Eichengreen and O’Rourke on ‘A Tale of Two Depressions‘
[T]he world is currently undergoing an economic shock every bit as big as the Great Depression shock of 1929-30. Looking just at the US leads one to overlook how alarming the current situation is even in comparison with 1929-30.
Since my post in Autumn on the Obama health care plan a lot has happened. But perhaps more importantly, the EVENT hasn’t happened. No healthcare bill has been passed. A mojor reason for this is the impasse reached between the ‘House Bill’ Affordable Health Care for America Act and the ‘Senate Bill’ Patient Protection and Affordable Care Act.
It would seem that this impasse may now be about to be … err… passed. As Obama has just published a new proposal which tries to satisfy the House and the Senate. Th differences between the three plans are detailed here.
So on the strike wave in Britain…. The slogan ‘British Jobs for British Workers’ has been raised.
But as the flag says the extent of this nationalism is no further to the right than the jingoism of that is expected from Gordon Brown or anyone.
And the extent of this nationalism is hard to measure. The British state and its media is deliberately excentuating the nationalism of the strikers in what would seem to be an attempt to portray them as the dangerous mob, the fascist horde.
One shocking example taken from vimeo.
Quotes from News At Ten and Newsnight (half an hour later), Feb 2 2009. The striker’s quote is edited in the News At Ten segment in a way that makes it seem he does not want to work alongside foreigners, in the context of a ministerial claim of xenophobia. In the fuller Newsnight report, it is clear that he is saying that he _cannot_ work alongside them, because they are segregated.
The same man appears in the Six O’Clock News the same day, but the edited quote is not in that bulletin.
BBC Strike News Selective Quoting from fridgemagnet on Vimeo.
Also some of the demands have been quite internationalist. The demands coming out of a mass meeting of strikers at the Linsey Oil Refinery were
* No victimisation of workers taking solidarity action. * All workers in UK to be covered by NAECI Agreement. * Union controlled registering of unemployed and locally skilled union members, with nominating rights as work becomes available. * Government and employer investment in proper training / apprenticeships for new generation of construction workers – fight for a future for young people. * All Immigrant labour to be unionised. * Trade Union assistance for immigrant workers – including interpreters – and access to Trade Union advice – to promote active integrated Trade Union Members. * Build links with construction trade unions on the continent.
However, there is no way around the fact that there has been a continous nationalist dimension to these strikes. Even the seemingly progressive demands of the Lindset strike may hide a more sinister nationalism. What exactly does ‘locally skilled union members’ mean?
One thing that the left needs to sort out is its understanding of the economic significance of immigration. We need to be able to give honest answers about what immigration means.
A good place to start for this is to have a look at a very easy to read article by George Borjas, perhaps the worlds leading labour economist and almost certainly the world leader on the economic significance of immigration. Anyway the article is here and is well worth a look to catch up on the state of knowledge in the field.
There were 12 good issues of The Commoner earlier this century and then it disappeared for over two years. And now it’s back with an issue on the Energy Crisis. It’s available here Going with it is an ‘editor’s blog’, where the ‘editor’ makes this observation:
This sumarises Obama’s world view: “We’ll provide new computers, new technology, and new training for teachers so that students in Chicago and Boston can compete with kids in Beijing for the high-tech, high-wage jobs of the future.â€
Okay, perhaps I’m a bit obsessed by the Obama phenomenon. But, meh, I am interested by it. A friend on facebook recently said that she “welcomes President Obama, but urges you to remember one thing about the will of the people – it wasn’t long ago that the world was swept away by the Macarena.”
Back in July I noted
the global downturn is hitting advanced economies much harder than the rest of the world
While that was true then, it is less so now. There is an interesting article on the FT from a few days ago on how the recession has spread to China.
The post-1997 global balance is breaking down, and the world is lurching drunkenly to find a stable new balance. Until now, Chinese overproduction has balanced US overconsumption, leading to China’s massive trade surplus and capital account deficit. Inevitably, however, a reduction in US overconsumption, a necessary consequence of the financial crisis, must force a corresponding reduction in overproduction elsewhere, and China, like it or not, will have to bear the brunt of the adjustment. The US and Europe must design their fiscal and monetary policies in part to ease China’s adjustment, which will otherwise be extremely difficult.
It’s continued over here
As Kevin O’Rourke, the same, points out over on the Irish Economy Blog Ireland being a small open economy heavily dependent on foreign demand for our exports, China’s problem’s are not a world away from our own.
Obama has said Christina Romer is going to be Chair of the Council of Economic Advisors to the President. Interestingly, this now means that the world leading expert on the Great Depression, Ben Bernanke, is heading the Fed, while the world’s second foremost scholar on the Great Depression is Chair of the CEA.
As people will know, Romer and Berstein have drawn up ‘the Obama plan’. She describes some of her thinking on it in this video. Its very untechnical so have a look-see.
Ian McEwan wrote in ‘Amsterdam’ of the 68 generation.
How prosperous, how influential, how they had flourished under a government they despised for almost seventeen years. Talking ’bout my generation. Such energy, such luck. Nurtured in the post-war settlement with the State’s own milk and juice, and then sustained by their parents tentative, innocent prosperity, to come of age in full employment, new universities, bright paperback books, the Augustan age of rock and roll, affordable ideals. When the ladder crumbled behind them, when the State withdrew her tit and became a scold, they were already safe, they consolidated, and settled down to forming this or that – taste, opinion, fortunes. pp.11-12
When I was added to this blog I said I had about 5 posts I was going to make immediately. I didn’t make them. One was an observation with regards to Obama defeating Clinton in the primaries for Presidential nominee way back, fado, fado.
A lot of people had observed that age was an issue. That Obama was young, and this was something really unique and attractive about him. But others observed that Bill Clinton was actually a younger candidate, he was 46 when inaugurated whereas Obama will be 47. The issue wasn’t simply that Obama was young though, rather what was attractive about him was that he was not a ’68-er.
Since the 1960 western politics has been dominated by its legacy, with the growth of civil unrest and class struggle throughout the 70s and the honest belief held by many that the 70’s would bring issue in Socialism in the west. ‘The 70s will be socialist’. While since the fall of the Berlin Wall we have seen the same people fight out the same battle after the battle was lost. So we had the student revolutionaries of the 70s make up Blair’s cabinet, the young hotshots of the Reagan Revolution make up Bush’s cabinet and even Daniel Cohn-Bendit throw his weight in with the now almost forgotten ‘Third Way’.
Obama for all his faults was not part of this. He is a different generation. And with that got the support of many of those who in 2000 were out for Nader and in 2004 were out for Howard Dean. (The anti-globalisation generation.)
One of the few promising things of the last 2-3 years is how the 60s have faded into distant memory. As have the defeats of the 70s and 80s. Remember in 1996 when Britpop was all go and Blair was being elected, the rather bizarre parallels being drawn with 1966, when London was swinging? But in 2008, the 40th anniversary of 1968, we heard remarkably little paralleling of anything with 1968, and we say very few commemorative events. Rather with Obama we had the ridiculous statement in his acceptance speech ‘It’s been a long time coming, but tonight, because of what we did on this day, in this election, at this defining moment, change has come to America.’ The 60s are over, the dream is over because it has been achieved. Of course, it hasn’t been achieved. But the dream is over. 2008 marked the end of 1968. And now we can work on new better dreams that respond to our lives today not those lead in the 60s.
There has been a bit of a resurgence in interest in Mr Keyne’s recently. There was a brief article in Time a few weekd back on this. I liked the quote from Robert Lucas, perhaps the most important economist since Keynes and certainly NOT a Keynesian: “I guess everyone is a Keynesian in a foxhole”.
Also interesting was that it cleared up what I’d heard before but wasn’t sure about. It was Miton Friedman, the reason there is a ‘perhaps’ in the above sentence, who said ‘We are all Keynesians now’ not Nixon.
…A few pages later came the now famous quote from economist Milton Friedman: “We are all Keynesians now.” Friedman later objected that it was taken out of context–all he meant was that everybody used Keynesian language and concepts. But the phrase stuck. It’s often attributed these days to Republican President Richard Nixon, but what Nixon actually said, in 1971, was the less expansive “I am now a Keynesian.” …
Okay I’ve promised myself I’m going to read The Poverty of Theory by EP Thompson, if only to read this quote in context:
We might define the present situation more precisely if we employed a category found frequently in Marx’s correspondence with Engels, but a category which evaded Althusser’s vigilant symptomatic scrutiny. All this ‘shit’ (Geschichtenscheissenschlopff) in which both bourgeois sociology and Marxist structuralism stand up to their chins (Dahrendorf beside Poulantzas, modernization theory beside theoretical practice) has been shat upon us by conceptual paralysis, by the dehistoricising of process and by reducing class, ideology, social formations, and almost everything else, to categorical stasis… .the systems-analyses and structuralisms. . .the econometric and cleometric groovers – all of these theories hobble along programmed routes from one static category to the next. And all of them are Geschichtenscheissenschlopff,unhistorical shit.
Its possible that the crisis in the financial markets is over. The bailout had a large effect. But obviously things are still rocky and another wave of panic could come very easily. My prediction is and has been for the last few weeks that what happens next depends on Obama. He took a very pro-worker line in the election and has commited himself to universal health care, reforming enviromental policy, the introduction of The Employee Free Choice Act, cutting taxes on the working class and increasing them on earners of over $250,000 and talked about increasing Capital Gains Tax. If he does all these things, or if the market comes to believe that he will fulfill some or most of his election promises there will be a panic and the financial markets will go into chaos, again. So far Obama’s major decicions the TEAB he’s announced, and his chief of staff are both ‘safe’ choices. But it is clear that the markets did not react happily to his election. In the two days following his election the stock market, as measured by the Dow Wilshire 5000 Index, lost $1.2 trillion in the two days following the election.
Terry Savage on The Street writes:
The stock market is always right. Nonetheless, I must admit to being more than a little annoyed that the stock market greeted the election results with a two-day nosedive, the worst two-day decline since the crash of 1987. Even Friday’s 250-point gain was little solace.
It smacked of Wall Street pique that the next president appears to be no friend of “the Street.” But the economic platform of our new president came as no surprise, so why the selloff?Yes, he promised to tax capital gains at the same rate as ordinary income, which would represent a huge hit to those who still have any capital gains remaining. But the smart money had already priced that fact into the stock market, selling earlier in the campaign as the candidate’s momentum picked up.
Certainly, President Obama will take a more populist approach to digging America out of its economic mess. But realistically, how much more could Wall Street have expected in the way of aid from the government? More than a trillion dollars has already been injected directly into the banking system by way of guarantees and capital stock purchases.