an interesting point, which supports his line that Greek debt can be managed:
Greece’s government debt stands at around 175% of GDP. That is, there is no disputing it, very high indeed. But concentrating on the level of debt is not necessarily the most meaningful way to think about it ...
In many ways, when considering the case of Greece, the most economically meaningful number isn’t the level of debt to GDP, but the cost of servicing that debt measured against GDP i.e. how much of the Greek national income is being swallowed up in servicing debt? That is a better measure of the burden of debt than simply looking at the headline numbers. The results of this analysis are somewhat surprising. In 2014, government debt servicing costs in Greece were just 2.6% of GDP. That’s considerably lower than Portugal (5.0%) or Italy (4.7%) and not that much higher than Germany (1.9%).
Measured as share of tax revenues, Greek government interest payments are now lower than when Greece joined the Euro.
He concludes:
The costs to Greece of the past five years have been enormous, neither Greece nor the creditors have covered themselves in policy making glory. Faced with an ill designed currency union the costs of the shock that hit between 2008 and 2010 was always going to have been high. Imposing extreme austerity on an economy hit by a lack of demand exacerbated that crisis. But a policy of ‘I wouldn’t start from here’ isn’t a real policy. ‘Kicking the can down the road’ was probably a lot better than the alternatives.
James Galbraith, who has previously written on the crisis with Varoufakis, takes on critics and cynics with both barrels in a trenchant defence of the deal. It is worth reading in full. He points out:
To understand the issues actually at stake between Greece and Europe, you have to dig a little into the infamous “Memorandum of Understanding” signed by the previous Greek governments. A first point: not everything in that paper is unreasonable. Much merely reflects EU laws and regulations. Provisions relating to tax administration, tax evasion, corruption, and modernization of public administration are, broadly, good policy and supported by SYRIZA. So it was not difficult for the new Greek government to state adherence to “seventy percent” of the memorandum.
The remaining “thirty percent” fell mainly into three areas: fiscal targets, fire-sale privatizations and labor-law changes. The fiscal target of a 4.5 percent “primary surplus” was a dog as everyone would admit in private. The new government does not oppose privatizations per se; it opposes those that set up price-gouging private monopolies and it opposes fire sales that fail to bring in much money. Labor law reform is a more basic disagreement – but the position of the Greek government is in line with ILO standards, and that of the “programme” was not. These matters will now be discussed. The fiscal target is now history, and the Greeks agreed to refrain from “unilateral” measures only for the four-month period during which they will be seeking agreement.
His conclusion is that the Greek elections could mark a sea-change in political economy:
Alexis Tsipras stated it correctly. Greece won a battle – perhaps a skirmish – and the war continues. But the political sea-change that SYRIZA’s victory has sparked goes on. From a psychological standpoint, Greece has already changed; there is a spirit and dignity in Athens that was not there six months ago. Soon enough, new fronts will open in Spain, then perhaps Ireland, and later Portugal, all of which have elections coming. It is not likely that the government in Greece will collapse, or yield, in the talks ahead, and over time the scope of maneuver gained in this first skirmish will become more clear. In a year the political landscape of Europe may be quite different from what it appears to be today.
Sony Kapoor is less ebullient, but highlights the concessions that Syriza did achieve and sees the value of working with 'the institutions':
Greece has the best chance it has had in years to make a clean break with the past. It may not be on the terms its people wished for, but on a number of matters the moderating influence of the “institutions” will actually make for better policy than what Syriza had in its manifesto. 
The reforms Syriza puts forward, particularly for the longer term will be judged on merit, not on their conformity with German diktat. The triple criteria of “fiscal sustainability”, “financial stability” and “economic growth” make sense and one hopes that the technocrats at the IMF, the European Commission and the OECD do a better job of applying these. If Syriza governs competently it will no doubt also win significant concessions on debt relief and the size of the primary surplus it will be required to maintain. Together, this could easily amount to more than 10% of GDP of fiscal space over its term to be used for much needed investment and humanitarian relief. It will also have a significant positive impact on growth. Whether the reforms look good for Syriza or not, they should be good for Greece and that is all that really matters.
I like his conclusion, it demolishes the facile analogies that were drawn between Greece and Weimar Germany.
It has been remarkable that defying history and developments elsewhere in Europe, the Greek people have, after enduring a great depression, elected a party that is pro-European, pro-Euro and pro-migration. This contrasts sharply with the rise of the anti-European anti-migrant far right in France, the Netherlands and elsewhere
That alone is worth celebrating

Saturday, February 21, 2015

On totalitarianism

This article by Graeme Wood has been shared widely. It isn't surprising that it has been. It is a clear explanation of the theology of Islamic State. It is long, but is worth reading in full. It is also a critique of the way that journalists and writers have understood Islamism as being something other than religious. That it really is Islamic should be obvious. Equally obvious is that it is unrepresentative of what Islam has become in the modern world. There is a trap here that the article comes close to falling into. It may rubbish the claim that Islamic State is somehow un-Islamic, quoting Bernard Haykel that such views are "embarrassed and politically correct, with a cotton-candy view of their own religion," but it doesn't say explicitly that ISIS' fundamentalist views are atypical of the faith as a whole and the piece seems to me to come too close to an essentialist view of Islam as violent and oppressive.

It may be a cliché to say that Islam is a religion of peace, but it is certainly true for many of its adherents, some of whom are willing to take action to prove it. Time is a great editor and modernity has discretely removed much of the psychotically bonkers bits from the sacred texts of all religions, rendering them, in the words of the Hitchhiker's Guide to the Galaxy, mostly harmless (the qualifier is very necessary). ISIS reject modernity to produce something that is unexpurgated and wholly harmful. Most Muslims are horrified, not least because they are becoming targets of hatred from all sides and picking up the blame for something that they had long rejected. However, Islamism's air of authenticity, its politicisation of piety and its spirit of religious revivalism are an important part of its appeal, especially to a generation looking for radical alternatives. I am anything but an expert, but it seems to me to be a challenge to the liberalisation of Islam and, on a secular level, a grab for power.

Religious movements are difficult for secular minds to understand, myself included. And so we have mentally secularised Islamism in two main ways. The first is by suggesting that it is responsive. Apologists portray it as a retort to western imperialism, liberals that it expresses a hatred and even envy of enlightenment values. The former is contemptible, the latter is true though superficial. The second way is by describing it as an interaction between religious traditions and European political movements. The term Islamofascism is one way of rendering it comprehensible to a secular mind, as is Paul Berman's discussion of the history of death cults in Terror and Liberalism. There is much more sense in this. Just as interaction with liberal societies has been a stimulus for reform, it wouldn't be surprising if authoritarian and irrational western ideas have also influenced Islamic political movements. Yet, I am not comfortable with either as a complete explanation and Wood's article rejects them in terms of understanding ISIS. So, what if this form of jihadi radicalism has nothing to do with the west? How then do we understand it? Well, we can simply take it on its own terms and assume that they mean what they say. That is common sense, even if it leaves us baffled, but we can also use totalitarian theory.

Totalitarianism is one of those many terms that are thrown about as accusations without paying much attention to what they actually mean. It has been applied so widely as to render it meaningless and it has been used to conflate very different regimes as being essentially the same. I think we need to be much more precise. Seen as a form of government, Friedrich and Brzezinski's definition of totalitarianism as a six point syndrome (a single ideology; a single mass party; the use of terror; a monopoly of force; a monopoly of the means of communication; central control of the economy) has been the basis of most post-1945 discussion. Though useful, I find it limited. It is firmly secular and historically specific. It tells us nothing about the nature of different totalitarianisms. I don't think totalitarianism is solely a form of government, instead I would argue that it is an intellectual pathology and that the key to understanding it is ideology.

Totalitarianism has emerged on both the right and the left and I want to suggest that these ideologies can be categorised into four ideal types: secular, theocratic, modernist and traditionalist. They can either be inspired by science - or more usually pseudoscience - or by religious revelation. They can look forward to a new world remade or backwards to an idealised version of the past. These categories aren't enough though. I would add three additional defining features, which, when all are present together, make for a totalitarian ideology.

The first is eschatology. This is a belief that there is a final, absolute destiny for humanity. It is a much stronger concept than utopianism. There is plenty of utopian thought that is crazy and potentially dangerous, but utopianism is mainly speculative rather than prescriptive. It can be dreaming about a better world that may just be possible. And without the dreamers, would we ever progress? I doubt it. No, totalitarians are not sentimental dreamers, they know where we are heading and brook no compromise or deviation. They are ruthless because they are dictated to by destiny.

Secondly, totalitarian ideologies assert the importance of human agency to bring about radical change. They do not think that all people have to do is sit back and wait for some historical process to work itself out or for an act of divine intervention. People are obliged to take action, to struggle and sacrifice, otherwise humanity will remain sunk in the squalor of mediocrity. It is demanding and heroic. As such, totalitarianism is revolutionary.

And lastly, a totalitarian ideology is clear that this final goal, this state of human perfection, can only be realised through the elimination of certain categories of unworthy or corrupting people. Terror is not just an instrumental tactic for holding on to power, it fulfils our destiny. Totalitarianism is inherently genocidal.

Islamic State fits these definitions. It is a theocratic and traditionalist totalitarian movement seeking to return to the purity of 7th century Islam. It calls the faithful to action and martyrdom and condemns to death those who do not answer the call. It wishes to purify the earth through the slaughter of unbelievers. It isn't secular in any way. It isn't fascist. It is millenarian, an ecstatic religious uprising of the type that has occurred and reoccurred throughout history. And if we want to understand it, perhaps we could do worse than to dust off our copies of Norman Cohn. Countering it is another matter altogether.

Friday, February 20, 2015


The fashion started with politicians parading their football supporting credentials so that they looked like ordinary human beings, it spread into the grounds with the 'prawn sandwich brigade' of corporate hospitality guests, it was reinforced by rocketing ticket prices as clubs became the playthings of international billionaires and now we have reached the ultimate in gentrification - posh football hooligans.

One of the Chelsea fans behaving in a racist way has been identified as
... part of a small but “vocal” Ukip crowd during their time at Millfield private school more than a year-and-a-half ago.
Millfield charges fees of £30,000 a year. 

Now what was all that guff about the white working class again?

Thursday, February 19, 2015

Payback time

The Eurozone crisis has focused on sovereign debt, the debt owed by states. But there is another debt crisis, private debt. Much of the expansion of consumption before the banking crisis was down to credit rather than earnings. Low pay has spawned the exploitative pay-day loan industry - respectable loan sharks. And then the pressure mounts, credit dries up and people have to repay rather than spend. At the bottom end of the income scale, they stop spending on essentials. Economic crisis and social crisis walk hand in hand.

So, how about this as an experiment for boosting demand through poverty alleviation?
From February 2, around 60,000 of Croatia’s poorest citizens are having their debts wiped under the country’s “Fresh Start” scheme. This figure carries greater significance when placed into context of Croatia’s population of around 4.4 million. Having endured six years of recession, and with growth forecasts remaining stubbornly low, around 317,000 Croatians have found their bank accounts frozen due to debt, stifling economic demand. 
Those with a debt under the equivalent of around £3,300, with a weekly income under £91 and with no investments or savings have now found themselves with a clean slate.

Tuesday, February 17, 2015

Deal or no deal

Both sides need a deal, but is there going to be one? We will know by Friday, because that is the deadline to stop the process that will lead to a Greek default. Negotiators seem to be going about it in rather an odd way. Mind you, the Greek finance ministry is led by a tie-less economist who quotes Kant.
One may think that this retreat from game theory is motivated by some radical-left agenda. Not so. The major influence here is Immanuel Kant, the German philosopher who taught us that the rational and the free escape the empire of expediency by doing what is right.
How do we know that our modest policy agenda, which constitutes our red line, is right in Kant’s terms? We know by looking into the eyes of the hungry in the streets of our cities or contemplating our stressed middle class, or considering the interests of hard-working people in every European village and city within our monetary union. After all, Europe will only regain its soul when it regains the people’s trust by putting their interests center-stage.
Meanwhile, the apparently German-led insistence that the Syriza government has to abide by the agreement made by the previous government would, in effect, nullify the result of the Greek election, which was fought on precisely this issue. It is a basic principle of Parliamentary democracy that a Parliament cannot bind its successors, otherwise there can be no change and democracy becomes meaningless. Negotiators have to face that reality.

Austerity has produced a primary budget surplus in Greece. It has also produced an increase in sovereign and private debt, social crisis, capital flight, a brain drain, mass unemployment, the rise of fascism and a 30% contraction in GDP. Every economic forecast coming from the 'Troika' of lenders has been completely wrong, every target missed. And now the Eurozone as a whole is slipping into recession and deflation. Is this a success? 

Syriza's negotiating position on economics is modest. They wish to run a smaller primary budget surplus (not a deficit), restructure debt and tie repayments to growth, mitigate the social crisis, whilst dealing with serious problems of elite corruption and tax evasion. The principle is simple - they aim to restore growth by boosting demand at the bottom though poverty alleviation and at the same time attack corruption at the top. It's not a bad basis for a democratic left reform agenda. But modest proposals sometimes have immodest aims. This policy undermines the elite economic consensus and the basis of decades of economic policy making. It won't be easily conceded.

There is something else as well. If it works and the debt crisis is eased, the fundamental issue will still remain - the flawed construction of monetary union. Here, Greece isn't the problem. It is Germany, with its excessive savings and trade surplus. This is beautifully explained in this neat animation from the Financial Times. All currency unions allow for transfers from wealthy to poorer areas and the collective sharing of risk, except EMU. In other words, the next crisis is built into the Euro. Even with a deal, it will not be time to relax.

Monday, February 16, 2015

Monopoly is theft

I never enjoyed the board game Monopoly, probably because I always lost. However, this article by Mary Pilon describes how the idea for the famous game was misappropriated. The article is drawn from her new book about the history of the game and the subsequent legal struggles over ownership and recognition. Charles Darrow made millions from it, but the original idea came from a woman, Elizabeth Magie, who invented the Landlord's Game thirty years earlier, in 1903.
She created two sets of rules for her game: an anti-monopolist set in which all were rewarded when wealth was created, and a monopolist set in which the goal was to create monopolies and crush opponents. Her dualistic approach was a teaching tool meant to demonstrate that the first set of rules was morally superior.
The story is well known these days, but this is a nice article giving a picture of an independent and creative woman, the sort of person that keeps cropping up when you research radical history and who, just as frequently, disappears again when you read later accounts. Just as intriguing is the way the game was developed to promote the ideas of the radical liberal, Henry George. George was hugely influential in his day and gathered a mass following in the latter part of the nineteenth century. If you look at contemporary writing across a wide spectrum of liberal and socialist ideas you keep bumping into two names who are relatively neglected these days, George and Herbert Spencer. Any intellectual history of nineteenth century radicalism should include mention of both, they often don't.

It's the symbolism that really gets me; the cooperative rules lost out (crushing an opponent is much more fun) and the millions were made by a man. It is good to see an attempt to reclaim the credit due. Shame about the millions though.

This is a nice little article about how a British version was published in Newbie, Scotland by a Liberal group who based it on Brer Fox and Brer Rabbit. NB. Phillips was Magie's married name.

Tuesday, February 03, 2015

Boyhood heroes

When I became captivated by football, watching the Crystal Palace side of the late 60s, I, like most young fans, had a boyhood hero whose memory has stayed with me. Mine was Mark Lazarus. He had joined us late in his career after scoring the winning goal for third division Queens Park Rangers in the 1967 League Cup Final.

I loved his flamboyance and skill, but most of all it was his goal celebrations that made him my all-time favourite. Modern footballers have their awful choreographed routines, but nothing has even beaten Mark Lazarus'. You willed him to score, simply so you could see it again. After a brief celebration with his team mates, he would set off on a lap of honour round the whole ground, waving and shaking hands with the fans. The teams were lined up for kick off, but had to wait as Lazarus jogged round the pitch, milking the applause before taking his place out on the right wing. These days he would probably be booked for 'over-celebrating'. Modern football takes itself far too seriously.

Lazarus was the obligatory 'character'. Every team had one. They were the flair players, usually tricky wingers or flashy forwards. Fans loved them and some of the names still flow off the tongue; Frank Worthington, Rodney Marsh, Duncan McKenzie, Stan Bowles - great players who were never allowed the international honours their skills should have won them. They were distrusted entertainers in a pragmatic sport. But in those innocent days I was unaware that there was much more to Mark Lazarus' story and have only just discovered it by reading a fantastic football history, Anthony Clavane's Does Your Rabbi Know You're Here?: The Story of English Football's Forgotten Tribeabout the experience of Jews in British football. A section of the book is a profile headed, Mark Lazarus: The Tough Jew.

Clavane also had his boyhood heroes. Growing up in the Jewish community in Leeds, supporting Leeds United and facing some pretty unpleasant anti-Semitism, both on the streets and on the terraces, he idolised three Jews who fought back.
"My number one Jewish strongman was Samson, whose doomed heroism particularly appealed to me. In second place I selected the biblical warrior Judah Maccabeus, whose followers, the Maccabees, … founded the Hasmonean dynasty, which ruled from 164 to 63 BCE … And third was Mark Lazarus ..."
He quotes Rodney Marsh.
"For me the hardest player [of my era] may surprise you – Mark Lazarus the former QPR winger … He didn't look for trouble, but when it came his way, look out, Lazarus could stand up like one of the old-fashioned bare-knuckle fairground fighters".
Lazarus came from a large, East End family of fighters. He had been a boxer as were two of his brothers, one knocking out the gangster Charlie Kray in a bout. His mother gave him sound advice:
My mum always said to me that if anyone called me a 'Jew bastard' I should go up and smack him on the chin …
It seems he did precisely that. There are lots of stories in the book; Lazarus knocking out one of his team mates in training because of an anti-Semitic remark, getting away with punching abusive players behind the referee's back, including a big centre-half at Scunthorpe, and tales of how he handled some appalling crowd abuse:
During one match at Sunderland home fans called him a 'Jew bastard', said he should be sent to the ovens and informed him he was lucky to be alive. Those who visited the Den in 1971 will never forget the vile, anti-Semitic abuse he received. At Shrewsbury, Lazarus responded to racist heckling by flicking the ball up and juggling it from one knee to the other - then turning to his abusers and waving at them. The referee booked him for inciting the crowd. Perhaps it should have been for chutzpah.
And this is where there is another side to his lap of honour. It wasn't just showmanship. It was pride. His own supporters may have adored him, but in away games it was a way of sticking two fingers up to the racism and the hatred that poured out from the terraces and beyond.

A lot has been written on the struggles of black footballers for acceptance, but anti-Semitism is the forgotten, hidden racism and, whilst reading Clavane's book, I was shocked by how widespread it was in the game and in broader society.

The book is a classic example of how important sporting history is to social history. It is a field of human endeavour that is often ignored. Yet Mark Lazarus' story tells us so much about prejudice and about how people fought back. Lazarus wasn't religious. He is an atheist who married out, but he was never apologetic or furtive about his background, unlike some of the other figures in the book. He was pugnacious in the defence of the people he came from. He always was my favourite player and now is even more so.