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Monday, April 24, 2017

‘Peak Globalization’ and the Future of Democracy [feedly]

'Peak Globalization' and the Future of Democracy

http://www.globalpolicyjournal.com/blog/24/04/2017/%E2%80%98peak-globalization%E2%80%99-and-future-democracy

The world may be headed toward "peak globalization". This shift could empower individuals and communities to strengthen democracy, while easing some of the most troublesome aspects of globalization.

'Peak globalization' may provide a pathway to preserving the best of globalization and global interconnectedness, enhancing economic and environmental sustainability, and empowering individuals and communities to strengthen democracy.  At the same time, some of the most troublesome aspects of globalization may be eased, including massive financial transfers to energy producing countries (and companies) and loss of jobs to manufacturing platforms like China. This shift could bring relief to the 'losers' of globalization and ease populist, nationalist political pressures that are roiling the developed countries.

That is quite a claim, I realize.  But let me explain the vision.

By 'peak globalization' I mean a point in the future – in some ways we are already seeing this – when the amount of physical stuff moving around the world peaks and begins to decline.  By 'stuff,' I am referring to liquid fuels, coal, containers on ships, food, raw materials, etc.  But I don't see peaking movement of people, information, data, and ideas around the world. In fact, while movement of stuff is slowing if not declining, digital flows are growing exponentially and are likely to continue to do so for the foreseeable future. We are moving toward increasing "just-in-time-production-at-the-point-of-consumption" of energy, food, and products. 

The key factors moving us toward peak globalization and making it an economically viable alternative are new technologies and innovative businesses and business models. More specifically, exponential technologies and their 'democratization' have made possible these trends and sharply reduced the 'cost of entry' for creating businesses as the technologies have become available to almost anyone, anywhere. They have been subject to 'Moore's Law'[1] of exponential growth in capacity and exponential decline in cost. Beginning with the microchip, which has had a billion-fold improvement in 40 years (10,000 times faster and 10 million times cheaper), the marginal cost of producing almost everything that can be digitized has fallen toward zero. 

A hard copy of a book, for example, will always entail the cost of materials, printing, shipping, etc., even if the marginal cost falls as more copies are produced. But the marginal cost of a second digital copy, such as e-book or a streaming video or song, is nearly zero as it is simply a digital file sent over the Internet, the world's largest copy machine.[2]

Moreover, the smartphone itself has capabilities that if purchased separately a generation ago would cost more than $900,000 in 2011 ($977,000 in 2017), as shown in the chart below from Peter Diamandis' book, Abundance (see below).[3] Mobile broadband subscriptions had reached 4.3 billion by the end of 2016, according to Ericsson[4] (3.9 billion smartphones plus other devices like tablets) and are forecast to reach 8 billion by 2022.

This technology alone provides access to half of the human population to artificial intelligence (from SIRI, search, and translation to cloud computing), geolocation with GPS, global free video calls with Skype, digital photography and free uploads to social network sites, free access to global knowledge, a million apps for a huge variety of purposes, and many other capabilities that were unavailable to most people on the planet only a few years ago. Artificial intelligence, which has improved exponentially in the last 2-3 years, is becoming a 'utility' available to entrepreneurs who can apply it to enhance almost all products and services. 

New technologies

Exponential technologies have led to the creation of platforms built on the two "platforms of platforms," the Internet and the GPS system, which functions as both the essential timing clock of the Internet and geolocation for millions of apps, from Google maps and Waze, to directions to your local restaurant or theater. Other 'platforms' have been built on these two underlying platforms, such as Google, Facebook, Baidu, Tencent, WeChat, WhatsApp, Snapchat, Twitter, Alibaba, Amazon Web Services (AWS), and many thousands more. The ecosystem of several million 'apps' have been built on smartphone platforms, including Apple IOS and Android. This has led to the creation of millions of startup businesses exploiting these platforms. Uber and Didi ride-hailing services, and Airbnb and Tujia home-sharing services, are platforms based on apps and mobile connectivity, which have led to employment of hundreds of thousands of drivers and income for more than a million property renters. Amazon Web Services, Microsoft Azure, and other cloud computing platforms provide global access to cheap and ubiquitous cloud-based computation, software-as-a-service, and artificial intelligence. Other exponential technologies are also functioning as platforms, including drones, robotics, computational biology, 3D printing, and the Internet of Things. 

These platform technologies combined with exponential technologies have 'democratized technology' and have led to a sharp reduction in the 'cost of entry' for entrepreneurs to create new businesses. This has led to the proliferation of hundreds of thousands of startups all over the world that are leveraging the Internet, cloud computing, artificial intelligence, 3D printing, drones, apps, and biotech. 

The cost of starting an Internet business has dropped precipitously toward zero as developers no longer require a major investment in servers and software but rather can rely on cloud-based computing power and software, sharply reducing costs and labor requirements. One estimate suggests that this cost dropped from about $5 million in 2000 to about $5,000 in 2011, (see below) and by 2017 the cost of building an app or Internet company is only hundreds of dollars, propelled by cloud open source software and cloud computing. 

Digitization of biology has also led to order of magnitude declines in the cost of biotech development as experiments can be designed digitally and uploaded to cloud-based laboratories that will conduct the experiment for a small fraction of the cost of acquiring laboratory equipment and hiring lab technicians. 

These new technologies and platforms are key contributors to and will in the future reinforce the trend toward "just-in-time-production-at-the-point-of-consumption" of energy, food, and products. Exponential technologies have created new possibilities or enhanced existing technologies for local and regional production of renewable energy, food, and an increasing array of productions. Since the pace of technological development is accelerating,[5] all of these capabilities will likely improve rapidly in the next few years, benefiting from the application of artificial intelligence, cloud computing, robotics, new materials, mobile connectivity, computational biology, blockchain, and many other advances. 

Renewable energy production, especially solar, is located at or relatively near the source of consumption. Although electricity generated by solar, wind, geothermal and other renewable sources can of course be transmitted over longer distances, it is mostly generated and consumed local or regionally. It is not transported around the world in tankers, ships, and pipelines like petroleum, coal and natural gas.  Moreover, the fuel is free forever. There is no global price on sun or wind. The people relying on solar and wind power do not have to worry about price volatility and potential disruption of fuel supplies as a result of political, market, or natural causes.  Renewables have their problems, of course, including intermittency and storage, and currently they work best if complementary to other sources, especially natural gas power plants that, unlike coal plants, can be turned on or off and modulated like a gas stove, and are half the carbon emissions of coal. 

Within the next decades, it is likely that the intermittency and storage problems will be solved or greatly mitigated. In addition – and key to our future world – unlike coal and natural gas power plants, solar is completely scalable, from solar panels on individual homes or even cars and other devices, to large-scale solar farms. Solar can be connected with microgrids and even allow for autonomous electricity generation by homes, commercial buildings, and communities. It may be several decades before fossil fuel power plants can be completely phased out, but the development of renewables has become exponential in cost reduction and while significantly improving efficiency to now compete with coal and gas will eventually be much cheaper. Even now, renewables are obviously cheaper over time – if the fuel is free for solar and has to be continually purchased for coal and gas, at some point it is cheaper. Renewables are already far cheaper if the externalities are also included in the calculation, including carbon emissions and environmental degradation involved in obtaining and transporting fuel.

Food can be increasingly produced near the point of consumption with vertical farms that are beginning to proliferate and eventually with printed food and even printed or cultured meat. These sources bring production of food very near the consumer, so transportation costs, which are up to 70% the cost of food to consumers, are greatly reduced. The use of land and water are reduced by 95% or more, and energy use is cut by nearly 50%. 

In addition, fertilizers and pesticides are not required and crops can be grown 365 days a year whatever the weather. The reduction of land and water use as well as the relative invulnerability to inclement weather will be increasingly important as the world faces the challenges of increasing food supplies by some 70% to feed a world of possibly 9.5 billion people in 2050 while also coping with the loss of arable land to desertification, degradation, and climate-change exacerbated drought, sea level rise, and extreme weather events.

While it may not be practical to grow grains, corn and other such crops in vertical farms, many vegetables and fruits can flourish in such facilities. In addition, cultured or printed meat is being developed – the big challenge is scaling up and reducing cost – that is based on cells from real animals without slaughtering animals. There are currently some 60 billion animals grown for food around the world and livestock alone counts for 15-20% of global emissions. Moreover, livestock places huge demands on land, water and energy. Like vertical farms, cultured or printed meat could be produced with no more land use than a brewery and with far less use of water and energy.

3D printing

An increasing number of products can be manufactured on demand and customized at the point of consumption. 3D printing (additive manufacturing) allows for distributed manufacturing near the point of consumption, eliminating or reducing supply chains and factory production lines. 3D printers can print an entire finished product in one piece or reduce parts of larger products, such as engines, from many pieces to one piece (like the nozzles for GE's new Leap jet engine), reducing time and cost of manufacturing. 3D printing also allows for manufacturing geometries that are not possible through conventional subtractive manufacturing – such as a ball inside a ball inside a ball. 

Such complexity is also free and nearly unlimited. Moreover, every time a 3D printer prints, it can be a different item – or put another way, no assembly line needs to be set up for every different product. And there is no cost benefit from scaling – each item can be customized and printed on demand. No inventories, no shipping of items across oceans, no carbon emissions from transport not only of the final product but of all the parts in that product shipped from suppliers to the OEM. Moreover, the process of 3D printing, which builds items layer by layer, produces almost no waste, unlike "subtractive manufacturing" in which an item is carved out of a piece of metal and more than 50% of the material can be useless waste. 

3D printing is basically a general purpose technology that involves many different types of printers using different materials – from plastic to metals to ceramics to human cells – to produce a huge range of items, from human tissue and potentially human organs to household items and a wide range of industrial items for planes, trains and automobiles. 

There are 3D printers on the International Space Station that can print spare parts and soon there will be robotically-controlled printers in the vacuum of space that can manufacture huge antenna and solar arrays and even much of the next space station and space vehicles. 3D printing is also highly scalable, from inexpensive 3D printers (several hundred dollars) for home and school use to increasingly capable and expensive printers for industrial production. There are also 3D printers for printing buildings, including houses and office buildings, and other infrastructure. These printers will greatly reduce the cost and time of construction as well as waste in the construction process and many will use recycled concrete to reduce resource consumption and disposal of concrete from destroyed buildings. 

Universal manufacturing facilities

This is a very brief introduction to the technologies that can bring "just-in-time-production-at-the-point-of-consumption" of energy, food, and products to cities and regions. These technologies could significantly reduce carbon emissions and enhance environmental sustainability for communities and countries. They could also have significant economic benefits, which may be more difficult to envision and quantify.  But new and good jobs would be created in building out, maintaining and managing the solar power infrastructure. Numerous 'universal manufacturing facilities'(UMFs) could be located throughout cities and regions. These could scale from a couple of people in a garage with a computer, Internet access, and a 3D printer who custom design and print relatively small and simple products for local consumption or even global sales (including their designs as STL files for others to print) to large UMF's with many 3D printers and other advanced manufacturing equipment and robots producing a wide range of products from pots and pans to automobile bodies and even food. 

The UMFs could also recycle materials for printing feedstock and have mobile printers for constructing buildings and other infrastructure. These UMFs could provide a larger number of jobs, including not only designers of products and machine operators, but sales and delivery people as well as back office and management jobs. These would likely be relatively high-wage jobs and would be embedded in the community. The vertical farms, printed meat, and other food-related facilities would likewise have employment for a range of good jobs. In all these cases, there would be a need for software engineers designing products or acquiring and modifying designs from around the world as well as for building apps, running production facilities, applying artificial intelligence to improve production and distribution, managing social media for communications with customers, and many other IT activities. There would be need for education, but most of the jobs would not necessarily require college education but rather on-the-job training or local vocational education. 

Means of production 

All three areas of production – energy, food, and manufacturing – involve acquiring the means of production from other companies, often major corporations. This would range from solar panels and to 3D printers and leveraging the major platforms, including the 'platforms of platforms,' the Internet and GPS system and then the platforms built on the Internet and GPS, from cloud computing services like Amazon's AWS, IBM's AZURE, and Google Cloud Platform, to Facebook and Google and app stores for iOS and Android systems. 

But the means of production once acquired – the energy system, the vertical farms, and the UMFs – would be at the point of consumption, not a continent away, and many would be locally created and controlled, including by individuals, small groups, co-ops, and municipalities. UMFs, vertical farms, and energy systems could be 'franchised' or owned by multinational corporations but still be locally producing energy, food, and products for local consumption. A model for this might be the recently announced partnership of UPS and SAP to create giant 3D printing facilities that could print parts, products, and prototypes on demand to be shipped to the local client by UPS to the local customer.

For the community or even the country as a whole, this trend could lead to a more resilient and self-reliant economy, especially for developing countries. This import-substitution approach would reduce export of capital to pay for material goods – energy, food, and other products. Even raw materials imports might significantly decrease since the production process would be much less wasteful and there would be new opportunities for recycling a wide range of discarded materials, potentially even steel and aluminum from the millions of junked cars, trucks, and other vehicles. At the same time, the two-way flow of digital information, including design files, would likely increase significantly as these communities would remain globally connected and a huge number of items would continue to be traded internationally. 

This model suggests a shift toward a 'bottom up' economy that is more democratic, locally controlled, and likely to generate more local jobs. The global trends in democratization of technology make this vision technologically realistic as much of this technology already exists and is improving and scaling while exponentially decreasing in cost to become available to almost anyone anywhere. This includes not only access to key technologies, but also to education through digital platforms available globally. Online courses are available for free ranging from advanced physics, math, and engineering to skills training in 3D printing, solar installations, and building vertical farms. Social media platforms like Facebook can enable local and global collaboration and sharing of knowledge and best practices.

These new communities of producers can be the foundation for new forms of democratic governance as they recognize and 'capitalize' on the reality control of the means of production can translate to political power.  And the jobs and local control that could be produced could weaken the populist, anti-globalization political forces as people recognize that they could benefit from the positive aspects of globalization and international cooperation and connectedness while diminishing the impact of globalization's downside such as jobs lost to outsourcing and dependence on foreign energy supplies. 

There are powerful vested interests that stand to lose in such a global structural shift as we see in the Trump administration's efforts to serve the fossil fuel industry industry interests in rolling back regulations and purging climate science research from the federal government, for example. But this vision builds on trends already under way and gaining momentum as technology underpins the economics of the shift. 'Peak globalization' could be a viable pathway to creating an economic foundation for "putting people at the heart of the future" while building a more economically and environmentally sustainable future. 

 

 

Banning Garrett, SOIF Colleague; Associate Faculty, Singularity University; Senior Fellow, Global Federation of Competitiveness Councils. The views expressed here are his own. This post first appeared on OpenDemocracy.

 


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Marine Le Pen, Donald Trump and the Emergence of New Right-Wing Movements [feedly]

Marine Le Pen, Donald Trump and the Emergence of New Right-Wing Movements

http://www.globalpolicyjournal.com/blog/24/04/2017/marine-le-pen-donald-trump-and-emergence-new-right-wing-movements

Marcus Rolle and Alexandra Boutri - 24th April 2017

Brexit, the rise of Donald Trump and the emergence of a new right-wing radicalism in both Europe and the United States signify fundamental developments in the political and ideological landscape of Western societies, while at the same time, there is a resurgence of extreme nationalism and authoritarian politics virtually all around the world. For an understanding and explanation of some of these disturbing developments and the alternatives available, we spoke to political economist C.J. Polychroniou, editor of a forthcoming book consisting of interviews with Noam Chomsky, titled Optimism Over Despair: On Capitalism, Empire, and Social Change (Haymarket Books, 2017).

Marcus Rolle and Alexandra Boutri: Today's political landscape in many advanced capitalist societies is marked by the rise of a new right-wing populism centered around anti-immigrant sentiment, xenophobia and extreme nationalism fueled mainly by the antiglobalization rhetoric of authoritarian political leaders. We'd like to start by asking you to put in context the contradictions of global capitalism and the emergence of what has come to be known as the "alt-right."

C.J. Polychroniou: For quite some time now, there have been clear and strong indications across the entire political and socioeconomic spectrum in advanced Western societies that the contradictions of capitalist globalization and the neoliberal policies associated with them have reached an explosive level, as they have unleashed powerful forces with the capacity to produce highly destructive outcomes not only for growth, equality and prosperity, justice and social peace, but concomitant consequences for democracy,  universal rights and the environment itself. Indeed, not long after the collapse of the former Soviet Union and its "communist" satellites in Eastern Europe -- a development which led to such unbounded enthusiasm among supporters of global neoliberal capitalism that they embarked on an  audacious but highly dubious course of (pseudo) intellectual theorization to pronounce the "end of history" -- it became quite obvious to astute observers that the forces unleashed by capitalism's inner dynamism and the dominant capitalist states, with the US imperial state at the helm, were more attuned to the brutalities of societal regression, economic exploitation, war and violence than to the subtleties of socioeconomic progress, geopolitical stability and environmental sustainability.

To be sure, we now live in a world of unparalleled economic inequality coupled with massive economic insecurity and dangerously high levels of unemployment (especially among the youth), all while the depletion of  natural resources has reached highly alarming rates and climate change threatens the future of civilization as we know it. All these developments are interconnected as they are fuelled by globalization's imminent contradictions, but ultimately sustained by actual government policies and measures that cater almost exclusively to the needs of the wealthy and the concerns of the corporate and financial world. In the meantime, authoritarianism is reestablishing a foothold in many Western nations just as the social state is being reduced to the bare bone under the pretext of fiscal discipline.

Yet, despite poll results showing rising support for socialism in the US, especially among millennials, growing discontent with the current economic order has thus far resulted not in a new socialist era but in the rise of ultranationalist leaders like Donald Trump who deploy rhetoric shrouded in racism and anti-immigration sentiment.

In France, Marine Le Pen is playing on similar strains of xenophobia and ultranationalism, arguing that "division is no longer between left and right ... but between patriots and believers in globalization."

What is called the "alt-right" is in some ways a new phenomenon in the sense that, unlike conservatives and neoconservatives, the new right-wing radicalism belongs expressly in the "antiglobalization" camp. But the "alt-right's" grievance is not with capitalism itself. Instead its adherents blame economic globalization and immigration for their woes. The strengthening of this right-wing antiglobalization movement was behind Brexit and Trump's presidential victory and can explain the resurgence of authoritarian, xenophobic political leaders in countries like France, Austria, Hungary, Italy and Germany, to name just a few.

In a way, then, the sudden rise of the new right-wing radicalism is due to the fact that it has adopted part of the "antiglobalization" posture of the left and a good deal of the old left's radical political discourse, such as the struggle of "people vs. elites." In some cases, extreme right-wing leaders in Europe, such as Marine Le Pen in France, promise to strengthen the welfare state, impose capital controls to avoid speculation, nationalize banks and provide employment opportunities through keeping production at home. Marine Le Pen's economic vision for France seeks to counter "unregulated globalization" and is based on a particular version of old-fashioned state capitalism, which globalization appears to have made obsolete.

Is the formation of an "illiberal state" also part of the "alt-right's" vision for the future of Western society?

The term "illiberal state" is associated with the ideology and policies of Viktor Orbán in Hungary. Since coming to power, Orbán has operated on a political platform that combines social and nationalist populism with anti-European Union rhetoric. He has infringed on the freedom of the press, made inroads into the judiciary system and openly advocates an "illiberal" democracy as a means to counteract the impact of globalization. More recently, he has sought to shut down Central European University, which was founded by George Soros in 1991 as part of the billionaire's "Open Society" project.

The extent to which the rise of "alt-right" leaders in Western Europe can lead to similar outcomes as in the case of Viktor Orbán in Hungary is a rather shaky proposition. Eastern European countries do not have the system of checks and balances of established democracies. Moreover, millions of Hungarians do not embrace Orbán's authoritarian tendencies, and oppose him every step of the way, as millions of Turks opposed Erdoğan's quest to be granted expansive powers via a highly controversial referendum (51.4 percent voted for it, making Erdoğan officially Turkey's new sultan). Likewise, Donald Trump may be an autocrat, but he cannot just run roughshod over the whole country. The tendency to call Trump a fascist (even though he has authoritarian leanings) and to define the US as a totalitarian state does a great disservice to political analysis and, by extension, to our imaginative capacity for realistic and sustainable alternatives.

In popular accounts of globalization, the impression one frequently gets is that this is a new phenomenon and simply irreversible. What's your take on globalization?

Globalization itself is not a new phenomenon in history. The conquests of Alexander the Great and the spread of Hellenic civilization in Europe and Asia was the first great instance toward the creation of a cosmopolitan, globalized world. And, for the record, Alexander actually sought the "marriage" between different cultures and expressed disdain toward some of his own generals for failing to show proper respect for civilizations older than Greece.

To be sure, as many scholars have shown, the history of the world is practically a history of imperial expansion. Most people throughout recorded history actually lived in empires. And, equally important, there have been different visions of empire. The Roman Empire, the Ottoman Empire, the British Empire and the French Empire shaped the world in fundamentally different ways.

Nonetheless, with the advent of capitalism, sometime during the so-called "long 15th century," the nature of expansion, through trade and commerce accompanied by the sword, follows a different trajectory. Capitalism spreads to all corners of the world, resulting in the accumulation of wealth for European powers and the gradual impoverishment of the colonized countries and regions, simply out of sheer necessity. As such, capitalism is pretty much distinguished from all previous socioeconomic systems by this fact -- that is, that the system has to expand in order to survive. Alexander the Great made a decision to expand Hellenic culture to the deepest ends of Asia. Capitalists have to expand, otherwise they face possible extinction. In short, capitalism is by its nature an expansionist socioeconomic system, with the accumulation of capital being one of the system's basic but fundamental laws of motion.

In the modern times, and prior to our own age, we saw a great wave of capitalist globalization taking place sometime around the 1880s and lasting until the outbreak of World War I. The world economy was as open as it is today, and possibly even more so, and capital movement across national boundaries was so extensive of an activity that a passionate opposition to foreign direct investment had developed in the United States by the 1890s.

After World War I, there were lukewarm efforts to return to the previous era of internationalization, but the political climate of the time proved to be a major stumbling block and the outbreak, eventually, of World War II put to an end all aspirations for the revival of a new international capitalist order.

The latest phase of capitalist globalization begins sometime in the mid-to-late 1970s and comes in the aftermath of the collapse of the postwar structure of capital accumulation. Following World War II, Western capitalism experienced a phase of unprecedented growth and development: the ranks of the middle class exploded, labor rights were solidified (including labor representation on company boards) and workers' benefits were greatly expanded, all while the "social state" became a major pillar of the postwar Western capitalist world. But the postwar social structure of accumulation collapsed when capitalism entered a systemic crisis in the early 1970s, manifested by "stagflation," an oil crisis and the appearance of new technologies that made Fordist production obsolete.

Enter neoliberalism. In an attempt to overcome the accumulation crisis, the major international organizations, such as the International Monetary Fund, the World Bank, and of course, the US Treasury, began to promote throughout the world the neoliberal triad of liberalization, privatization and deregulation. These policies were accompanied by budget-cutting for social programs and generous tax cuts for corporations and the rich. In this context, globalization becomes a development strategy vehicle for the realization of super-profits.

Like many on the left, certain powerful segments of the extreme right, such as the leader of the National Front in France, think that globalization is reversible. Is it?

If Marine Le Pen wins the French presidential election coming up (April 23-May 7) and pushes forward with her goal of taking France out of the EU and returning to the Franc, the European integration project -- and hence, a major component of globalization -- could collapse like a house of cards, especially since the anti-euro fever is also spreading in Italy, and a Frexit [French exit from the European Union] will surely have immediate effects among all Europeans now skeptical of the integration project in their continent. However, it should be noted that the Frexit scenario is not as easy as Brexit. It would require a constitutional change, and that is very unlikely to happen. But, yes, globalization is certainly reversible, although it will require nothing short of cataclysmic events in the world's major power centers. Having said that, it is unclear if a return to the old nation-state is desirable. A policy of autarchy is impossible in today's world, and I don't think anyone in his/her right mind advocates such a project. Socialists and radicals must come up with a new version of a globalized economy.

Speaking of the upcoming French elections, there seems to be a new twist with the momentum gained by ultra-left candidate Jean-Luc Mélenchon. Is the French radical left back?

This is one of the most interesting and uncertain presidential elections in the history of the French 5th Republic. None of the traditional center-right, center-left party candidates are expected to make it to the second round. This is yet another evidence of the changing nature of the political and ideological landscape in today's Western societies. Marine Le Pen will surely make it to the second round, and the only question is who will be her opponent. Entering the final stretch, it appears that the gap separating the major contenders for the second round is closing, and that Jean-Luc Mélenchon has an actual shot (although the odds are against him) of making it to the second round. If this happens, you would have a candidate from the ultra-right and the ultra-left competing for the French presidency.

Like Marine Le Pen, Mélenchon is against the EU but also promises to pull France out of NATO. And he advocates a much more radical economic agenda than Le Pen, which includes higher wages and a 90 percent tax rate on the very rich. Moreover, and this goes to the core of your question, his supporters seem to be coming from the entire political spectrum in France. This development has been helped by Mélenchon's overt nationalist rhetoric as of late, and his promise to crack down on "illegal immigration." Not coincidently, the French flag prevails over the red revolutionary flag in the latest rallies organized by Mélenchon's party. This must be seen as an indication that the concerns about the contradictions of globalization cross traditional party lines, and that the new political contest is between those who are in favor of globalization and those who are against it.

Does this mean that there is more hope now for resistance to global capitalism?

Perhaps. We may be reaching a point where the traditional terms "left" and "right" do not have much applicability in today's world, at least insofar as the reaction of a growing segment of the population around the world is concerned with regard to the impact of neoliberal capitalism on their lives and communities. But whatever may be going on in terms of people's political affiliations, hope is all we have.

Despair, as Noam Chomsky keeps saying, is not an option, no matter how horrendously depressing the current world situation appears to be, as resistance to oppression and exploitation has never been a fruitless undertaking even in more dire times than our own. Indeed, the Trump "counter-revolution" in the US has already brought to surface a plethora of social forces determined to stand up to the aspiring autocrat and, in fact, the future of resistance in the world's most powerful country appears more promising than in many other parts of the advanced industrialized world. Of course, the problem with the United States is that it is in the perpetual habit of taking "one step forward and three steps backward." But this does not mean we should give up hope, but only to work harder to create powerful organizing forces that can pose greater resistance to predatory capitalists and war-makers, while at the same time articulating consistently a coherent and realistic vision of radical change.

 

 

C.J. Polychroniou is a political economist/political scientist who has taught and worked in universities and research centers in Europe and the United States. His main research interests are in European economic integration, globalization, the political economy of the United States and the deconstruction of neoliberalism's politico-economic project. He is a regular contributor to Truthout as well as a member of Truthout's Public Intellectual Project. He has published several books and his articles have appeared in a variety of journals, magazines, newspapers and popular news websites. Many of his publications have been translated into several foreign languages, including Croatian, French, Greek, Italian, Portuguese, Spanish and Turkish. This was reposted with permission from TruthOut.


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Prudential regulation, capital controls, and second-best [feedly]

Prudential regulation, capital controls, and second-best
http://rodrik.typepad.com/dani_rodriks_weblog/2017/04/prudential-regulation-capital-controls-and-second-best.html

A usual argument against the use of capital controls as a prudential measure is that it is always better to tackle problems at their source rather than trying to deal with symptoms.  This is called the principle of economic targeting in Economics, one of the discipline's most powerful teachings. The problem with indirect remedies is that they create problems themselves, "by-product distortions" in Econ-speak. With capital controls, those would be corruption and the discouragement of trade and other flows that are not necessarily a problem.

Hyun Song Shin essentially relies on this principle when he argues against capital controls (in a speech yesterday in Washington, DC):

The lesson is to distinguish underlying causes from outward symptoms. Yes, the 2008 financial crisis was in large part a cross-border phenomenon, but focusing on capital flows confuses the symptoms (capital flows) from the underlying causes (excess leverage and funding risk). If the problem is excessive bank leverage and funding risk, then address these risks directly with traditional microprudential, or regulatory tools.

This argument always reminds me of opponents' argument about why gun controls are not needed: "it's not guns that kill people; it's people." The implication is that we should target the criminals and not the guns. Of course, if we could perfectly regulate the behavior of future criminals, we would not need controls on the sale of guns directly. But most of us are reasonable enough to realize that we have imperfect control over the behavior of gun owners and so we think direct gun controls make sense.

Similarly, if one could design the perfect prudential regulatory regime, targeting all the relevant distortions at source and adjusting pre-emptively to all future financial innovations, then indeed we would not need direct controls on capital flows. But if we cannot, and we surely cannot, we need to work on as many margins available to us as we can. That is why capital controls belong in the arsenal of sensible policy makers.

One of my favorite aphorisms is "the world is second best, at best" (due to Avinash Dixit). It tells us that first-best logic can be misleading in the real world. Interestingly, Shin himself starts his speech by reminding us of the second-best theorem. But then he goes on to apply a first-best argument to dismiss capital controls.


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Trump’s Alternative Economics of Climate Change


Trump's Alternative Economics of Climate Change


via the Regulatory Review
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The Trump Administration's new social cost of carbon policy muddies the waters.

President Donald Trump signed an executive order last month calling for the elimination of health and safety rules related to domestic energy production. The order starts a long—and legally risky—process of dismantling President Barack Obama's executive actions to address climate change.

One section of the order purports to withdraw the federal government's estimates of the social cost of carbon, a metric developed to quantify the economic costs of each ton of carbon dioxide pollution, based on peer-reviewed science and economics. The government uses these numbers to evaluate the benefits and costs of proposed regulations and decide if a rule makes sense.

President Trump's executive order throws out an estimate of the social cost of carbon that the federal government has carefully developed over many years, replacing it with an agency-by-agency approach that would value greenhouse gas emissions in a manner "consistent with the guidance contained in Circular A-4," a guidebook on cost-benefit analysis issued by the Office of Management & Budget during the George W. Bush Administration in 2003.

What the executive order fails to acknowledge is that the Obama Administration's estimate of the social cost of carbon is consistent with the guidance from Circular A-4. Asking each agency to develop its own metric will waste agency resources and open rules up to needless and risky legal challenges.

The executive order insists that agencies comply with Circular A-4 with respect to two main factors: "domestic versus international impacts," and "the consideration of appropriate discount rates." For each of these factors, the existing estimate of the social cost of carbon that the executive order attempts to dismantle is, in fact, already consistent with the approach in Circular A-4.

Many opponents of federal climate action argue that it is inappropriate for the United States to consider the effects of our carbon emissions on other countries when analyzing proposed regulations. They argue that if the costs of the regulation are felt locally, the government's cost-benefit analysis must focus only on local climate benefits. Experts have written extensively about why a global analysis is the appropriate approach from an economic and legal perspective, and a federal court ruling recently upheld the government's global approach to analyzing the social cost of carbon.

Moreover, Circular A-4 provides for the consideration of global effects. The guidance does note that an analysis should "focus on benefits and costs that accrue to citizens and residents of the United States," but it also instructs, "where you choose to evaluate a regulation that is likely to have effects beyond the borders of the United States, these effects should be reported separately." That is, when effects are felt globally, as with climate change, the analysis should consider those effects, with the global and the domestic effects broken out separately.

The current social cost of carbon is based precisely on this approach. The federal government has reported a global value, in addition to offering a rough estimate of the proportion of the value involving domestic damages. (As the National Academy of Sciences recently noted, a precise value for domestic damages is difficult to calculate given the fact that climate damages in other countries also affect U.S. interests, through threats to investment, trade, and national security.) By offering an estimate of the domestic portion of damages, as well as reporting a global value, the existing guidance on the social cost of carbon is consistent with Circular A-4.

President Trump's executive order also insists that agencies must evaluate climate impacts by using "appropriate discount rates," consistent with Circular A-4. Again, the social cost of carbon developed under the Obama Administration already adheres to Circular A-4's guidance on discount rates.

Discount rates are needed in economic analysis when the benefits and costs of a rule do not occur in the same time period to reflect that costs and benefits accruing sooner are worth more than those accruing later in the future. The higher the discount rate, the less value is placed on future impacts. In this case, because the harms from climate change accrue over a long time period, the higher the discount rate, the lower the estimate of the social cost of carbon.

Circular A-4 recommends that agencies analyze proposed rules using a range of discount rates that reflect the nature of the rule's impacts on affected parties. It recommends that agencies use a discount rate that reflects the "before-tax rate of return to private capital," as well as a discount rate that reflects the "real rate of return on long-term government debt." In 2003, these values were 7 percent and 3 percent, respectively, but given the low interest rates in today's markets, the Council of Economic Advisers recently noted that these numbers may be too high. Surveys of economic experts have also found that the 7 percent and 3 percent values are likely too high in the context of long-term decisions affecting the public, like climate change.

Additionally, Circular A-4 instructs agencies that if a "rule will have important intergenerational benefits or costs," then the agency "might consider a further sensitivity analysis using a lower but positive discount rate." That is, for an issue like climate change that will impact future generations, it makes sense to offer additional estimates of net benefits using an even lower discount rate.

Existing social cost of carbon estimates already follow the discount rate approach from Circular A-4. In particular, the government's guidance on the social cost of carbon recommends a range of discount rates, from 2.5 percent to 5 percent, with a central estimate based on a 3 percent rate. Especially given the intergenerational nature of climate change and low interest rates in markets, this range of estimates is consistent with Circular A-4's guidance.

In issuing an executive order to revoke the existing government-wide estimates of the social cost of carbon, President Trump is purporting to replace it with separate analyses by each agency based on the guidance in Circular A-4. However, the current government-wide estimates are already consistent with that guidance. To insist otherwise is yet another example of the Trump Administration's embrace of "alternative facts." By calling for each agency to establish its own estimates, the Trump Administration is wasting taxpayer dollars on unnecessary new models and exposing agencies to expensive and risky lawsuits.

Denise Grab

Denise Grab is a Senior Attorney at the Institute for Policy Integrity at New York University School of Law, focusing on environmental, energy, and regulatory policy issues.

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John Case
Harpers Ferry, WV

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New understandings of populism


Daniel Little via Understanding Society


It is apparent, on this first round of the presidential elections in France, that we urgently need to understand better the dynamics and causes of radical populism in democratic polities. What is populism? Why does it have such virulence in the current moment as a political movement? What roles do racism, xenophobia, resentment, and economic fear play in the readiness of ordinary citizens in Europe and America to support radical populist candidates and platforms?


The topic has been the subject of research by very talented investigators over the past twenty years. Several recent books are especially relevant in the current moment. Particularly relevant are Cas Mudde and Cristobal Rovira Kaltwasser's Populism: A Very Short Introduction; Jan-Werner Muller's What Is Populism?; and a recent collection by Social Europe edited by Henning Meyer, Understanding the Populist Revolt. Taken together, the three sources provide an excellent basis for thinking further about the nature of radical populism.

Mudde and Kaltwasser argue that populism differs from other political umbrella terms (socialism, fascism) in one important respect: it is less specific in identifying a well defined ideological program. It is, in their words, "an essentially contested concept". Here are a few of their central ideas:
A more recent approach considers populism, first and foremost, as a political strategy employed by a specific type of leader who seeks to govern based on direct and unmediated support from their followers. It is particularly popular among students of Latin American and non-Western societies. The approach emphasizes that populism implies the emergence of a strong and charismatic figure, who concentrates power and maintains a direct connection with the masses. (kl 677-680)
Beyond the lack of scholarly agreement on the defining attributes of populism, agreement is general that all forms of populism include some kind of appeal to "the people" and a denunciation of "the elite." Accordingly, it is not overly contentious to state that populism always involves a critique of the establishment and an adulation of the common people. More concretely, we define populism as a thin-centered ideology that considers society to be ultimately separated into two homogeneous and antagonistic camps, "the pure people" versus "the corrupt elite," and which argues that politics should be an expression of the volonté générale (general will) of the people. (kl 700-705)
This means that populism can take very different shapes, which are contingent on the ways in which the core concepts of populism appear to be related to other concepts, forming interpretative frames that might be more or less appealing to different societies. Seen in this light, populism must be understood as a kind of mental map through which individuals analyze and comprehend political reality. It is not so much a coherent ideological tradition as a set of ideas that, in the real world, appears in combination with quite different, and sometimes contradictory, ideologies. (kl 713-717)
A common thread of populist rhetoric is that the movement is "anti-elitist" and that it speaks on behalf of "the people". Elites, according to populist leaders, have dominated policy and captured the benefits of society; "the people" have been left behind by elites who care nothing for their wellbeing. These tropes make perfect interpretive sense of Trumpism -- the campaign's attack on the media, scientists, politicians, and universities, its virulent personal attacks against Hillary Clinton, and its efforts to divide "the real Americans" from others -- immigrants, Mexicans, Muslims, Jews, and urban dwellers. And this is the most important point: by claiming to speak uniquely for "the people", there is an implicit openness to authoritarianism in populist politics.

So what is "not-Populism"? What is a political ideology and movement that falls outside the populist rubric? They identify pluralism as the main rival:
Pluralism is the direct opposite of the dualist perspective of both populism and elitism, instead holding that society is divided into a broad variety of partly overlapping social groups with different ideas and interests. Within pluralism diversity is seen as a strength rather than a weakness. Pluralists believe that a society should have many centers of power and that politics, through compromise and consensus, should reflect the interests and values of as many different groups as possible. Thus, the main idea is that power is supposed to be distributed throughout society in order to avoid specific groups— be they men; ethnic communities; economic, intellectual, military or political cadres, etc.— acquiring the capacity to impose their will upon the others. (kl 733-738)
Mudde and Kaltwasser pay close attention to what seems like the most important current problem: mobilization around populist political agendas.
By mobilization we mean the engagement of a wide range of individuals to raise awareness of a particular problem, leading them to act collectively to support their cause. Overall, three types of populist mobilization can be identified: personalist leadership, social movement, and political party. (kl 1246-1248)
They highlight three kinds of mechanisms of mobilization: social movements, charismatic leaders, and local grassroots organizations. (See an earlier post on work by McAdam and Kloos on racialized social movements in the United States; link.)

What factors lead to success in populist mobilization?
For any political actor to be successful, there has to be a demand for her message. Most populist actors combine populism with one or more so-called host ideologies, such as some form of nationalism or socialism. Although populism is often noted as a reason for their success, many electoral studies instead focus exclusively on the accompanying features, such as xenophobia in western Europe or socioeconomic support for disadvantaged groups in Latin America. This is in part a consequence of the lack of available data at the mass level. Empirical studies of populist attitudes are still in their infancy, but they do show that populist attitudes are quite widespread among populations in countries with relevant populist parties (e.g., Netherlands) and social movements (e.g., the United States) as well as in countries with no relevant populist actors (e.g., Chile). (Kindle Locations 2063-2069)
This passage highlights some of the kinds of messages that populists have deployed to support mobilization -- xenophobia and its cousins, and "nation first!" appeals for economic improvement for "the people". Mudde and Kaltwasser highlight the use of mistrust as a political theme -- "elites" are abusing "the people's" interests and needs, the elites cannot be trusted.  Appeals by populist leaders to fear, mistrust, and resentment of others have proven widespread and durable in numerous countries, including the recent presidential campaign in the United States.

A crucially important question before us is why racist and xenophobic attitudes appear to be becoming more common and more readily mobilized, in Europe and in the United States. Why is the rhetoric of division and hate so powerful in today's politics? Mudde and Kaltwasser do not shed much light on this question; indeed, they barely confront the topic. The terms "hate" and "race" do not appear in the book at all. They address the topic of xenophobia more generally (largely in the context of immigration issues). But they do not consider the more basic question: why is hate such a powerful political theme in the politics of extremist populism?

The other two books mentioned above provide more insight into this question, and I will return to them in a subsequent post.

*     *     *

There is today a little bit of good news for everyone concerned about the ascendancy of extremist populist politics in modern democracies. It appears that political novice and moderate candidate Emmanuel Macron has slightly bested far-right populist Marine Le Pen in today's French election results (23.7% vs. 21.8%, with 96% of polls reported). So the final round will involve a run-off election between the two leading candidates, and almost all commentators agree that the advantage in the second round will go to Macron. So the anxiety felt by many around the world that France would follow Great Britain (Brexit) and the United States (Trump) with an unexpected victory for the extreme right populist position is now much abated.

--
John Case
Harpers Ferry, WV

The Winners and Losers Radio Show
7-9 AM Weekdays, The EPIC Radio Player Stream, 
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