Tuesday, June 18, 2013

Stating the Case.

Speculator Column, IR magazine

  4 Jun 2013

Finding chinks in the armor of the Iron Lady’s legacy 

Margaret Thatcher’s death in April revived discussion of state ownership of industries. The New York Times always described Mrs T as ‘the prime minister who privatized the loss-making state industries’. In reality, she was careful to sell only those that were very profitable, otherwise her friends in the City would not have been so eager to snap them up.

That well-known Bolshevik Winston Churchill nationalized BP, which was making untold millions for the Treasury by the time Mrs T sold it. The utilities that were privatized were no more efficient after the event than before, and usually inflicted much higher charges on their captive customers.

The same management teams that had led the state enterprises kept their desks but tended to pay themselves much more, despite mediocre results. In the modern version of shareholder capitalism, they escaped the political scrutiny of both parliament and citizenry and swapped it for the benign insouciance of money managers.

It’s true that in some countries state industries were channels of patronage and corruption, but the industries Thatcher sold were not among them. They did have strong unions, but for most of the post-war period those unions co-operated in productivity measures and closures, as well as huge reductions in employees. Industries like British Rail lost three quarters of their workers under state control, and these workers tended to be low paid anyway, as governments used them to hold down pay rates and allegedly control inflation.

If the British state industries had a fault, it was not inherent in their form of ownership, but rather that the permanent government of Treasury civil servants starved them of investment, and thus productivity, in order to reduce the Public Sector Borrowing Requirement (PSBR). The PSBR was, and is, an irrelevant shibboleth, as if there were no difference between borrowing to finance investment and selling bonds to finance day-to-day government operations. Indeed, that was one of the stated reasons for privatizing British Telecom: bringing the antiquated telephone network up to date would have needed huge amounts of public investment.

Thanks to Mrs T, in the 1980s, competing parallel universes to the left and the right called for the nationalization of strategic industries, or liberating business from the ‘tyranny of the state’. Both were, and are, utterly detached from reality, as indeed is much of the discussion now.

In the real world, the governments of countries like Singapore, Norway or other oil states now hold huge stakes in British and American industry, without any diminution of business efficiency. Wall Street travels to work on the public-owned MTA and PATH trains and, in between glasses of Champagne, drinks water supplied by New York City. The Street lacked enthusiasm to invest in a 50-year water tunnel building program, but it is not reticent in its acceptance of Uncle Sam’s cash in times of crisis, as long as it comes untrammeled by ownership and control.

Back in Britain, one of Mrs T’s successes was the privatization of the Trustee Savings Bank, until the courts ruled it was owned by its clients, not the government. The proceeds of the sale to Lloyds had to be returned to those clients.

But these models can be Procrustean. If a state enterprise makes money it is either sold or milked to make it fit the privatizers’ paradigm. Now that Fannie Mae and Freddy Mac are making money for the US Treasury, we can be sure calls to sell them will follow – and soon. The US Postal Service (USPS) made money until ideological Congressmen forced it to prefund its employee health plans for 75 years, to pave the way for privatization.

One potential beneficiary of USPS dismemberment would be DHL – owned by the state-owned German Postal Service! There may be a rationale here, but it got lost in the mail somewhere.

Thursday, June 13, 2013

Looking back to Spain, and sideways to Syria

 Tribune 14 June 2013

 Ian Williams

George Orwell understood that ignoring obvious horrors for expediency’s sake is a roadblock to justice.

OrwellThe New Statesman recently reminisced about its former editor Kingsley Martin’s feud with Tribune’s former literary editor George Orwell about the latter’s attempt to tell the whole truth about the Spanish War. Martin preferred the commodity doled out sparingly, for which Orwell never forgave him.
Like many people who would otherwise swear by the truth as an abstract principle, Martin made it a partisan issue for the “cause.” Orwell, of course, often defied such criticism: that to tell the truth would harm the war effort, or harm unity with the part of the so-called left that had tried to kill him in Spain and was busily executing Socialists across Eastern Europe. Interestingly, twenty years after the fall of the Soviet Union, its ghosts haunt Orwell’s reputation yet, with vitriolic detractors whose ad-hominem hatred has almost forgotten its original roots in the purges and now uncontested mass murders of the era.
Veracity as a sacred principle has lots of small-print exceptions for so many people. It would be “bad for Israel,” or bad for the Palestinians. Over years of writing, I’ve been told I couldn’t say “that” about Militant in Liverpool, New Labour, UN corruption, and many other causes. In an eerie echo of Martin in the Statesman, I was told that the Nation in the US had a line, so we could not write anything about intervention in Kosovo that was not outright condemnation. It would “aid imperialism” to say that Slobodan Milosevic built his power on unleashing genocidal impulses.
The Hapsburg lip allegedly led generations of sycophantic dons into emulatory lisps -- which is a minor lapse -- the compared to all those who joined committees to “defend” Rwandan and Balkan mass murderers against “imperialist” justice.
All of us practice a partial vision some extent. Someone might indeed be very ugly, but it behooves us not to point that out. But like the emperor with his new clothes, if such a political figure poses publicly, then it is indeed a writer’s duty to mention their absence of raiment.
Recent weeks have seen some outstanding examples of reckless candour that deserve applause and support. Bradley Manning revealed clear examples of crimes by the Pentagon, notably the murder of a Reuters camera team in Baghdad and the gunning down of innocent civilians coming to help the wounded. It is worth recalling that the Pentagon lied to Reuter’s legal Freedom of Information request by claiming the video was lost.
He deserves all-out support from journalists, not the mumbling diffidence of the New York Times that published his revelations while abandoning their source. Similarly, one hopes that revelations that Edward Snowden supported deranged libertarian right-winger Ron Paul will not detract from support for his deed revealing, dare one say, Orwellian, government surveillance that would have Big Brother green with envy!
One other, almost unrecognised act of non-partisan balance, has come from the UN, in its reports on Syria, which suggest that people on both sides have used chemical weapons and violated human rights. It has resisted attempts to provide the smoking chemical canisters that neocon hawks would like, even though it has indeed made plain that the balance of crimes weighs heavily down on the regime side.
The parallels with Spain are painful. Most atrocities from the rebel side in Syria seem to be associated with their version of the International Brigades, which include fundamentalists coming in to “help.” This week, Russia Today quite correctly reported on their execution of a young Syrian for “heresy.” Somewhat less correctly, RT maintains complete silence on the regime’s mass killings of civilians and opponents.
Orwell’s commitment to the defeat of fascism was unimpeachable. And apart from being one of nature’s awkward squad, he appreciated that publicly ignoring obvious horrors for expediency’s sake does not help the cause of justice and progress in the slightest.
Orwell supported the Republicans in Spain, even though the KGB operating under their aegis tried to kill him -- and actually did execute many others. He certainly did not collectively condemn his comrades in arms who went to fight in the Brigades.
The reason that many of us oppose Assad’s regime is because it is ruthless and murderous, so there is absolutely no reason not to denounce such behaviour when committed by some of “our” side. Indeed, there is even more reason to do so, since to be silent implies complicity.
The truth is not only an effective principle, it is also an expedient weapon in the war of public opinion. We should pillory all who betray it.

Sunday, June 09, 2013

East and West, meeting in twain?

Can Obama, Xi find common ground?
Special to The BRICS Post
June 7, 2013, 3:34 am

In 1907, US President Teddy Roosevelt signaled the arrival of the US as as world power by sending the “Great White Fleet” in  a grand gesture to the globe it circumnavigated. It was a little premature: the ships were obsolescent and relied on the kindness of strangers to refuel but it did mark Washington’s aspirations to put truth in the rumours about the Monroe Doctrine.
Similarly, Xi Jinping’s grand tour, which begins in California and a meeting with US President Barack Obama on June 7, is a debut rather than a consolidation.
It is, perhaps wisely, more economic in its theme, brandishing investments rather than waving big sticks.
While modern financial and trading networks need not follow the consolidated marine and land boundaries of previous rising empires, Xi’s triumphal progress through America’s backyard – the Caribbean and Mexico – demonstrates how much more effectively powerful China’s economic success is than the Soviet weaponry had been. “The China Dream,” is Xi’s rallying cry of a China with a seat at the top table.
It will be interesting to note the progress, with small indicators like the almost certain relaxation of Chinese regulations that restrict imports of Mexico’s Tequila because of methanol levels. A few extra Chinese hangovers is a small price to pay for an economic beachhead right on the Rio Grande.
It is fascinating to watch the interplay between the aspirant and receding superpowers and it is reassuring that both sides are obviously thinking seriously, and not necessarily reflexively about it.
When Richard Nixon went to China, apart from recognition of the previous pariah state’s future potential, at least part of  the White House motive was counterbalancing the Soviet Union. President Xi’s tour of the America epitomizes a renewed appreciation on both sides, but above all of China as a potential counterweight to the US itself. A less confident US is relinquishing the xenophobia, or more specifically Sinophobia, that previously greeted Chinese investment interests.
Across the US, job-hungry local governments yearn for the Yuan to come in and do what their own bankers are refusing to do – invest locally.
The times, they’re a-changing
Previous ups and downs of the great powers have been marked by major conflagrations, and we can be grateful that the demotion of the Soviet Union was relatively peaceful. Two decades ago, it would have been difficult to believe that the US of Strategic Defense Initiative, Star Wars and the New American Century fame would have been quite so polite to its most likely supplanter.
Two decades ago, even Japan was viewed with a jaundiced eye as it surged close to overtaking the US economically, even though militarily it was no threat, and indeed, was almost a US protectorate. The costs of wars in Afghanistan and Iraq have taxed US power even as it outspends the rest of the world militarily.
But the relationship between China and the US is unique. While there is very real rivalry as they both compete for the same space at the top of the table, it is like a Puerto Rican knife fight with the combatants tied by the wrists to each other. The US needs China, which, after all, has financed Washington’s wars with its purchase of US dollars. Conversely, China needs the US. Beijing can neither forgo those reserves deposited in its rivals’ Treasury vaults and needs its markets to fuel the growth of its economy.
Xi knows that the secret of continuing Communist Party of China (CPC) power in the face of potential domestic dissatisfaction is the growing prosperity that keeping US consumers happy brings.
However, China is developing military potential along with its economic success and the friction over disputed islands around the China Sea is worrying. The scenario of a rising uppity power confronting one that is relatively getting weaker, is all the more worrying when we consider that network of alliances and defence commitments that the US has across the region. China has interests and claims in an area where the US is far from home but has ties made in former days of glory.
Pulling treaty triggers
There has been rising tension over disputed islands in the China Sea [Xinhua]
There has been rising tension over disputed islands in the China Sea [Xinhua]
In 1914, we saw what happened as a result of those treaty triggers being pulled, and in the South China Sea, US commitments to Japan, Taiwan, and the Philippines could drag the US into a local conflict with China where the latter has its forces concentrated. The US, of course, is still in imperial overstretch mode, with bases and commitments worldwide. At home, the American public has strictly limited enthusiasm for wars for far-away countries of which, after all, it knows amazingly little.
Conservatives have set up a shopping lists of what Obama should demand of Xi, on economic reforms, currency policy, government etc. Obama is more sophisticated than many of his predecessors – and of course economic circumstances have weakened his hand. He is, one hopes, not going to be crass in his demands of China.
One assumes that Obama would realize just how counterproductive it would be for the US, whose economic model has never looked so dodgy, to lecture China, for whom a growth rate four or five times the US’s, seems to be overstretched in its own right. He will also understand that Xi has his own domestic politics to worry about.
The Communist Party has pretty much abandoned the dialectic of the class struggle, and the glue that holds it together is the nationalism of an oft-humiliated civilization.
So the talks are an opportunity for quiet dialogue and a development of rapport between the two leaders. Beijing might offer magnanimous compromises or exit routes on many of the maritime border issues, for example, but would certainly bridle at any ultimata. But the US is hardly in a position to brandish ultimata.
Room for compromise
In the case of Taiwan, for example, the administration’s efforts are more about stopping Taipei tickling the dragon than building up a prickly defence. The long obfuscation of Congressional efforts to sell F-16s to Taipei shows successive presidents’ deference to Beijing’s sensibilities, which on the face of it is illogical appeasement. The planes are only of use if China attacks – no one seriously expects Taiwan to attack the mainland, after all. But Washington has to take account of the importance of the island in China’s inner party rivalries.
There is room for compromise. If we consider, for example, North Korea as China’s Israel, an embarrassing but ineradicable ally, it would frame the limits of what Washington could reasonably expect China to do in a low key way. Xi can no more disown Kim Jong-un publicly than Obama can repudiate Netanyahu, but there are important gestures available.
Obama could pledge, for example, that US forces would withdraw from the Korean Peninsula in the wake of any re-unification, thus avoiding the triumphalistic mistakes in Europe that still fuel Russian resentment.
In fact, there is another model the two might adopt. Britain and the US were similar rivals and partners, tied as much by financial chains as any alleged common bonds of culture and language.
The US facilitated the decline of its erstwhile rival, moving from debtor to creditor – and, it might be added, doing its best to stab its ally in the back financially even as they fought together. But it has not approached military tensions since the British burnt the White House in 1814.
Of course, unless the Tea Party triumphs and splits the US into autonomous fragments, the US is never going to decline as precipitately as Britain shorn of empire, but it is possible for a rising China to be partners with a still powerful, although relatively declining America.
It would appear that Xi and the Chinese are prepared for this.
In terms of domestic politics, Japan is the foreign scapegoat up front while the US is relatively benign in China’s image.
Similarly, China benefits in the US from not being the Soviet Union and also the  main trading partner, an object of admiration and emulation.
Xi and Obama might be the two right people in the right place to make the mutually respectful links needed – and these talks will demonstrate that, one way or another.