Piketty: The Transferunion fantasy

The Transferunion fantasy

Thomas Piketty

While the political crisis deepens in Italy and in Spain, France and Germany are still demonstrably incapable of formulating precise and ambitious proposals for reforming Europe. All that is required however is for these four countries, who alone account for three quarters of the GDP and the population of the Euro zone, to agree on a common approach and the way to reform would be open. How can we explain such extraordinary inertia and why is it so serious?

In France, there is a tendency to lay the blame on other people. The official view is that our young and dynamic president has made innovative proposals for the reform of the Euro zone, its budget and its Parliament. But the unfortunate thing is that our neighbours are incapable of taking these into account and responding with the same Gallic audacity!

The problem with this superficial theory is that these notorious French proposals are quite simply non-existent. Nobody is capable of writing three simple sentences explaining which common taxes will fund this budget, who will be the members of the Euro zone Assembly who will exercise this new fiscal sovereignty, etc. If you want to make sure, just ask your favourite pro-Macron friend, or, if you do not have any – nobody is perfect – write to your favourite newspapers !

It is almost as if the revolutionaries in 1789, instead of setting up a National Assembly enabling all privileges to be abolished immediately and a new fiscal system to be set up, had only announced that it would be a good idea to pause to reflect on the setting up of a commission to consider a long-term plan to save the Ancien Régime. It is the difference between doing something and empty rhetoric.

The truth is that the French proposals are so vague that they are open to almost any interpretation. This is precisely the problem: all the nationalist and anti-European discourses can easily oppose them by putting what they want in it. Today, it is easy to criticize the reluctance of Angela Merkel and the fact is that her reply to the 'French proposals' is more than hesitant. The latest version is that she would apparently agree to an investment budget for the Euro zone on condition, however, that it be ridiculously small (less that 1% of the GDP of the zone.)

Obviously, in all this there is no mention of the common taxation system capable of financing it (so much so that there is a strong risk of finding ourselves recycling investments which have already been made or announced, with considerable 'creative accounting', as with the Juncker plan).

And of course, there is no mention of the all-important democratisation of the Euro zone. The single proposal made by Merkel is to rename the European Stability Mechanism which would become the 'European Monetary Fund'; this expresses fairly clearly the hyper-conservative vision. It is a question of applying the IMF model to the government of Europe, in other words, government behind closed doors, piloted by the Ministers of Finance and the technostructure. This is the antithesis of the public, democratic, parliamentary and contradictory discussion which should always have the last word. It is extremely sad to see that Merkel and Germany have ended up here, thirty years after the end of Communism and the certainties of its bureaucratic closed-doors procedures.

But it is too easy to criticise Merkel's reluctance. It is time that the French media understand that she is only responding to Macron's timidity. The fact is they share the same conservatism. Ultimately, these two leaders do not wish to make any fundamental changes in present-day Europe because they suffer from the same form of blindness. Both consider that their two countries are doing quite well and they are in no way responsible for the ups and downs of Southern Europe.

By so doing, they run the risk of undermining the whole endeavour. After having humiliated Greece in 2015, whose 'extreme left' government was perhaps not perfect, but did at least have the virtue of promoting values of solidarity towards the poorest and the migrants, France and Germany now find themselves in 2018 with the extreme right in power in Italy. The only thing that holds this government together is hostility to, and active pursuit of, foreigners, all of which has been enabled by the effect of European rulings.

The difficulty now is how to get out of this impasse? The dilemma is that a fair number of the German and North European leaders have for years explained to their voters that all the problems in Europe were caused by the lazy people in the South. These populations were said to be jealous of their money and all that was required was to get them to start working and exporting like the Germans or the Dutch and all would be well.

From the economic point of view, these speeches are as ridiculous as those made by the Front National in France or the League in Italy (since no country in the world could ever absorb a German trade surplus generalised at the level of the Euro zone). The fact remains that this fear of the transfer union – (or as the Germans say 'Transferunion') – prevents any debate.

To overcome this problem, one would probably need to guarantee that the future budget of the Euro zone, funded by a common corporate income tax on the profits of companies and on the highest incomes and property holders, voted by a genuinely democratic Assembly, should benefit each country in proportion to its fiscal contribution (with net transfers limited to 0.1% or 0.5% of GDP).

This intrinsically national vision of solidarity is not satisfactory, but ultimately this is not the most important aspect: the aim is primarily to enable a European public power to tax the most powerful economic actors at least as much as the poorest, in order to invest in the future and to reduce inequality within each country. Let's discuss Europe at last and forge ahead!

--

John Case
Harpers Ferry, WV

The Enlighten Radio Player Stream, 

Sign UP HERE to get the Weekly Program Notes.

Check out Socialist Economics, the Enlighten Radio website

Reviewing Richard Baldwin's _The Great Convergence... [feedly]

Reviewing Richard Baldwin's _The Great Convergence...
http://www.bradford-delong.com/2018/06/richard-baldwin-2016-_the-great-convergence-information-technology-and-the-new-globalization_-reviewed-for-_nature_.html

My review of the superb and extremely thought provoking: Richard Baldwin (2016): The Great Convergence: Information Technology and the New Globalizationhttp://amzn.to/2sIcr6C. Reviewed for Nature http:nature.com: The iron-hulled oceangoing steamships and submarine telegraph cables of the second half of the 19th century set off a first wave of economic globalization. The intercontinental transport of both staple commodities and people became extraordinarily cheap. The container of the second half of the 20th century made the transport of everything non-spoilable—and some things spoilable—essentially free. It set off a second wave of economic globalization.

Now, Richard Baldwin argues, we have a third wave of economic globalization as important as each of the first two: The internet and the intercontinental airliner have made it possible, for the first time, to transfer, with sufficient effort, the engineering expertise for efficient manufacturing production. Thus manufacturing goods can now be produced efficiently any place property rights are secure, and a literate labor force and technical cadre can be assembled.

The first two waves of globalization were global boons, nearly unmixed. This third wave, Richard Baldwin argues, is working primarily to the advantage of first world intellectual property owners, and secondarily to the advantage of those workers and communities in emerging markets able to find places in highly productive global value chains.

It is, however, working to the disadvantage of first-world communities and manufacturing workers. They used to have preferential advantage to the technical expertise needed to support high productivity manufacturing production. They no longer do so...

 -- via my feedly newsfeed

Sam Webb: Loose ends in an inceasingly chaotic world

Loose ends in an inceasingly chaotic world

Sam Webb

1. The war danger will grow if the tomorrow's summit fails, and it could fail miserably. For many in Trump's circle, this would be a welcomed end to this example of high stakes diplomacy. After all, it would allow them to make a case to move on to the "fire and fury" option, something that they are chomping at the bit to do, to a president who is intoxicated by visions of U.S. unilateral power and domination to begin with. If that were to happen, the Korean Peninsula, Southeast Asia, and the world would enter a chaotic and deadly period. And only insane and deluded people would want such a denouement.

2. Much of the left distanced itself from the Democratic Party in the 1960s. The reasons lie not only in its insurrectionist disposition, but also its flawed methodology of the two party system. Its accent — or should I say near singular focus — was on the similarities between the two parties of capital to the neglect of important differences at the level of policy as well as social and political composition. In effect, the two parties were rendered essentially the same. But shouldn't truth generally and in this particular instance lie in a concrete analysis in which which differences — bright and unmistakable as well as shades — along with similarities figure in any accounting made and conclusions drawn?

3. The unapologetic and crude racism of Trump has roots that go deep and far back into our nation's development, but, at the same time, it is also inseparable from the rise of the right in the second half of the last century and the election of Barack Obama a decade ago. The election of the first African American president, while uplifting for tens of millions, constituted an existential crisis for a significant section of white people. Their world was turned upside down and their worry was that it could be permanent. In these circumstances, any restraints on their race talk and action were lifted. Facilitating this explosion of unvarnished racist hatred was the whole panoply of right wing amplifiers, ranging from the newly formed Tea Party to right wing talk radio to Fox News to right wing politicians.

Trump, in becoming the spokesperson for the Birther movement in the aftermath of Obama's election, was part of this racist din and, at the same time, gave the country a preview of what his presidency would look like, that is, a cesspool of unrestrained racist invective and policies that endanger the well being and safety of people of color, while at the same time, undermining the rule of law, democratic governance, and people's rights generally. Indeed, if authoritarian rule is in our future, intensified racism will play an outsized role in ushering it in.

It is these dangers that give the elections a profound importance. A Blue Wave won't solve everything — not least racism in its many forms — but it would lift somewhat the Damocles Sword that the country.

4. Just returned from a visit to Chile. Had a wonderful trip, but couldn't help but think that in Chile as well as across Latin America the right is reclaiming power. It wasn't that long ago that an ascendant left on the continent provided welcome relief and hope to people in South American, not to mention the left that was left reeling in the wake of the historic defeat of communist, socialist, and working class movements across much of the globe.

One can lament this recent turn of events in Latin America. It is hard not to. But it should also nudge us to investigate the tectonic shifts on multiple levels that underlie this new political conjuncture as well as to articulate the strategic and tactical adjustments that follow from this new correlation of power.

To be fair, much has been done in this regard. New books and papers have shed light on where we are, how we arrived here, and what is to be done in the face of this new configuration of political and social power. What is more, on a practical level the surge of disparate social constituencies and political movements here and elsewhere in reaction to the rise of the right is evidence that millions have figured out rather quickly what the main strategic challenge is at this moment and for the foreseeable future.

5. Samantha Bee's comment on her show last night about Ivanka Trump was despicable. But it was also plain stupid. I don't buy her apology. She had to know in advance that it would provoke a negative reaction, give the right something to run with, while deflecting from Rosanne's crude and unapologetic racism and Trump's deafening silence of Trump in response to it.

6. Authoritarian rulers like Trump, assisted by his sycophants in the White House, Congress, and media, like to create the impression that they speak for the majority when they, in fact, don't. Keeping this in mind and reminding others of this fact is part of resisting creeping authoritarian rule.

7. It seems that an unintended consequence of the Trump presidency and policies is the accelerated rise of China as a global power. The securing or loss of hegemony on a global level depends, among other things, on state policies and statesmanship of rival powers. Trump and his policies, it strikes me anyway, are weakening the ability of the U.S. to maintain its global hegemony in either the short or long term, while at the same time increasing the danger of war.

8. The 200th birthday of Karl Marx's birthday has triggered much commentary by Marxists and non-Marxist alike. Here's my two cents, informed, I should add, by my experience in the communist movement where we erred in the direction of dogmatism, determinism, wishful thinking, and a slowness in acknowledging new phenomena.

Marxism is relevant and vital to the degree that it changes in the face of changing conditions. It has to eagerly embrace new angles of looking at, thinking about, and reshaping the world. It has to be ready to modify its categories of analysis and struggle, even ditch its received wisdom where reality compels it.

And the reason is simple: Marxist categories of analysis and struggle in the best of circumstances aren't set in stone any more than reality is. Ideally, if I can use that term, they take into account new experience and adjust themselves to new realities, including the emergence of new needs and desires.

In other words, Marxism in its best iteration has no patience for schematic and formulaic thinking that squeezes contingency, contradiction, and novelty out of the process of social development and change. Nor does it have any truck for the repetition of timeless and abstract formulas that are distant from day to day life.

Only such a Marxism can re-imagine and remake the world – not in some sort of utopian way, but in line with the expanding requirements of a good life in the 21st century.

I would only add that Marx and Engels on their best days didn't write in categorical and deterministic language nor did they claim to be the "last word" on any subject. Nor did they allow abstract theoretical constructions determine political policies or action.

Near the end of his life, Engels, in an effort to counter a dogmatic and deterministic interpretation of historical materialism which, they would probably acknowledge that to some degree they had a hand in creating, wrote: "Our conception of history is above all a guide to study … All history must be studied afresh."

On another occasion, he exclaimed, "Communism is not a doctrine but a movement; it proceeds not from principles but from facts."

A decade or so later, Lenin, the leader of the Russian revolution, asserted,

"A Marxist must take cognizance of real life, of the true facts of reality, and not cling to a theory of yesterday, which, like all theories, at best only outlines the main and the general, only comes near to embracing life in all its complexity."

Good advice!

Marxism in the 20th century has much that it can be proud of analytically and practically, but it also has on its ledger serious shortcomings, mistakes, and massive crimes that in part have their origins in a Marxism that on too many occasions lost its critical and self critical capacity. And that isn't Marxist.

--

John Case
Harpers Ferry, WV

The Winners and Losers Radio Show

7-9 AM Weekdays, The Enlighten Radio Player Stream, 

Sign UP HERE to get the Weekly Program Notes.

Check out Socialist Economics, the Enlighten Radio website, and 

The Poets and Mechanics Quaker Worship Group

For Big Corporations Like Walmart, Wage Theft Penalties Are Just the Price of Doing Business [feedly]

For Big Corporations Like Walmart, Wage Theft Penalties Are Just the Price of Doing Business
http://inthesetimes.com/working/entry/21204/walmart-corporations-wage-theft-labor-settlements-firms/

A scathing new report finds that hundreds of major corporations in the United States are repeat wage-theft offenders—committing the violations and then paying the subsequent fines as part of the cost of doing business. Jointly published on June 5 by Good Jobs First and Jobs with Justice Education Fund, the report finds that, since 2000, 450 firms have each paid at least $1 million each in settlements or judgments related to wage theft. And 600 companies paid a penalty in multiple cases of wage theft, indicating that punitive measures are not deterring these companies' violations. In some cases, the number of settlements and fines was stunning, with Hertz seeing 167 cases since 2000 and Walmart seeing 98 cases and shelling out $1.4 billion.

 -- via my feedly newsfeed

The High Price of Gender Inequality [feedly]

The High Price of Gender Inequality
https://www.project-syndicate.org/commentary/gender-equality-group-of-seven-summit-by-kristalina-georgieva-and-marie-claude-bibeau-2018-06

The huge costs of depriving women and girls of rights and opportunities are borne not only by women and girls themselves, but also by their families, communities, and the entire economy. By investing in women and girls and ending gender inequality, we can eliminate those costs and change the fate of entire countries.

OTTAWA – There is no doubt that ensuring that women and girls enjoy the same rights and opportunities as men and boys is the right thing to do from a moral and ethical standpoint. But it also makes economic sense – $160 trillion worth, to be precise.



A new report released by the World Bank Group, with support from the Canadian government, finds that if women had the same lifetime earnings as men, global wealth would increase by $23,620 per person, on average, in the 141 countries studied, for a total of $160 trillion. That is a lot of money that could be put toward, say, reducing inequality, expanding the ranks of the middle class, and mitigating the factors that drive social and political instability.

Despite this clear opportunity, women still only account for 38% of their countries' human capital wealth, defined as the value of the future earnings of adult citizens. In poor and lower-middle-income countries, women account for just one-third of such wealth – or even less.

In nearly every country, women and girls face systemic barriers that bar them from full and equal participation in the workforce and the formal economy more broadly. While the specific challenges confronting women vary, the fundamental imperative is the same everywhere: national governments and international actors must put the needs and priorities of women and girls at the center of everything they do.

As the current head of the G7, Canada has committed to ensuring that gender equality and women's empowerment are integrated into all of the body's themes, activities, and initiatives. This approach echoes Canada's Feminist International Assistance Policy, launched last year on the premise that ensuring equal rights and economic opportunities for women and girls is the best way to eradicate poverty.

Reflecting this commitment, participants at the May 31-June 2 meeting of G7 finance and development ministers in Whistler, British Columbia, discussed women's economic empowerment, including unlocking the potential of adolescent girls. Last week in Charlevoix, Québec, G7 leaders affirmed this focus. To gain access to opportunities and to the resources needed to succeed in the workforce, empowerment must occur throughout a woman's life, from early childhood to school and the acquisition of in-demand job skills.



If women are to participate equally in the labor force, we first need to ensure that they have the right tools. That means guaranteeing that all women and girls have access to health care and information, proper nutrition, and safe and effective learning environments at all levels. It also means upholding sexual and reproductive rights and combating sexual and gender-based violence, including harmful practices like child, early, or forced marriage.

But that is not enough to improve women's employment opportunities and earnings. We must also take collective action to reduce the amount of time women spend in unpaid work; to ensure they have access to and control over productive assets like land, credit, insurance, and savings; and to address the restrictive social norms that relegate women to lower-paid or informal work.

Policies to support women's entrepreneurship would also have far-reaching benefits. One initiative that is already advancing this goal is the Women Entrepreneurs Finance Initiative (We-Fi), a collaborative partnership housed at the World Bank and supported by 14 governments, including Canada. We-Fi seeks to unlock billions of dollars in financing for women-owned or women-led businesses in developing countries.

The huge costs of depriving women and girls of rights and opportunities are borne not only by women and girls themselves, but also by their families, communities, and the entire economy. By investing in women and girls and ending gender inequality, we can eliminate those costs and change the fate of entire countries.

Moreover, by considering economic empowerment in terms of gender, we may better understand how intersecting issues like ethnicity, age, disability, or language also create barriers to full and equal economic participation. Dismantling these barriers would bring even more far-reaching benefits.

Only by unleashing the full potential of all people to participate fully in the economy can we strengthen growth, eliminate poverty, and respond effectively to mounting global challenges, from conflict to climate change. The G7 meeting presents an important opportunity to take concrete steps toward doing just that.


KRISTALINA GEORGIEVA



Kristalina Georgieva is CEO of the World Bank.

 -- via my feedly newsfeed

Krugman: Debacle in Quebec [feedly]

Debacle in Quebec
https://www.nytimes.com/2018/06/09/opinion/debacle-in-quebec.html

For all their pomp, most multilateral summit meetings are boring and of little consequence. I once spoke to a State Department official who had a role in putting these meetings together; he described his job as "policing the nuances," which gives you an idea about how much is normally at stake.

Occasionally, however, such meetings do have real consequences, good or bad. The 2009 G20 summit, at which nations agreed to provide economic stimulus and loans to troubled countries in the face of the financial crisis, played at least some role in helping the world avoid a full replay of the 1930s. The 2010 summit, by contrast, effectively endorsed a turn to austerity that significantly delayed recovery and, arguably, partially set the stage for the rise of political extremism.

Still, there has never been a disaster like the G7 meeting that just took place. It could herald the beginning of a trade war, maybe even the collapse of the Western alliance. At the very least it will damage America's reputation as a reliable ally for decades to come; even if Trump eventually departs the scene in disgrace, the fact that someone like him could come to power in the first place will always be in the back of everyone's mind.

What went down in Quebec? I'm already seeing headlines to the effect that Trump took a belligerent "America first" position, demanding big concessions from our allies, which would have been bad. But the reality was much worse.

He didn't put America first; Russia first would be a better description. And he didn't demand drastic policy changes from our allies; he demanded that they stop doing bad things they aren't doing. This wasn't a tough stance on behalf of American interests, it was a declaration of ignorance and policy insanity.

Trump started with a call for readmitting Russia to the group, which makes no sense at all. The truth is that Russia, whose GDP is about the same size as Spain's and quite a bit smaller than Brazil's, was always a ringer in what was meant to be a group of major economies. It was brought in for strategic reasons, and kicked out when it invaded Ukraine. There is no possible justification for bringing it back, other than whatever hold Putin has on Trump personally.

Then Trump demanded that the other G7 members remove their "ridiculous and unacceptable" tariffs on U.S. goods – which would be hard for them to do, because their actual tariff rates are very low. The European Union, for example, levies an average tariff of only three percent on US goods. Who says so? The U.S. government's own guide to exporters.

True, there are some particular sectors where each country imposes special barriers to trade. Yes, Canada imposes high tariffs on certain dairy products. But it's hard to make the case that these special cases are any worse than, say, the 25 percent tariff the U.S. still imposes on light trucks. The overall picture is that all of the G7 members have very open markets.


So what on earth was Trump even talking about? His trade advisers have repeatedly claimed that value-added taxes, which play an important role in many countries, are a form of unfair trade protection. But this is sheer ignorance: VATs don't convey any competitive advantage – they're just a way of implementing a sales tax — which is why they're legal under the WTO. And the rest of the world isn't going to change its whole fiscal system because the U.S. president chooses to listen to advisers who don't understand anything.

Actually, though, Trump might not even have been thinking about VATs. He may just have been ranting. After all, he goes on and on about other vast evils that don't exist, like a huge wave of violent crime committed by illegal immigrants (who then voted in the millions for Hillary Clinton.)

Was there any strategy behind Trump's behavior? Well, it was pretty much exactly what he would have done if he really is Putin's puppet: yelling at friendly nations about sins they aren't committing won't bring back American jobs, but it's exactly what someone who does want to break up the Western alliance would like to see.

Alternatively, maybe he was just acting out because he couldn't stand having to spend hours with powerful people who will neither flatter him nor bribe him by throwing money at his family businesses – people who, in fact, didn't try very hard to hide the contempt they feel for the man leading what is still, for the moment, a great power.

Whatever really happened, this was an utter, humiliating debacle. And we all know how Trump responds to humiliation. You really have to wonder what comes next. One thing's for sure: it won't be good.

 -- via my feedly newsfeed

The Elephant in the Room: The International Arms Trade and the G7 [feedly]

The Elephant in the Room: The International Arms Trade and the G7
https://www.globalpolicyjournal.com/blog/09/06/2018/elephant-room-international-arms-trade-and-g7

International Media Centre – G7 Charlevoix Summit. This year's G7 Summit in Charlevoix had promised to be a thoroughly feminist affair, with gender equality, development and security all central to the Canadian presidency. In an attempt to mirror his own feminist foreign policy, Justin Trudeau has created an agenda that aims to promote women's empowerment globally, proclaiming gender equality central to economic advancement and extreme poverty reduction. Despite one of the most ambitious G7 agendas we have seen for some time, the impact of international arms sales on the developing world is not up for discussion at all.

The adoption of the Sustainable Development Goals (SDGs) in 2015 marked a universal call to action to end poverty, protect the planet and ensure all people enjoy peace and prosperity, and has been reflected in subsequent G7 agendas. Conflict and violence often contribute to, and intensify poverty in developing countries, with women and children suffering disproportionately during and after war. More people than ever are thrown into poverty by war, conflict and persecution, with 65 million people displaced worldwide in 2016.  Meanwhile global military spending is currently booming, exceeding $1.7 trillion in 2017. 

However, many of the G7 leaders continue to ignore the connection between the arms trade and the development failures that it can provoke and which they claim to want to overcome.

Even though the Arms Trade Treaty (AAT) was adopted by the UN General Assembly in 2014, several of the G7 leaders supply arms to Saudi Arabia, the second biggest importer of major arms worldwide. The AAT prohibits the transfer of arms that could be used to commit or facilitate genocide, crimes against humanity, or war crimes. However, Canada, the US, the UK and France all have billion-dollar deals with the Kingdom. 

All four countries have furiously defended these deals, even though the Saudi regime has faced intense international criticism surrounding the war in Yemen, and is considered to be one of the most repressive regimes towards women worldwide. Trudeau in particular has struggled to obtain support for his deal. However, if he wants Canada's G7 presidency to be defined by a commitment to gender equality, development and global security, surely he should be looking to follow Germany's example, and halt arms sales to Saudi Arabia. 

India is currently the largest importer of weapons, having spent more than $100 billion in the last 10 years. It also has more of the world's abject poor (280 million) than any other country.  Spending a huge amount on expensive arms imports automatically means that there is less to invest in human development. 

In short, the world's leading economies are profiting from arming poor countries and in the process are reducing spending that would, otherwise, be directed towards poverty alleviation and meaningful development.

The US, Germany, France, the UK and Italy are all in the top ten countries for global arms exports in the world. It is therefore not surprising that arms trade regulation has not made it onto previous agendas.  

However, with the SDGs 2030 deadline looming ever nearer, it is time for the G7 to take charge and start a serious conversation about arms trade transparency and regulation.  Indeed, in order to take steps towards a more peaceful and secure world, it is time they prioritised morality over money. 

 -- via my feedly newsfeed