Sunday, June 17, 2018

Sam Webb: Loose ends in dangerous times

Loose ends in dangerous times

1. The old global order dominated by US imperial power with its many contradictions and inequalities is cracking along many seams. But what is much less evident is what will replace it. I would like to be optimistic, but given the weaknesses of the left and progressive movements in the US and elsewhere on the one hand and the momentum and strength of the right on the other, It is hard to be sanguine about the future. In fact, one can make an argument that thanks to Trump, Putin, and other rightists who demagogically exploit the contradictions of everyday life and contemporary capitalism for anti-democratic and selfish purposes that a long era of democratic governance (with its obvious — you don't have to remind me — limitations) could well be in the autumn of its life.

All of which, I believe, gives profound importance to this fall's elections. Here in Kingston, NY we have the opportunity to unseat the Republican House incumbent. Years ago this contest for a House seat might have gone unnoticed by me, but not now. And better yet millions across the country are of the same mind.

2. Few things so viscerally demonstrate the utter inhumanity, cruelty, and depravity of Nazi Germany than the scene in the movie Sophie's Choice when the Nazi officer tells Sophie (Meryl Streep) to decide which of her two children will live and which will die. The Trump administration hasn't got to quite to that point, but in ripping children and babies out of the arms of their parents and interning them in makeshift shelters at the border, what it is doing is in the same ballpark.

3. Below is an excerpt from the speech of AFL-CIO leader Richard Trumka earlier this week to the UAW Constitutional Convention,

"As we fight… as we educate our members… as we campaign this summer and fall, we'll spell out our independent worker agenda again and again. We don't work for any political party. We work for workers, because we want more Republicans who will break rank and stand with working people. And while we're at it, we want fewer Democrats who take our money and energy and then forget who got them elected in the first place."

I find this so wrongheaded given the particular circumstances of this election. I suppose for some it might seem like an expression of political independence, but when looked at concretely, when looked at through the lens of the overarching imperative of electing a Democratic majority to the House and Senate this fall in order to preserve democracy and slow down the many sided, unrelenting, and unprecedented, anti-people offensive of Trump and his Republican Congressional quislings, it fails badly to meet the challenge of the present moment.

Much the same could be said about another remark by Trumka in his speech. He asserted:

"The corporate billionaires can't touch our solidarity… . yet when they attack our institutions… when they attack our ability to fight for our members and our communities… when they attack our ability to harness political power for working people… we'll fight back. We will fight back against every attack on working people, and we'll fight hard… we'll fight to win!

I appreciate the militant spirit expressed by Trumka here; it's sure needed. But I find the claim that "the corporate billionaires can't touch our solidarity" a misrepresentation of reality. That fact is that over the past two years Trump, who represents a healthy section of corporate billionaires, has fractured the solidarity of the labor movement as well as working people generally. And the fractures are along racial, gender, nativist, and nationalist lines. To suggest otherwise is of little help to the very members that Trumka represents, not to mention working people and their allies generally.

What would have served his audience better is if Trumka, much like he did in the presidential campaign of 2008, had spoke forthrightly and tactfully to these divisions . They aren't, after all, strangers to the UAW nor the labor movement across the Midwest at this moment. Trump knows this well. And, he will continue to say and do whatever he is necessary to exacerbate them. Such a posture, whose purpose is to peel away a substantial section of white workers to his side, is at the core of his political and reelection strategy to secure a beachhead in the Midwest in particular and country generally.

Hopefully, Trumka will make a course correction. Still time to do it.

4. Pre-trail detention for Paul Manaford, according to Trump and his minions, is cruel and arbitrary, but when it comes to the breakup of families and the lockup of children and babies at the border, that's perfectly ok, even scriptually sanctioned.

5. If the Summit was so good — and it was a step back from a war of words, threats, and nuclear brinksmanship — what was so bad about the Iran agreement?



--
John Case
Harpers Ferry, WV
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Saturday, June 16, 2018

Bachtell: A new era for building socialism with ‘Chinese characteristics’

A new era for building socialism with 'Chinese characteristics'


A delegation from the CPUSA of Carol Widom and myself visited China May 26-June 3 at the invitation of the Communist Party of China (CPC) and got a glimpse of these changes. We were invited to attend a forum to celebrate the 200th birthday of Karl Marx with 70 communist, socialist, left and revolutionary parties in Shenzhen, an eco-planned city followed by a week touring Beijing, Hefei, Fengyang County and Xiaogang Village, the site of the first rural economic reforms.

The event reflected the feeling by the CPC that a qualitative turning point has been reached in socialist construction and with China playing a new role on the global stage.

The meeting is an example of China and CPC opening wider to the world and expanding and deepening relations with communist and workers parties.

In December the CPC invited some 200 non-communist political parties, many who are governing, to share results and concepts from 19th CPC Congress last October.

Our week-long visit began with an informational session also attended by delegations from sub-Saharan Africa governments and an official from the United Russia governing party.

The informational session was attended by participants from four simultaneous events covering Africa relations, South America relations, 200th anniversary of Marx's birth, and the Belt-Road Initiative.

The schedule was geared to familiarize us with developments in China and CPC policies toward 'building socialism with Chinese characteristics' in a new era, the economic, governance and party reforms, approach to international relations and role of the CPC itself.

 

New Era

The world is entering a "new era" of global relations driven by China's peaceful ascendance and the decline of US and western imperialism. It will affect everything from global economic relations, to global politics and dynamics among communist and workers parties.

The economic and social developments in China in the 40 years since the start of socialist market reforms and opening the country to the global economy under the leadership of Deng Xiaoping are staggering and unprecedented in human history.

China has leapt from an underdeveloped economy to a largely modern economy and infrastructure almost overnight. Within a decade China will be world's largest economy as measured by GDP.

A recent Ipsos survey revealed 90 percent of Chinese were satisfied with the country's path, while only 37 percent of Americans and 11 percent of French said the same.

But the pace of development came at a cost and also brings its own set of problems and challenges. These include subsuming worker rights to overall development, the growth of the capitalist sector with all its risks, contradictions, economic inequalities and the emergence of a billionaire class along with sharpening class struggle, imbalances between urban and rural economies, growing contradiction between increasing needs and ability to address them, not to mention intensifying ideological struggle and the impact on the environment.

Social equality and consciousness tend to trail behind, far behind in some instances.

According to the CPC, China is in the primary stage of socialist construction; it remains a developing country. One could deduce this refers not just to the country's economics and material level of development, but also to its democratic institutions, civil society and political culture.

Nevertheless, China has achieved a standard of living where everyone can live a "moderately prosperous life". By 2050 the goal is to achieve fully modern, democratic, sustainable socialism.

The CPC sees the main contradiction as between imbalanced growth and the growing expectations and needs of the people.

Economic growth is nearly 7% per year. China accounts for 30% of global economic growth. China poured more concrete 2011-2013 than U.S. did in entire 20th century.

Seven hundred million people have been brought out of extreme poverty since the reforms began. This accounts for 70% of poverty reduction worldwide. They will eliminate poverty in the next 3-5 years. Most remaining extreme poverty is in rural and remote areas, and many of these communities will be relocated.

The standard of living is also being raised. Wages, while still low by U.S. standards have risen for factory workers by 64 percent since 2011 and are now on par with workers in Portugal and South Africa. Workplace safety has improved.

The scale of mega projects is hard to comprehend: knitting together a mega metropolitan area of 130 million encompassing Beijing and two others cities, water diversion from the south to the north, tunnel projects under the ocean, etc.

The 19th CPC Congress projected a new round of openness and economic, social and governance reforms that extend decades into the future. As Xi Jinping said, "The door to the world will open wider and wider."

The CPC projected shifting the economic model from one which is export driven and based on the import of foreign capital and technology to  a "made in China by 2025" model. The goal is radically raising productivity, which is approximately one-third the U.S. economy.

This will be achieved by placing a great emphasis on innovation, science, technology,  artificial intelligence (AI), big data along with modernization of all aspects of governance, business, finance, services, etc. A world class university system is being developed to attract world class scientific talent.

The economy is roughly 60 percent controlled by publicly owned enterprises and publicly controlled enterprises with minority private investment. The government also directs short and long term strategic social investment.

The state asserts absolute control over armaments, power generation and distribution, oil and petrochemicals, telecommunications, coal, aviation and shipping industries.

Ecological civilization

Since the 18th CPC Congress China has been committed to a sustainable path and building an "ecological civilization" as a national strategy.

This comes in response to the ravages of development which were plain to see and a widespread environmental movement and consciousness that arose among the people. The CPC policy promotes harmony of society and nature and overcoming any contradiction between development and sustainability.

The CPC initiated a "war on pollution" just like the "war on poverty". It is a shift from quantity to quality in production, prioritizing environmental protection, and becoming a global leader in the fight against the climate crisis.

China is doubling the previous target for solar power production by 2020 and is the largest producer of solar panels in the world. Plans were halted to build 150 coal fired plants, and installation of desulfurization and denitration filters on the remaining plants is nearly complete; China sells more electric vehicles than Europe and US combined and passed laws to create a circular economy (reuse, recycling and remanufacturing).

A 35,000 kilometer high-speed train network is half complete. This is more than the rest of world combined and will allow people to commute longer distances. The second generation of high-speed trains are completely designed and built in China.

The country is constructing 6 mega windfarms and carrying out the largest reforestation project in the world. A few years ago, Beijing was plagued with regular sandstorms originating in Inner Mongolia. The sandstorms have largely been contained by planting a Great Green Wall.

We saw other examples of an eco-civilization taking shape. Cities are full of greenery and on our bus ride to Xiaogang Village the 50-mile highway was lined with a band of trees 75 feet wide on both sides.

However, enormous challenges remain. China still produces more CO2 than any other country and its developmental goals will keep it committed to coal fired plants. In addition, plastic is ubiquitous and the source of the plastic waste stream include four Chinese Rivers among the top ten emptying into the Pacific Ocean. (although as of 2018 China will no longer import plastic waste from US and EU).

 

International relations

China's economic reforms are also dependent on "opening wider and wider" to the global economy, ensuring a stable global trade environment and peace.

The peaceful rise of China and decline of US imperialism, the emergence of a multi-polar world, deepening and expanding globalization of production and multilateral trade pacts, and the mass communications and technological revolutions are shaping the emergence of a new global dynamic.

The essence of the opening policy is a recognition that no country can develop its economy in isolation and must engage in the globalized economy dominated for the time being by the U.S. and other imperialist powers. China realizes its state owned companies and private corporations must play by these rules and be competitive in the global market.

China is operating by a concept of international relations referred to as "Building a community for a shared future." It involves "two guidelines": build a more just and reasonable new world order and jointly maintain international security.

These are international relations of a new type based on mutual respect regardless of social system, fairness and justice, working out problems peacefully and win-win economic cooperation.

It also involves a new model of relationships between major countries, disputing the prevailing international order, and reforming global governance systems established during post WWII such as the UN Security Council, IMF and World Bank, etc.

It is based on the idea no country can solve problems of development, climate change, peace, poverty, disease, resource allocation, etc. on their own: it takes cooperation.

China will play a bigger role in all international forums, e.g., the Paris Climate Agreement.

China has been building alternative international networks and relationships since the fall of the USSR including the Shanghai Cooperative Organization (SCO), the association of five major emerging economies known as BRICS (Brazil, Russia, India, China and South Africa) and alternative financial institutions to facilitate trade and development including the Asian Infrastructure Investment Bank.

From keeping a low profile to becoming assertive and aspirational, China's foreign policy will engage and increasingly impact the dominant pattern of capitalist globalization relations.

One mammoth developmental project is the Belt-Road Initiative (BRI) – $1 trillion investment in road, rail, and maritime ports, energy pipelines, power grids, refineries, connecting 65 countries with trade and cultural exchange. Once complete, the BRI could boost global trade by an estimated 12%.

The BRI is geared to facilitating trade and infrastructure development of countries involved while securing raw materials and resources China needs for its own development, theoretically a win-win.

The opening policy is also having an impact on developments on the Korean peninsula, drawing North Korea into the global economic and governance system.

U.S. ruling circles are divided on foreign policy and trade. Trump's economic protectionism and nationalism is threatening to disrupt the global trading system. China is concerned whether economic nationalism characterizes only the Trump administration or is a fundamental shift by U.S. ruling circles.

The rise of protectionism effects China's drive for openness and reform. These policies depend on deeper connection to the global trading system and creating a more fair and well balanced system.

Trump has targeted China and Russia as strategic rivals. Tariffs and other demands are meant to blunt China's rise by gutting state investment and guidance of the economy, support for high tech and basic scientific sector, and demanding that its finance sector open for foreign investment.

Democracy and governance reform

The CPC is projecting a reform of governance to fit the new era. Emphasis is being placed on establishing a rule of law society, which along with economic reforms, comprise "two wings of bird."

A rule of law society means enforcing the constitution, developing judiciary and legal rights, regulatory bodies, streamlining governmental agencies, environmental and consumer protections, etc. This will take some time to develop and entails cultivating a grassroots democratic culture and vibrant civil society.

Among the biggest problems are the growth of wealth inequality and emergence of a billionaire class which is larger than that in the U.S. One study indicated the National People's Congress had elected delegates with a net worth of $500 billion. The billionaire class is the source of much of the corruption in the society and party and has been expatriating billions of dollars of wealth and investing overseas.

Although an independent media has emerged since Deng Xiaoping, Reporters without Borders ranks press freedom very low. There is a widespread domestic social media, but Facebook, Twitter, YouTube are banned.

The free flow of information in a world of cyber warfare and the battle of ideas are challenges facing every country. But Chinese citizens are finding ways around the bans which means censorship is largely ineffective and will only garner resentment.

 

Women are guaranteed equal rights under the constitution but winning that in reality is far more difficult. Over 80% of women are in the workforce but vestiges of patriarchal society remain including sexual harassment, property rights and unwanted daughters.

The presence of women in CPC leadership and among elected officials is scarce.

Changes are afoot including with a new anti-sexual harassment law and anecdotally we learned over 50% of a geo-physicist class were women.

Gay and lesbian rights also lag far behind. We were told attitudes toward gays and lesbians are like the U.S. military "Don't ask, don't tell" policy. But things are changing among China's younger generation who are totally accepting of different sexual orientations and identities.

We didn't learn anything on the status of national minorities. Affirmative action type development projects are seen as a priority as is respect for cultural traditions. From reports some nationalists and religious extremists are taking advantage of the situation to foment separatist movements. But breaking up China's territory won't be tolerated.

The CPC freely admits there are imperfections in democracy. Take into consideration 2000 years of imperial rule ended in 1912 with the Xinhai Revolution followed by civil war, Japanese occupation and WWII; the revolutionary war for independence resulted in the founding of the People's Republic in 1949 only to be followed by the turmoil of the "Great Leap Forward" and "Cultural Revolution."

China didn't pass through bourgeois democratic republic phase. During its history, a single party emerged as leader. Authoritarian tendencies carried over from the revolutionary war for independence and establishment of socialist republic.

Creating democratic institutions didn't really begin until the reforms of 1978. China's system of elections is hierarchical – each legislative body is drawn from the legislative bodies below. It's system of participatory and consultssative democracy is unique.  National, state and local direct elections are the goal. China is an evolving new democracy.

 

The CPC

The CPC is a deeply revolutionary party, creatively applying Marxism to the Chinese reality. Their approach is pragmatic, fact based, self-critical, and self-reforming.

Far from building a capitalist economy, the CPC is charting a path in the context of China's realities, guiding the country to achieve a modern socialist society under extraordinary difficult conditions and not without many problems, mistakes and shortcomings, one with "Chinese characteristics."

The CPC is forging a path through uncharted territory.

The CPC is leading a country of 1.4 billion people through mind boggling changes. Their experience has a lot of relevance for developing countries and it gives confidence that it is possible to eliminate poverty and adopt a sustainable path of development in a relatively short span of time.

Enormous changes are taking place almost overnight. The CPC believes it is not possible to navigate these changes without a strong, united Party, politically, theoretically and organizationally.

The 19th CPC Congress called for elevating and strengthening the role of the 86 million member party; to strengthen leadership, functioning, intra-party democracy, connection to people, and theoretical development.  As Xi said, "The CPC must change with the times."

Corruption is one of the main challenges undermining authority of the Party. The CPC has taken steps to eliminate extravagant banquets and restore accountability.

Over 30,000 cadres have been dropped from membership including political bureau and provincial leaders. Overall, one million officials have been punished for corruption since 2013.

They are applying Marxism to Chinese reality, insisting each party must adopt its own path, and there are no universal models. Even when one comrade from a fraternal party suggested the 21st century would be the century of Eurasia, the ID CPC leader said it would be "the century of the world's people".

The CPC wants to elevate dialog and sharing because "each party is captive of its experience."

The CPC's opening will have a good effect on communist, socialist and revolutionary parties around the world. They are injecting refreshing, new concepts based on a unique experience. They insist they are not trying to impose their model, there is no new "center", that equality between parties and countries big or small must be the norm.

But by their mere size and accomplishments they will have huge influence.

The image of Chinese socialism, positive and negative, will have a big impact on how people in the U.S. view socialism. China's model is not ours and the complexity of development makes it hard to explain to the American people. We can discuss the positive achievements but must find ways to explain China's unique history, problems, and shortcomings in a partisan way without arrogance on our part.

And most of all we must continue to develop our own vision of a democratic, demilitarized, sustainable socialism and the democratic path we project to get there.


--
John Case
Harpers Ferry, WV
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Noah Smith: Unions Did Great Things for the working class


Unions Did Great Things for the Working Class

Strengthening them could blunt inequality and wage stagnation.


Politically and economically, unions are sort of an odd duck. They aren't part of the apparatus of the state, yet they depend crucially on state protections in order to wield their power. They're stakeholders in corporations, but often have adversarial relationships with management. Historically, unions are a big reason that the working class won many of the protections and rights it now enjoys, but they often leave the working class fragmented and divided -- between different companies, between union and non-union workers, and even between different ethnic groups.

Economists, too, have long puzzled about how to think about unions. They don't fit easily into the standard paradigm of modern economic theory in which atomistic individuals and companies abide by rules overseen by an all-powerful government. Some economists see unions as a cartel, protecting insiders at the expense of outsiders. According to this theory, unions raise wages but also drive up unemployment. This is the interpretation of unions taught in many introductory courses and textbooks.

If this were really what unions did, it might be worth it to simply let them slip into oblivion, as private-sector unions have been doing in the U.S.:

It's Been a While Since the Union Made Us Strong

Share of workforce belonging to unions in the private sector

Source: Barry T. Hirsch and David A. Macpherson via Unionstat.com

But there are many reasons to think that this theory of unions isn't right -- or, at least, is woefully incomplete.

First, even back in the 1970s, some economists realized that unions do a lot more than just push up wages. In a 1979 paper entitled "The Two Faces of Unionism," economists Richard Freeman and James Medoff argued that "by providing workers with a voice both at the workplace and in the political arena, unions can and do affect positively the functioning of the economic and social systems."

Freeman and Medoff cite data showing that unions reduced turnover, which lowers costs associated with constantly finding and training new workers. They also show that unions engaged in political activity that benefitted the working class more broadly, rather than just union members. And they showed that contrary to popular belief, unions actually decreased racial wage disparities. Finally, Freeman and Medoff argue that by defining standard wage rates within industries, unions actually reduced wage inequality overall, despite the cartel-like effect emphasized in econ textbooks.

But the world didn't listen to Freeman and Medoff, and private-sectors unions declined into near-insignificance. Now, four decades later, economists are again starting to suspect that unions were a better deal than the textbooks made them out to be. A recent paper by economists Henry Farber, Daniel Herbst, Ilyana Kuziemko and Suresh Naidu concludes that unions were an important force reducing inequality in the U.S.
QuicktakeIncomeInequality

Since past data tends to be patchy, Farber et al. combine a huge number of different data sources to get a detailed picture of unionization rates going all the way back to 1936, the year after Congress passed a law letting private-sector employees form unions. The authors find that as unionization rises, inequality tends to fall, and vice versa. Nor is this effect driven by greater skills and education on the part of union workers; during the era from 1940 through 1970, when unionization rose and inequality fell, union workers tended to be less educated than others. In other words, unions lifted the workers at the bottom of the distribution. Black workers, and other nonwhite workers, tended to benefit the most from the union boost.

Now, however, private-sector unions are mostly a faded memory and their power to raise wages has waned -- Farber et al. find that although there's still a union wage premium, it's now much more due to the fact that higher-skilled workers tended to be the ones who stayed unionized. A 2004 paper by economists John DiNardo and David Lee found that by 1984-1999, unions had lost much of their ability to force wages higher.

Given the contrast between the golden age of 1940-1970 and the current age of spiraling inequality, wouldn't it make sense to bring unions back? Perhaps. The key question is why private-sector unions mostly died out. Policy changes -- right-to-work laws, and the appointment of anti-union regulators, probably played a key role in reducing unionization. But globalization may have also played a big part. Competition from companies in countries like Germany -- where unions often bargain to hold down wages in order to increase their companies' competitiveness -- might have made the old American model of unionization unsustainable. Now, with even stiffer competition from China, the challenge of re-unionizing the U.S. might be an insurmountable one.

But it might be worth it to try. Other than massive government redistribution of income and wealth, there's really no other obvious way to address the country's rising inequality. Also, there's the chance that unions might be an effective remedy for the problem of increasing corporate market power -- evidence suggests that when unionization rates are high, industry concentration is less effective at suppressing wages. Repealing right-to-work laws and appointing more pro-union regulators could be just the medicine the economy needs.

So supporters of free markets should rethink their antipathy to unions. As socialism gains supportamong the young, both economists and free-market thinkers should consider the possibility that unions -- that odd hybrid of free-market bargaining and government intervention -- were the vaccine that allowed the U.S. and other rich nations to largely escape the disasters of communism in the 20th century.

It looks like it's time for a booster shot.



--
John Case
Harpers Ferry, WV
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Stiglitz: Can the Euro be saved?


Can the Euro Be Saved?

Jun 13, 2018 JOSEPH E. STIGLITZ

Across the eurozone, political leaders are entering a state of paralysis: citizens want to remain in the EU, but they also want an end to austerity and the return of prosperity. So long as Germany tells them they can't have both, there can be only one outcome: more pain, more suffering, more unemployment, and even slower growth.

NEW YORK – The euro may be approaching another crisis. Italy, the eurozone's third largest economy, has chosen what can at best be described as a Euroskeptic government. This should surprise no one. The backlash in Italy is another predictable (and predicted) episode in the long saga of a poorly designed currency arrangement, in which the dominant power, Germany, impedes the necessary reforms and insists on policies that exacerbate the inherent problems, using rhetoric seemingly intended to inflame passions.


Italy has been performing poorly since the euro's launch. Its real (inflation-adjusted) GDP in 2016 was the same as it was in 2001. But the eurozone as a whole has not been doing well, either. From 2008 to 2016, its real GDP increased by just 3% in total. In 2000, a year after the euro was introduced, the US economy was only 13% larger than the eurozone; by 2016 it was 26% larger. After real growth of around 2.4% in 2017 – not enough to reverse the damage of a decade of malaise – the eurozone economy is faltering again.1

If one country does poorly, blame the country; if many countries are doing poorly, blame the system. And as I put it in my book The Euro: How a Common Currency Threatens the Future of Europe, the euro was a system almost designed to fail. It took away governments' main adjustment mechanisms (interest and exchange rates); and, rather than creating new institutions to help countries cope with the diverse situations in which they find themselves, it imposed new strictures – often based on discredited economic and political theories – on deficits, debt, and even structural policies.

The euro was supposed to bring shared prosperity, which would enhance solidarity and advance the goal of European integration. In fact, it has done just the opposite, slowing growth and sowing discord.

The problem is not a shortage of ideas about how to move forward. French President Emmanuel Macron, in two speeches, at the Sorbonne last September, and when he received the Charlemagne Prize for European Unity in May, has articulated a clear vision for Europe's future. But German Chancellor Angela Merkel has effectively thrown cold water on his proposals, suggesting, for example, risibly small amounts of money for investment in areas that urgently need it.

In my book, I emphasized the urgent need for a common deposit insurance scheme, to prevent runs against banking systems in weak countries. Germany seems to recognize the importance of a banking union for the functioning of a single currency, but, like St. Augustine, its response has been, "O Lord, make me pure, but not yet." Banking union apparently is a reform to be undertaken sometime in the future, never mind how much damage is done in the present.


We have seen the first and second acts of this play many times already. A new government is elected, promising to do a better job negotiating with the Germans to end austerity and design a more reasonable structural reform program. If the Germans budge at all, it is not enough to change the economic course. Anti-German sentiment increases, and any government, whether center-left or center-right, that hints at necessary reforms is thrown out of office. Anti-establishment parties gain. Gridlock emerges.The central problem in a currency area is how to correct exchange-rate misalignments like the one now affecting Italy. Germany's answer is to put the burden on the weak countries already suffering from high unemployment and low growth rates. We know where this leads: more pain, more suffering, more unemployment, and even slower growth. Even if growth eventually recovers, GDP never reaches the level it would have attained had a more sensible strategy been pursued. The alternative is to shift more of the burden of adjustment on the strong countries, with higher wages and stronger demand supported by government investment programs.

Across the eurozone, political leaders are moving into a state of paralysis: citizens want to remain in the EU, but also want an end to austerity and the return of prosperity. They are told they can't have both. Ever hopeful of a change of heart in northern Europe, troubled governments stay the course, and the suffering of their people increases.

Portuguese Prime Minister António Costa's socialist-led government is the exception to this pattern. Costa managed to lead his country back to growth (2.7% in 2017) and achieve a high degree of popularity (44% of Portuguese thought the government was performing above expectations in April 2018).

Italy may prove to be another exception – though in a very different sense. There, anti-euro sentiment is coming from both the left and the right. With his far-right League party now in power, Matteo Salvini, the party's leader and an experienced politician, might actually carry out the kinds of threats that neophytes elsewhere were afraid to implement. Italy is large enough, with enough good and creative economists, to manage a de facto departure – establishing in effect a flexible dual currency that could help restore prosperity. This would violate euro rules, but the burden of a de jure departure, with all of its consequences, would be shifted to Brussels and Frankfurt, with Italy counting on EU paralysis to prevent the final break. Whatever the outcome, the eurozone will be left in tatters.

It doesn't have to come to this. Germany and other countries in northern Europe can save the euro by showing more humanity and more flexibility. But, having watched the first acts of this play so many times, I am not counting on them to change the plot.1




JOSEPH E. STIGLITZ

Writing for PS since 2001
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Joseph E. Stiglitz, a Nobel laureate in economics, is University Professor at Columbia University and Chief Economist at the Roosevelt Institute. His most recent book is Globalization and Its Discontents Revisited: Anti-Globalization in the Era of Trump.--
John Case
Harpers Ferry, WV
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Friday, June 15, 2018

Trump Meets Kim Amid Shifting World Order

Trump Meets Kim Amid Shifting World Order

It's almost a surreal spectacle to see the world order shifting before our very eyes. The sight of the Western G7 summit collapsing in acrimony at the weekend was in stark contrast to a positive, resplendent Shanghai Cooperation Organization conference hosted at the same time in China.

Over the weekend, the tale of two summits illustrated more than ever an historic shift in the global order. The US-led Western order is evidently breaking down, giving way to a new multilateral paradigm led primarily by China and Russia. Potentially, the latter trajectory is one marked by genuine cooperation and peaceful relations, as opposed to the old US-led order marked by hegemony and unipolar ambitions which inevitably foment conflict.

US President Donald Trump's abrupt and abrasive departure from the G7 summit in Canada spoke volumes. Over the weekend, Trump sparred with the other Western leaders plus Japan's Shinzo Abe over various trade disputes. Then Trump pointedly bailed out early from the gathering in a snub to host Canadian premier Justin Trudeau, bound for Singapore to meet North Korean leader Kim Jong-Un.

The symbolism was expansive. It was as if the American leader was showing disdain for an ineffectual forum, pursuing far more important matters. The rendezvous for Trump and Kim in Singapore also spoke of the Eastern impetus of a new geopolitical energy.

Trump is the first serving American president to ever meet a North Korean leader. Technically, the two countries are still at war from never having signed a peace treaty to end the 1950-53 war. That animus could all change this week if the two leaders strike up a rapport, possibly leading to de-escalation of military forces on the Korean Peninsula.

Kim arrived in Singapore two days before his scheduled historic meeting with Trump on Tuesday. The latter also arrived a day early. Kim's highly unusual overseas trip – reportedly his third-ever as North Korean leader – was on board an Air China 747 courtesy of the Beijing government. Again, the symbolism was resonant. China was pragmatically facilitating this crucial encounter between the two adversaries.

The G7 summit Trump left behind was an embarrassing debacle. The leaders of Britain, Germany, France, Canada as well as European Union senior officials were incensed by the American president's high-handed disdain for multilateral accord. Trump boorishly browbeat the supposed American "allies' with complaints about "unfair" trade tariffs. It's hard to know who is right in the trade dispute. But one thing was clear: the G7 group of Western nations plus Japan – a forum set up some 43 years ago – was in complete disarray from deep disaffection.

Trump's combative stance threw the summit sideways before he even arrived in Quebec when he announced while leaving Washington that Russia should be readmitted to the G7. Russia was expelled from the former G8 back in 2014 over Western claims about Moscow interfering in Ukraine's sovereignty.

The other G7 members, especially Britain's premier Theresa May, were indignant at Trump's offer to Russia. Only Italy's newcomer populist Prime Minister Giuseppe Conte agreed with Trump's position, which is consistent with how the new government in Rome wants to restore European relations with Russia. Another telltale sign of Eastward movement in international politics.

When the American president ambled into the G7 summit to be greeted by Canada's Trudeau the body language was one of reluctance and awkwardness. The weekend descended into spats and insults. Trump even called Trudeau "dishonest" and "weak". Meanwhile, French President Emmanuel Macron showed no fawning bromance as he had previously done towards Trump. Macron even called for a new G6 format without US "hegemony".

The contrast with proceedings at the SCO summit in China could not have been greater. President Xi Jinping warmly greeted Russian counterpart Vladimir Putin as well as the leaders of India, Pakistan, Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, and Iran. The convivial unity of those leaders was in sharp contrast to the disunity and bickering at the G7.

The presence of India and Pakistan as two new members of the SCO seated together after decades of war and conflict was a powerful testimony to the new geopolitical paradigm rising in the East.

The SCO nations vowed to redouble efforts for partnership in economic development and mutual security. President Xi said a new global order beckoned, based on partnership, not hegemony of one power asserting itself over the others, as is the case of the US-led order.

Iran's President Hassan Rouhani expressed gratitude to Xi and Putin for leading the way in building a new global format based on multilateral respect. The Iranian leader thanked China and Russia for their steadfast support of the international nuclear accord, which Trump is trying to undermine by unilaterally withdrawing the US. It remains to be seen if the Europeans will adequately support the nuclear accord; but their ineffectualness in standing up to Trump at the latest G7 summit suggests that they won't have the mettle to deliver on their avowed commitments.

Xi and Putin rightly reminded through public statements during the SCO gathering that the Trump-Kim meeting in Singapore this week is following their earlier endorsements for peaceful dialogue between the US and North Korea. Last year, when Trump and Kim were engaging in fiery rhetorical exchanges threatening nuclear war, it was China and Russia that both admonished peaceful dialogue as the only way forward.

The post-Second World War Western order that prevailed for over seven decades is undoubtedly waning. That order, dominated by the US, was always something of an illusion. Far from mutual partnership and high-browed virtuous claims, the US-led order was always about the dominance of American capitalism and imperialist objectives.

The Europeans were never really allies. They were appendages to American power. Now that American power has ebbed, the inter-Western rivalries are gaining sharper edges. American desire for hegemonic control is limited by its waning power, and so Washington is resorting to more brazen bullying tactics towards its supposed allies who are now realizing their true role as nothing more than vassals.

However, American unipolar "exceptionalism" is anathema in today's world of global interconnectedness and consciousness of the principles of equality and diplomacy.

China and Russia, under the leadership of Xi Jinping and Vladimir Putin, are on an evolutionary level of political awareness that exceeds that of the US and its coterie of Western flunkies.

The SCO summit demonstrated starkly the new global order of partnership for progress and peace. The squabbling, backbiting G7 is the ashes of an old order.

This does not guarantee that world peace will prevail. The vision is surely there and growing thanks to China and Russia and others from the Eastern hemisphere. The crucial challenge is how the dying US-led Western empire of capitalist hegemony and imperialism can be safely transformed into peaceful, multilateral partnership.



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John Case
Harpers Ferry, WV
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