Category Archives: Politics

Slasher Osborne and the belief that Austerity Is Good

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“When I was young and naïve”, writes Paul Krugman, “I believed that important people took positions based on careful consideration of the options. Now I know better.”

Yep. Me too. Long ago I decided that the null hypothesis should be that — in public life and management at least — Nobody Knows Anything.

“Much of what Serious People believe”, Krugman goes on, “rests on prejudices, not analysis. And these prejudices are subject to fads and fashions.”

For the last few months, I and others have watched, with amazement and horror, the emergence of a consensus in policy circles in favor of immediate fiscal austerity. That is, somehow it has become conventional wisdom that now is the time to slash spending, despite the fact that the world’s major economies remain deeply depressed.

This conventional wisdom isn’t based on either evidence or careful analysis. Instead, it rests on what we might charitably call sheer speculation, and less charitably call figments of the policy elite’s imagination — specifically, on belief in what I’ve come to think of as the invisible bond vigilante and the confidence fairy.

Bond vigilantes are investors who pull the plug on governments they perceive as unable or unwilling to pay their debts.

Now there’s no question that countries can suffer crises of confidence (see Greece, debt of). But what the advocates of austerity claim is that (a) the bond vigilantes are about to attack America, and (b) spending anything more on stimulus will set them off.

Which brings us to Slasher Osborne and his fag, Danny Alexander. Time and again, their mantra is our old friend TINA (There Is No Alternative). If we don’t slash public expenditure then the Bond Vigilantes will come and get us. There is, of course, no evidence that the bond market would do to the UK what it threatens to do to Greece. Nor could there be. The essence of these kinds of markets — based on that intangible thing, “confidence” — is that there’s no knowing what they might do, and you can’t base national policy on considerations as irrational as that. Otherwise you wind up with the economic counterpart of the National Security State, which can devise any rationale — no matter how absurd — for curtailing freedoms on the grounds that Al Qaede could conceivably exploit the ‘loopholes’ that such freedoms provide. (As an example, think of the obsession with stopping photographers from photographing public buildings.)

It should be obvious to the meanest intelligence that slashing public spending when the economy is on a tentative recovery from recession is a sure way of triggering another, deeper, recession. And of course Slasher knows that, as do his counterparts in the US. But here another chimera comes to their aid, namely what Krugman calls the “Confidence Fairy”.

But don’t worry: spending cuts may hurt, but the confidence fairy will take away the pain. “The idea that austerity measures could trigger stagnation is incorrect,” declared Jean-Claude Trichet, the president of the European Central Bank, in a recent interview. Why? Because “confidence-inspiring policies will foster and not hamper economic recovery.”

What’s the evidence for the belief that fiscal contraction is actually expansionary, because it improves confidence? (By the way, this is precisely the doctrine expounded by Herbert Hoover in 1932.) Well, there have been historical cases of spending cuts and tax increases followed by economic growth. But as far as I can tell, every one of those examples proves, on closer examination, to be a case in which the negative effects of austerity were offset by other factors, factors not likely to be relevant today.”

Oh, and if you’re in any doubt about what really savage public spending cuts can do to an economy, then have a look at my own dear homeland, which was recently the subject of an illuminating piece in the New York Times.

Nearly two years ago, an economic collapse forced Ireland to cut public spending and raise taxes, the type of austerity measures that financial markets are now pressing on most advanced industrial nations.

“When our public finance situation blew wide open, the dominant consideration was ensuring that there was international investor confidence in Ireland so we could continue to borrow,” said Alan Barrett, chief economist at the Economic and Social Research Institute of Ireland. “A lot of the argument was, ‘Let’s get this over with quickly.’ ”

Rather than being rewarded for its actions, though, Ireland is being penalized. Its downturn has certainly been sharper than if the government had spent more to keep people working. Lacking stimulus money, the Irish economy shrank 7.1 percent last year and remains in recession.

Joblessness in this country of 4.5 million is above 13 percent, and the ranks of the long-term unemployed — those out of work for a year or more — have more than doubled, to 5.3 percent.

Now, the Irish are being warned of more pain to come.

More ‘pain’? (That word again.) Yep. Because of course the Bond Vigilantes aren’t satisfied yet.

The Quagmire

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Hindsight, they say, is the only exact science. The trouble is that we need it now. The news that Obama had fired General McChrystal while keeping the policy that the general was trying to implement sent me scurrying to locate my copy of Barbara Tuchman’s March of Folly: From Troy to Vietnam. Why? Because it reviews the story of the US’s adventure in Vietnam with the benefit of hindsight, and in the process makes plain the futility and stupidity of the enterprise. And I’m thinking that US policy in Afghanistan has all the same hallmarks, and yet we’re locked into the doomed enterprise much as Lyndon Johnson was in the 1960s.

One comparison in particular strikes me. Tuchman points out that the more enfeebled, corrupt and incompetent the regime in South Vietnam became, the more influence it exerted on its superpower patron. Spool forward to Afghanistan and we have the Karzai administration — corrupt, incompetent and feeble — more or less holding the US government to ransom. Karzai stole the presidential election, and yet was endorsed by Obama and Gordon Brown. There are 100,000 NATO troops in Afghanistan fighting what they all recognise as a futile, unwinnable war. A steady stream of bodybags returns to the US and to RAF Brize Norton ever week (1,000 to the US, 300 to the UK) We have a fresh, new administration in Britain which is cheerily engaged in a root-and-branch examination of public spending, and yet there’s not a hint that an adventure that must be costing £100 million a week should be re-assessed. Instead David Cameron goes to Afghanistan, is photographed with Karzai and solemnly restates his administration’s resolute commitment to the whole doomed charade. And back in London almost nobody (except for the columnist Simon Jenkins) seems willing to ask the question that needs to be asked: what the f*** are we doing there?

But it was the same in the 1960s. There were a few voices in Washington who asked awkward questions, but in the main there was no public debate about the wisdom — never mind the ethics or the feasability — of the war in Southeast Asia. And so the killing continued until — eventually — the US bowed to the inevitable and scuttled.

Now Obama has fired a general but kept the war. Worse still, he has appointed a successor to McChrystal who, like General Westmoreland in Vietnam, is going to prolong the US commitment indefinitely. Andrew Sullivan has a wonderful column this week about the implications of appointing General Petraeus, “the real Pope of counter-insurgency”, to lead the war in Afghanistan. Here’s a sample:

Obama’s gamble on somehow turning the vast expanse of that ungovernable “nation” into a stable polity dedicated to fighting Jihadist terror is now as big as Bush’s in Iraq – and as quixotic. It is also, in my view, as irrational a deployment of resources and young lives that America cannot afford and that cannot succeed. It really is Vietnam – along with the crazier and crazier rationales for continuing it. But it is now re-starting in earnest ten years in, dwarfing Vietnam in scope and longevity.

One suspects there is simply no stopping this war machine, just as there is no stopping the entitlement and spending machine. Perhaps McChrystal would have tried to wind things up by next year – but his frustration was clearly fueled by the growing recognition that he could not do so unless he surrendered much of the country to the Taliban again. So now we have the real kool-aid drinker, Petraeus, who will refuse to concede the impossibility of success in Afghanistan just as he still retains the absurd notion that the surge in Iraq somehow worked in reconciling the sectarian divides that still prevent Iraq from having a working government. I find this doubling down in Afghanistan as Iraq itself threatens to spiral out of control the kind of reasoning that only Washington can approve of.

This much we also know: Obama will run for re-election with far more troops in Afghanistan than Bush ever had – and a war and occupation stretching for ever into the future, with no realistic chance of success. Make no mistake: this is an imperialism of self-defense, a commitment to civilize even the least tractable culture on earth because Americans are too afraid of the consequences of withdrawal. And its deepest irony is that continuing this struggle will actually increase and multiply the terror threats we face – as it becomes once again a recruitment tool for Jihadists the world over.

This is a war based on fear, premised on a contradiction, and doomed to carry on against reason and resources for the rest of our lives.

All of which seems to me to be spot on. We don’t need to wait for hindsight to realise the absurdity of what we’ve got ourselves into. The Americans will have to answer for themselves. But the UK is — theoretically — still a sovereign state: so why isn’t there a serious debate about it here? Now.

Obama and the oil spill

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If, like me, you’ve been puzzled by Obama’s oscillations over the BP drilling catastrophe, then Tim Dickinson’s long article in Rolling Stone makes sobering reading. Essentially it highlights the extent to which the Obama Administration failed to deal with the corruption and incompetence in the Federal Minerals Management Service — the supposed regulator of oil drilling. Here’s an excerpt:

During the Bush years, the Minerals Management Service, the agency in the Interior Department charged with safeguarding the environment from the ravages of drilling, descended into rank criminality. According to reports by Interior’s inspector general, MMS staffers were both literally and figuratively in bed with the oil industry. When agency staffers weren’t joining industry employees for coke parties or trips to corporate ski chalets, they were having sex with oil-company officials. But it was American taxpayers and the environment that were getting screwed. MMS managers were awarded cash bonuses for pushing through risky offshore leases, auditors were ordered not to investigate shady deals, and safety staffers routinely accepted gifts from the industry, allegedly even allowing oil companies to fill in their own inspection reports in pencil before tracing over them in pen.

“The oil companies were running MMS during those years,” Bobby Maxwell, a former top auditor with the agency, told Rolling Stone last year. “Whatever they wanted, they got. Nothing was being enforced across the board at MMS.”

Salazar himself has worked hard to foster the impression that the “prior administration” is to blame for the catastrophe. In reality, though, the Obama administration was fully aware from the outset of the need to correct the lapses at MMS that led directly to the disaster in the Gulf. In fact, Obama specifically nominated Salazar – his “great” and “dear” friend – to force the department to “clean up its act.” For too long, Obama declared, Interior has been “seen as an appendage of commercial interests” rather than serving the people. “That’s going to change under Ken Salazar.”

Salazar took over Interior in January 2009, vowing to restore the department’s “respect for scientific integrity.” He immediately traveled to MMS headquarters outside Denver and delivered a beat-down to staffers for their “blatant and criminal conflicts of interest and self-dealing” that had “set one of the worst examples of corruption and abuse in government.” Promising to “set the standard for reform,” Salazar declared, “The American people will know the Minerals Management Service as a defender of the taxpayer. You are the ones who will make special interests play by the rules.” Dressed in his trademark Stetson and bolo tie, Salazar boldly proclaimed, “There’s a new sheriff in town.”

Salazar’s early moves certainly created the impression that he meant what he said. Within days of taking office, he jettisoned the Bush administration’s plan to open 300 million acres – in Alaska, the Gulf, and up and down both coasts – to offshore drilling. The proposal had been published in the Federal Register literally at midnight on the day that Bush left the White House. Salazar denounced the plan as “a headlong rush of the worst kind,” saying it would have put in place “a process rigged to force hurried decisions based on bad information.” Speaking to Rolling Stone in March 2009, the secretary underscored his commitment to reform. “We have embarked on an ambitious agenda to clean up the mess,” he insisted. “We have the inspector general involved with us in a preventive mode so that the department doesn’t commit the same mistakes of the past.” The crackdown, he added, “goes beyond just codes of ethics.”

Except that it didn’t. Salazar did little to tamp down on the lawlessness at MMS, beyond referring a few employees for criminal prosecution and ending a Bush-era program that allowed oil companies to make their “royalty” payments – the amount they owe taxpayers for extracting a scarce public resource – not in cash but in crude. And instead of putting the brakes on new offshore drilling, Salazar immediately throttled it up to record levels. Even though he had scrapped the Bush plan, Salazar put 53 million offshore acres up for lease in the Gulf in his first year alone – an all-time high. The aggressive leasing came as no surprise, given Salazar’s track record. “This guy has a long, long history of promoting offshore oil drilling – that’s his thing,” says Kierán Suckling, executive director of the Center for Biological Diversity. “He’s got a highly specific soft spot for offshore oil drilling.” As a senator, Salazar not only steered passage of the Gulf of Mexico Energy Security Act, which opened 8 million acres in the Gulf to drilling, he even criticized President Bush for not forcing oil companies to develop existing leases faster.

Worth reading in full.

Getting stuff done

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Or why the mass media’s attention-deficit syndrome is so pathetic — and so damaging. Great post by Andrew Sullivan.

What are the odds that Obama's huge success yesterday in getting BP to pledge a cool $20 billion to recompense the "small people" in the Gulf will get the same attention as his allegedly dismal speech on Tuesday night? If you take Memeorandum as an indicator, it really is no contest. The speech is still being dissected by language experts, but the $20 billion that is the front page news in the NYT today? Barely anywhere on the blogs.

This is just a glimpse into the distortion inherent in our current political and media culture. It's way easier to comment on a speech – his hands were moving too much! – than to note the truly substantive victory, apparently personally nailed down by Obama, in the White House yesterday. If leftwing populism in America were anything like as potent as right-wing populism – Matt Bai has a superb analysis of this in the NYT today – there would be cheering in the streets. But there's nada, but more leftist utopianism and outrage on MSNBC. And since there's no end to this spill without relief wells, this is about as much as Obama can do, short of monitoring clean-up efforts, or rather ongoing management of the ecological nightmare of an unstopped and unstoppable wound in the ocean floor.

I sure understand why people feel powerless and angry about the vast forces that control our lives and over which we seem to have only fitful control – big government and big business. But it seems to me vital to keep our heads and remain focused on what substantively can be done to address real problems, and judge Obama on those terms. When you do, you realize that the left's "disgruntleist" faction needs to take a chill pill…

Web science institute goes phut: “Low priority” says coalition

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From BBC News.

Funding for a new Institute for Web Science, set up with a £30m grant from the department for Business, Innovation and Skills (Bis) has been cut.

The collaboration between the Universities of Oxford and Southampton, announced in March 2010, was led by web creator Sir Tim Berners-Lee and Professor Nigel Shadbolt.

Both are also leading the government’s open data project data.gov.uk.

BIS said it was a “low priority” as it announced its efficiency savings.

The cut is part of Chancellor George Osborne’s plans to make £6.2bn savings in order to reduce the budget deficit.

A spokesperson from Bis said that the government remained committed to investing in internet technology research elsewhere but that it “cannot support” the creation of the institute in the current economic climate.

Linguistic pollution

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One of the (many) things that infuriated me during the election campaign was all the cant about politicians needing to have the “courage” to make “tough” choices and “painful” decisions. Er, excuse me, but who’s going to feel this much-heralded “pain”? Isn’t it the people who jobs will be terminated, students whose life-chances will be diminished, workers who will have to make do on lower pensions, teachers who will have to handle bigger classes, patients who will have to wait longer for operations, soldiers who will have to do without wearable body-armour? And besides, since when did it require courage to inflict pain on others?

And then there’s the alleged uniqueness of our new Con-Dem administration which is, we are told, the first non-wartime coalition for x hundred years. Er, are we not at “war” in Afghanistan at the moment? And what about the “war on terror”?

Yuck.

Onanism and the National Security State

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One of the reasons I was pleased (and not surprised) by Labour’s defeat in the general election is that I hold Blair, Brown, the infant Milibands and their mates responsible for a frightening growth in the authoritarian intrusiveness of the state over which they exercised such untramelled control. Even so, this piece by Paul Lewis shocked me.

A story lost amid the election coverage was that of David Hoffman, a photographer who had placed a poster of David Cameron containing the word "wanker" in his window on polling day. Hoffman, 63, was visited by police, who handcuffed him in his living room, threatened him with arrest and forcibly removed the poster, which they had deemed offensive.

The poster, which Hoffman considers an act of legitimate protest, has since returned to the window in Bow, east London. But the offending word has been replaced with “onanist”, derived from a biblical character in Genesis 38:9 whose seed was "spilled on the ground”.

As it turns out, Hoffman is no stranger to the policing of dissent, having spent the last three decades chronicling it. He photographed the miners’ strikes, the Wapping disturbances and the poll tax riots, but believes the policing of protest is today at its most repressive. (At last year’s G20 protest, he lost three teeth.)

The Conservative and Liberal Democrat coalition has promised to change all that, and made “restoration of rights to non-violent protest” a central plank of its drive to reinstate civil liberties. That ambition was repeated this week by deputy prime minister Nick Clegg, who will oversee the reforms.

I will start to take this coalition seriously if Clegg & Co deliver on the rolling back of the national security state. But I’m not holding my breath.

Democracy, huh?

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While we’ve been celebrating the peaceful transfer of power in Britain, over in Washington the Obama administration has been stroking Hamid Karzai, the corrupt, incompetent ‘president’ of Afghanistan who — among other things — stole the last presidential election and refuses to concede control over the electoral monitoring process for the next. When Obama first visited Kabul a few months ago, he made clear his distaste for this criminal. But it now seems that the exigencies of US military operations in Afghanistan has required a change of heart. All of which reminds me of Barbara Tuchman’s marvellous book about imperial military adventures. Her essay on Vietnam, for example, reminds us that the weaker the corrupt, incompetent Saigon government became, the greater the leverage it exerted on the Administration in Washington. History repeats itself, as usual.

The last word…

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… from Marina Hype, er Hyde*. Lovely Guardian piece. She’s particularly good on the increasingly-bizarre media circus that developed as the coalition negotiations dragged on.

To say that by the end of this saga the media had begun to eat itself wouldn’t begin to cover the cannibalistic orgy that has been raging in Westminster. News channel helicopters drowned out their own ground-level broadcasts, ably assisted by megaphone-wielding members of the public who chanted things like “Sack Kay Burley!” Ever more outlandishly repellent pundits were exhumed. Kenneth Baker … oof, mine eyes! For political junkies it had the flavour of Pokemon – gotta catch’em all.

For less insane members of the public, this week has presumably acted as a sort of politics aversion therapy, ensuring that every time someone even says the words “strong and stable government”, intense feelings of nausea and images of Alastair Campbell will flood their brain.

The geographically tiny village of Westminster has resembled nothing so much as a meth-assisted version of Camberwick Green, with the Sauron-like capabilities of news channels allowing viewers to follow dramatis personae round this weirdo toytown. There were the Lib Dems leaving their headquarters; there they were walking to the Cabinet Office; there they were a few minutes later arriving. And oh look — there’s Windy Miller talking to Kay Burley on College Green.

Unbelievably – although not really within the context of the past few days – a giant rainbow appeared over the palace just as Cameron’s car swept in. In the coming days, do expect unicorns to follow.

*Footnote: Thanks to the eagle-eyed Hugh Taylor for spotting the typo.