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Huffington Post Blog Entries by: JOHN BRIAN SHANNON
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Size isn't everything Baby: The New, Small "Green" Nuclear Reactor

Posted March, 9, 2012 http://www.huffingtonpost.ca/john-brian-shannon/modular-nuclear-reactors_b_1308276.html

;

Solar Power Gets the Might of the U.S. Military Behind It
Posted February 15, 2012 http://huff.to/yf4lk

 

Biofuel a Win-Win: Green and Cost-Effective
Posted February 1, 2012 http://huff.to/Ag8M9X

 

God Save Our Queen!
Posted January 16, 2012 http://huff.to/xKx7Rf

 

A Solution to Northern Gateway to Please Everyone
Posted January 9, 2012 http://huff.to/yeio3l

 

Kyoto Is Dead — But Don’t Blame Peter Kent
Posted January 2, 2012 http://huff.to/uP5v0F

 

Coal Gets Less Down and Dirty
Posted December 22, 2011 http://huff.to/rGf9Vk

 

As China Goes Green What Is Canada Waiting for?
Posted December 16, 2011 http://huff.to/uzq078

 

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EnergyBoom Blog Entries by: JOHN BRIAN SHANNON

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Solar

Solar Power Gets the Might of the U.S. Military Behind It

By JOHN BRIANSHANNON on April 20, 2012

The first solar panels ever installed, were photo-voltaic solar panels mounted on military satellites and blasted into space from Cape Kennedy, Florida during the 'Space Race' of the 1960's.

Read more:Solar Power Gets the Might of the U.S. Military Behind It

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Emerging

Energy: The Ball is in Our Court

By JOHN BRIAN SHANNON on April 19, 2012

Human beings use different kinds of energy for different purposes all over the planet every hour of the day and night.

Read more: Energy: The Ball is in Our Court

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Biofuels

Next Generation Biofuels Are Making Solid Progress

By JOHN BRIAN SHANNON on April 9, 2012

As many of you know most of the gasoline available in North America today has a biofuel component of between 5 and 10 percent. Newer cars and trucks are E85 compatible, meaning they can operate with up to 85 percent ethanol blended into the gasoline -- which means there is a total growth opportunity of up to 75 percent in the North American biofuel market.

Read more: Next Generation Biofuels Are Making Solid Progress

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EMERGING

The New, Modular Nuclear Reactor

BY JOHN BRIAN SHANNON ON APRIL 2, 2012

The March 11, 2011 Fukushima Daiichi nuclear power plant disaster has precipitated a world of change in Japan's nuclear power industry.

Read more: The New, Modular Nuclear Reactor

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POLICY

President Obama: Too Smart to Take the Bait

BY JOHN BRIAN SHANNON ON MARCH 27, 2012

A few weeks ago, I wrote to the President urging him to make North America more energy self-sufficient and to promote common-sense regulatory controls for all forms of energy in our hemisphere - while at the same time continuing to encourage both sustainable energy projects and responsible energy use.

Read more: President Obama: Too Smart to Take the Bait

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Austerity bites

Austerity bites | Politics for the 21st Century | Scoop.it
ECONOMIC developments have the austerity-growth connection in the news once again.

 

RE-BLOGGED FROM THE ECONOMIST - TO READ THE FULL ARTICLE, CLICK ON THE TITLE - ^ON TOP^

 

Apr 25th 2012, 17:55 by R.A. | WASHINGTON

 

ECONOMIC developments have the austerity-growth connection in the news once again. First, Spain continued its austerity push, even as it became clear that the Spanish economy remains in a recession that's undermining fiscal goals. And secondly, Britain's economy appears to have contracted in the first quarter, placing it officially in recession—thanks, say the critics, to the government's ambitious fiscal consolidation programme.

 

The temptation, to which many writers are succumbing, is to say that fiscal cuts automatically translate into slower growth, and that weak economies should delay austerity as much as possible. That's more right than wrong, but a little too oversimplified for my taste. When it comes to questions of austerity and growth there are a few key things to remember.

 

First, there is no "monetary demand" distinguishable from "fiscal demand". If there is an output gap that could potentially be filled by fiscal expansion, that same gap is amenable to monetary expansion. And so the impact of fiscal changes on the economy depends quite heavily on the central-bank reaction. When we look at the Alesina-Ardagna evidence on the relative success rate of spending-cut versus tax-rise austerity, we find that the difference in impact on growth is mostly attributable to differing central banks responses: central banks ease to offset spending cuts but are reluctant to do so for tax hikes, perhaps because spending cuts are seen as the more durable form of consolidation. In weighing the impact of austerity, then, the first question to ask is what the central bank is doing?

 

Next, this implies that in the absence of an independent monetary policy, the fiscal multiplier will often be quite high. If Spain had its own central bank, that central bank would be easing furiously to offset the government's budget cuts. But Spanish monetary policy is set in Frankfurt, for a currency-area much larger and economically healthier than Spain. Because there is very little monetary offset, fiscal cuts immediately and directly impact Spanish growth. The heavy emphasis on short-term austerity within the euro zone has been very counterproductive.

 

And thirdly, the stance of fiscal policy in an economy with an independent monetary policy may nonetheless matter if there are concerns that the monetary transmission mechanism is broken. Some economists have argued, for instance, that American monetary policy has been less impactful than expected because one of the main transmission channels—mortgage lending—has been seriously impaired for much of the recession and recovery. One could imagine an optimal policy that would involve fiscal efforts to support mortgage lending funded by monetary expansion. Of course, this kind of fiscal involvement needn't correspond to overall fiscal expansion. Targeted interventions in housing could be offset by cuts somewhere else.

 

Given all this, how should we interpret Britain's recent experience? I can think of three potential stories. One is that Britain's economy has substantial structural problems, and the decline in output in the Great Recession represented a permanent loss in capacity. According to this view, the low-growth, high-inflation response to monetary easing simply indicates that the economy is operating at (diminished) capacity, and fiscal austerity isn't doing any harm—indeed, it might be contributing to medium-term growth in economic potential.

 

A second story is that a key monetary transmission mechanism is broken: monetary easing isn't translating into new business lending. Monetary policy is therefore acyclical at best, and the overall stance of stabilisation policy is contractionary. High inflation, in this case, is essentially a red herring, driven by one-off movements in VAT, energy prices, and the exchange rate.

 

And a third story is that we're all missing the forest for the trees. That despite significant economic headwinds, including substantial financial-market spillover from Europe, Britain is doing all right. That fiscal austerity is probably healthy from a structural standpoint, that the Bank of England has acted more-or-less appropriately to offset the demand impacts of fiscal cuts and Europe, and that the current recession will soon give way to steady growth. That, or something close to it, is the view of a number of Britain-focused economists, including Adam Posen, who recently reversed his long-running support for more QE based on signs of underlying economic strength in the British economy.

 

In my view, British fiscal policy has not been ideal. Britain faced very little bond-market pressure and could easily have afforded to pursue a slower fiscal-consolidation route. It would have made (and would still make) more economic sense to devote the marginal budget dollar to improving the climate for lending to small businesses, or to investment in education and research, or to infrastructure spending rather than to deficit reduction. The Bank of England has been too conservative in addressing bank-financing troubles associated with the euro crisis; indeed, the ECB has handled the issue far better. And Britain's economy does seem to face substantially greater structural problems than America's. Structural reforms might well have been a better target for the Cameron government than budget cuts.

 

There is plenty of criticism to go around. And while I understand why Britain has become the poster-child for anti-austerity crusaders, the actual story isn't quite that cut and dry.

 

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shaun39April 25th, 20:52

I would agree here that sound investment - slowing the pace of deficit reduction in order to build roads while the labour is cheap - makes enormous sense and is fiscally prudent.

But the UK public sector consumes too large a share of GDP: the deficit magnitude is awful and unsustainable, while it isn't possible to raise enough revenue (even in good times) to cover government's spending share in the UK.

Things are stressed.

The focus must be on reducing finance costs for British businesses - new investment is what drives productivity, competitiveness, wages and profit, but instead we have cut credit lines, mothballing, stock cutting, plant closures and rising working capital requirements.

That's - alongside construction - is the big story. That is why the UK is still 3% down on the pre-recession GDP peak, despite advancing technology, rising population, rising retirement age, and human capital accumulation.

Government could and should increase capital spending - but it must never compromise in its relentless pursuit of efficiency savings, reduced payroll and welfare reform. And the real issue - availability of finance, especially for exporting businesses - must carry greatest weight.

 

JVS982 in reply to shaun39April 25th, 21:19

Hello shaun39,
I appreciate the comment, but I don't understand how the deficit run by the British Government is unsustainable. If the UK government can create pounds at will, and as many as it wants, how could a deficit be considered unsustainable?
Thanks-

 

shaun39 in reply to JVS982April 25th, 21:54

Because the total stock of government debt is soaring, from under 40% of GDP and rapidly towards/ past the 80% mark (much more if the bad debts held by government owned banks were marked down; much more if pension liabilities were explicit on the books).

You might argue that (thanks to quantitative easing) a large share of that debt is now held by the BoE, and that no interest has to be paid on that portion.

Yet, the UK has a bad balance of payments deficit without enough investment, credit or growth to justify the capital inflows; inflation is already 3.5% and likely to rise, as sterling's trade weighted depreciation seems likely to continue. On current path, the BoE will soon have to sell large numbers of bonds - and rising yields will have to be paid to middle eastern investors.

Because of the UK's historic low savings, and dependence on foreign capital, real interest rates will soon have to rise somewhat (beginning in the next 1 to 2 years, and continuing for a decade or more).

And yet, higher interest rates are precisely what would devastate the productive economy - we need the tradable sector to perform to support good terms of trade, but competitiveness depends so heavily on low business finance costs which high government debt would undermine.

A bigger deficit just isn't worth it - would slow the rebalancing and hurt both public and private sector productivity more than anything else. But necessary investment with substantial positive returns - from the electric grid to the roads to ports to education access - should be expanded upon (amidst general tightening).

 

JVS982 in reply to shaun39April 25th, 22:11

Hello shaun39,
Those are interesting points that you bring up. I'm not an expert, but I'll try to respond to them, point-by-point.

1. There is no question that UK government debt as a fraction of GDP has grown, but I fail to see that the UK government could not make good on its payments. Since they create money, they can always pay their debts. I agree that there are limits, but I think they are inflation-related, not government-solvency-related.

2. I don't live in the UK, so I can't comment first-hand about the inflation there, but from the reports I read, much of the inflation is a result of a rise in the VAT, and also the increase in fuel prices due to demand in China and other consumers pushing up prices. Several reports also indicate that the increase in prices caused by the VAT increase has passed and that the inflation rate is in decline, i.e. there is disinflation in the UK. I haven't seen a correlation between UK government deficit spending and inflation, in the UK or the US.

3. I can't see how the UK could have higher interest rates, unless the BOE wants them. The BOE sets the interest rate through the many tools at its disposal, which also include a balance sheet of unlimited size. How could they have high interest rates unless the BOE wants them? If the private sector fails to purchase sufficient bonds from the government to achieve the target interest rate, teh BOE could buy them. Why would a government that creates money be forced to borrow the money back from the private sector?

I agree with you that infrastructre spending has many benefits - it creates jobs, improves productivity, and gives citizens a higher quality of life. These are the type of things that a government shoudl pursue. I disagree with you that the debt of the UK government is standing in the way of those goals.

An interesting discussion.

 

shaun39 in reply to JVS982April 25th, 22:51

I largely agree with you that - under current circumstances - there are few immediate problems with debt. There is plenty of slack to stop that from immediately passing through to wages or inflation now.

Trouble is, interest rates won't be pressed against the zero bound for much longer: inflation in the UK is 3.5% (last April to this April). Again you are correct: core inflation is about 1%, and price inflation is coming from sterling's trade-weighted depreciation (large and ongoing). It doesn't really include significant VAT pass through (happened too long ago).

The risks in the UK aren't really wage pressure - capital flight and depreciation are a threat to price stability, and we are likely to need tighter monetary/ fiscal policy even as a massive output gap (and little wage pressure) remains.

If interest rates rise in the US or EU, or if there's another rally in oil prices or some other market shock, sterling could take another snap downwards, and the BoE will be forced to impose higher rates - devastating for consumers and businesses (including the exporters who matter most as we recover from a current account deficit).

We don't want that - or if it happens, we want it to be more moderate. Persistent and incremental fiscal tightening - however painful and badly timed - is necessary because the UK is a small open economy with a massive current account deficit, high debt, low investment and low savings; and therefore highly vulnerable to capital flight fuelled inflation.

 

 

John Brian Shannon in reply to JVS982  56 mins ago

 

JVS982 says; "...but I don't understand how the deficit run by the British Government is unsustainable. If the UK government can create pounds at will, and as many as it wants, how could a deficit be considered unsustainable?"

 

ANSWER: When the amount of interest paid to service the deficit is equal to or greater than the deficit itself.

 

When deficit financing rates are high (and compounding obviously) the government's ability to borrow ever more is constrained by virtue of credit ratings. Lower ratings further increase borrowing costs, which further lower the credit rating.

 

This happened to Canada in the early 1990's. In fact, in 1990, one half of all federal government revenue collected went to pay federal government deficit and accumulated deficit financing costs!

 

Until that point in time, successive Canadian governments thought as you do JVS982, that the federal government could just create money at will, and run endless deficits.

 

http://business.financialpost.com/2011/11/21/lessons-from-canadas-basket...

 

Lesson learned for Canada!

 

John Brian Shannon

 

 

Doug PascoverApril 25th, 20:18

I'm pretty convinced that most to all of the impact from macro-economic policy is the confidence it creates or fails to create. When the economy is broken and the government's balance sheet is good or monetary policy is tight, stimulus ought to work. When a government with a bad balance says we will do something about this in the medium term, that seems bound to erode confidence in the economy.

 

 

JVS982 in reply to Doug PascoverApril 25th, 21:29

Hello Doug,
An interesting comment, but I disagree with the assessment that austerity spurs confidence. If it were true, you would expect to see historical examples of depressed economies that grow dramatically when government spends less (unlike growing economies where private spending can replace the drop in public spending). What historical example can show that government austerity during a recession can create significantly higher growth? I can't think of one.

 

 

 

John Brian Shannon in reply to JVS982  1 hour 30 mins ago

 

I CAN.

 

In Canada 1990-1998 when our government was in record debt so obscene there was talk it would eventually be downgraded to junk bond status and Canada's overall economy was well on-track to become worse than Greece today.

 

Hindsight is 20/20, but it was a very uncertain time for Canada due to a lack of confidence in the government's ability to manage the economy.

 

In 1991 the Canadian government started collecting a brand-new tax (then called the Goods and Services Tax) which was a 7% sales tax on practically everything sold in Canada.

 

Prime Minister Jean Chretien and his Finance Minister Paul Martin used most of that windfall to lower Canada's obscene yearly deficits until they were at zero, at the same time any additional revenue was directed to government debt which was financed at a very high rate.

 

Over and above those self-policed paydowns, some of that tax revenue found it's way into hundreds of "shovel-ready" infrastructure projects across Canada which stimulated the economy nicely.

 

In the space of 7 years, Canada went from near-insolvency to zero deficit, reasonable debt-to-GDP, the remaining gov't debt financed at an attractive rate, fully restored credit rating, low inflation, decent growth and lower unemployment.

 

And not a few admiring glances from world economist's.

 

Once you fix the structural economy, everything else gets easier!

 

http://business.financialpost.com/2011/11/21/lessons-from-canadas-basket...

 

John Brian Shannon

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European Crisis Realities

European Crisis Realities | Politics for the 21st Century | Scoop.it

February 25, 2012, 7:01 AM

 

There are basically three stories about the euro crisis in wide circulation: the Republican story, the German story, and the truth.

 

This is not original, but for reference I find some charts useful. In what follows I show data for the euro area minus Malta and Cyprus — 15 countries. I use red bars for the GIPSIs — Greece, Ireland, Portugal, Spain, Ireland — and blue bars for everyone else.

 

The Republican story is that it’s all about excessive welfare states. How does that hold up? Well, let’s look at public social expenditures as a share of GDP in 2007, before the crisis, from the OECD Factbook:

 

Hmm, only Italy is in the top five — and Germany’s welfare state was bigger.

 

OK, the German story is that it’s about fiscal profligacy, running excessive deficits. From the IMF WEO database, here’s the average budget deficit between 1999 (the beginning of the euro) and 2007:

 

Greece is there, and Italy (although its deficits were not very big, and the ratio of debt to GDP fell over the period). But Portugal doesn’t stand out, and Spain and Ireland were models of virtue.

 

Finally, let’s look at the balance of payments — the current account deficit, which is the flip side of capital inflows (also from the IMF):

 

We’re doing a lot better here — especially when you bear in mind that Estonia, a recent entrant to the euro, had an 18 percent decline in real GDP between 2007 and 2009. (See Edward Hugh on why you shouldn’t make too much of the bounceback.)

 

What we’re basically looking at, then, is a balance of payments problem, in which capital flooded south after the creation of the euro, leading to overvaluation in southern Europe. It’s not a perfect fit — Italy managed to have relatively high inflation without large trade deficits. But it’s the main way you should think about where we are.

 

And the key point is that the two false diagnoses lead to policies that don’t address the real problem. You can slash the welfare state all you want (and the right wants to slash it down to bathtub-drowning size), but this has very little to do with export competitiveness. You can pursue crippling fiscal austerity, but this improves the external balance only by driving down the economy and hence import demand, with maybe, maybe, a gradual “internal devaluation” caused by high unemployment.

 

Now, if you’re running a peripheral nation, and the troika demands austerity, you have no choice except the nuclear option of leaving the euro, coming soon to a Balkan nation near you. But non-GIPSI European leaders should realize that what the GIPSIs really need is a general European reflation.

 

So let’s hope that they get this, and also give each of us a pony.

 

 


COMMENTS:

 

John Brian Shannon - Canada


I enjoyed the charts as they do relate to economic examples - but they seem mostly examples of aberrations and wild-cards to me.

 

Whether deficit-financing or accumulated government debt (which is merely a factor of running more than one deficit and not repaying it), it is money taken out of the economy and no longer available to stimulate or invest in other ways. Even worse, it is money which requires debt servicing, placing a further drag on the economy - and usually, the economies which can least afford more 'drag'.

 

Stimulating the economy with the goal of reflating it, by the use of deficit-financing, which adds more drag, seems counter-intuitive.

 

All of the following countries are "normal" having very low debt-to-GDP, excellent growth, reasonable inflation and unemployment figures, plus good standards of living.

 

They also have low per capita crime rates and good to excellent health care systems.

 

Australia, Liechtenstein, Qatar, Oman, Kuwait, Sweden, Switzerland, Korea, Argentina, South Africa, New Zealand and more, all feature less than 40% debt-to-GDP (two, effectively have 0% debt-to-GDP), thriving economies, they score well on the global competitiveness index and typically run low inflation.

 

For example:

http://en.wikipedia.org/wiki/Economy_of_Australia

 

http://en.wikipedia.org/wiki/Economy_of_Liechtenstein

 

http://en.wikipedia.org/wiki/Economy_of_Qatar

 

http://en.wikipedia.org/wiki/Economy_of_Oman

 

http://en.wikipedia.org/wiki/Economy_of_Kuwait

 

http://en.wikipedia.org/wiki/Economy_of_Sweden

 

http://en.wikipedia.org/wiki/Economy_of_Switzerland

 

http://en.wikipedia.org/wiki/Economy_of_South_Korea

 

http://en.wikipedia.org/wiki/Economy_of_Argentina

 

http://en.wikipedia.org/wiki/Economy_of_South_Africa

 

http://en.wikipedia.org/wiki/Economy_of_New_Zealand

 

Therefore, I would call the nations cited in the charts as abnormal, aberrant and in a transient state.

 

While the nations I have cited as "normal" (stable) are therefore more accurately captured and characterized in a snapshot of time.

 

 

John Brian Shannon - Canada 

(comment #2 on this article)


Thank you for the excellent information, Prof. Krugman.

 

I can't help but wonder if some "normal" countries couldn't have been included in the charts to establish some sort of baseline for "normal" economic behaviors.

 

(Sorry Germany, I still love you, in other respects you qualify as "normal" but you are approaching a demographic bomb - and you are coping with China, your new superpower competitor which has surpassed your outstanding manufacturing output - not to mention you are propping up Europe, moreso by the day!)

 

Not the "normal" state of affairs for any nation.

 

Most of the nations you have cited have obscene debt, dramatically changing demographics and/or the threat of external change being imposed and other transient problems. In my mind this skews the results enough to call them wild-cards and oddballs.

 

Normative, is what the West used to be - but only on account of the good economic policies then in place.

 

Saudi Arabia, for one example, has aggressively slashed debt over the past 20 years, from 102% to 6.3% of GDP.

 

They are maintaining a rapid growth rate of 7.8%, and are rated #21 on the global competitive index and rising.

 

Not only that, they have $533 billion dollars of foreign reserve cash and run large surpluses ($90 billion for 2012).

 

Inflation typically runs around 3-4%.

 

http://arabnews.com/opinion/article566672.ece?comments=all

 

http://arabnews.com/economy/article554645.ece

 

http://arabnews.com/economy/article565938.ece

 

Western economic policy-makers, take note. We in the West, have lost our way. We need to follow the best working model - starting yesterday!

 

 

 

Comment #3 by John Brian Shannon

 

Whether deficit-financing or accumulated government debt (which is merely a factor of running more than one deficit and not repaying it), it is money taken out of the economy and no longer available to stimulate or invest in other ways.

 

Even worse, it is money which requires vast debt servicing costs, placing a further drag on the economy - and usually on the economies which can least afford more 'drag'.

Stimulating the economy with the goal of re-flating it by the use of deficit-financing which adds more drag - seems counter-intuitive.

 

Instead of stimulating the economy with borrowed money, which by the time it gets repaid has cost 100% more than the prinicpal, places countries upside down in only a few years time.

 

Just in time to start a new and worse, boom/bust cycle!

 

Therefore, what Greece needs more than anything, is the best salesperson on Earth to dramatically increase exports (and bring in huge FDI) by whatever means.

 

Doing so will bring "new money" into the country. New money, if it is enough, will solve any economic problem as long as it comes in faster than the deficit increase - if everything else is relative.

 

This doctor prescribes: austerity enough to prevent any increase of government debt, re-negotiated existing debt and hiring the best salesperson available to dramatically increase exports and bring in huge FDI.

 

Where is the former CEO of Chrysler Corp, Lee Iacocca? Greece needs austerity, a re-finance package and strong sales!

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TomAlex's comment, February 27, 2012 5:22 AM
Living in Greece, the 'view from the field' is that I'm not sure you need a Lee Iacocca or a nobelist economist like Prof. Krugman to run the country. It basically boils down to doing the things that any ordinary household does: Balance your checkbook and always ask : Am I spending money that I can cover and in the most efficient way? Am I providing food for the family first, am i investing in my childern's education, am I covering for a possible accident or illness? Once I have that, then maybe one can see if we are really going to buy that yacht that our neighbor just bought.
And the situation in Greece was (and is) just the opposite:
You give a blanc check for say olympics when you alredy have a serious deficit. This is not sound economic judgement. Even worse, in the midst of the crisis, the parliament overwhelmingly approves(including the left wing oppositon parties) the government donnating the land and spending 15mil to build a mosque for illegal immigrants , plus pay for life a mufti. And of course this opens the gates of hell, so that every religion, from buddhists to scientologists can ask the same. 15 mil euros may not look like much, but the billions of deficits are made of such small '15mil euro' packages and at a time when the government has problems paying pensions and salaries(not for MPs though). The point is that there are surely much better uses for 15mil euros and the land.
Why not create a solar park there and have a steady influx of income for the state? In fact why not install solar panels in every government building?
So what is widely labelled 'austerity' does not necessarily have to be that. I call it common sense.
Second, there has to be some sense of proportionality-people cannot follow when they are asked for sacrifices, while those who created the problem make none. For instance the Director of the bank of Greece makes 4mil euros/year and has repeatedly called for connecting salary to performance. MPs, who voted for deficit upon deficit have also seen no real reduction.
Also what is called 'welfare state' ain't necesarily so. 'Welfare' was never that generous. You cannot compare it to say Germany or Sweden, or even the US. People on welfare actually survive because of family support.
Last, on sales: One actually needs to produce to sell(else the producer can eliminate you as the middleman). The problem there is that due to corrupt and incompetent managers(revenge of the D-students), every thing should be bought from an established company abroad(via a local rep), and it does not matter if people develop much better things internally. In that case of course people who do this development say "if my own company will not even evaluate my product which is much better than the commercial one and which they can have for free, what are my chances of starting my own company and trying to sell it to them?" Couple to that the huge amont of red tape and complex laws(for instance if you have a contract with a company abroad and you want to be taxed in Greece, you will be taxed not on what you contract says, but on what the tax authorities ***think** you should have been making. Don Corleone would be proud of this idea. Last, while Greece had an excellent educational system, which meant that greek students out of highschool would have a head start over corresponding ones from say US highschools, this has been criminally destroyed with huge implications both on the quality of professionals produced but also on the quality of thinking of many mediocre students.
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The Power of Plutocratic Pettiness

The Power of Plutocratic Pettiness | Politics for the 21st Century | Scoop.it
Hell hath no fury like hedgies scorned....

 

PROFESSOR PAUL KRUGMAN

March 18, 2012, 3:26 PM

 


Via Rich Yeselson, Alec MacGillis has a fantastic piece in the New Republic (unfortunately paywalled) about how hedge fund managers’ love for Obama has turned into blind, spitting hatred.

 

His main argument is that it’s all about feeling disrespected:

 

"Masters of the universe rarely get much guff in their daily routine: “The guy at the top, the name on the door who raises all the money and makes the big decisions: How’s that guy treated? How many times does someone tell that guy that he might not be a good guy, that, you know, you’re kind of a dick? These guys are not used to getting dinged at all."

 

And it wasn’t just anyone knocking them–it was the president of the United States, notes Eugene Fama, a legendary finance professor at the University of Chicago and Asness’s former mentor.

 

“Lots of [hedge fund managers] started out poor, and made a huge amount of money, and created thousands and thousands of jobs in the process. They’re used to being the American Dream, and now you have the president who looks at them and sneers at them like they’re bad guys.”

 

For all the brashness and bravado that goes with their world, it seems the managers are oddly insecure about their purpose.

 

For years, “most people in the financial service sector were viewed with enormous, out-of-the-box respect and adulation,” says Daley. “These guys were on pedestals, and now that pedestal’s gone, and now, in a lot of people’s minds, the industry doesn’t have that glow, and that bothers them, and now they join that with the president and his theoretically bashing the wealthy.

 

They’ve got to blame somebody, and they blame him because he is representative of that group of people who ‘aren’t us.’”

 

Former Official B told me, “Whether it’s [former Fed Chairman Paul] Volcker saying there’s been no financial innovation worth a shit since the ATM or the president saying his thing, they’re hypersensitive.”

 

Former House Financial Services Committee Chairman Barney Frank was more scathing: “They don’t just want us to represent their interest, they want to be told that what they do is very good. They want to be honored for what they do for society. And Obama has hurt their feelings. Raising their taxes is not simply a blow to their income. It is a blow to their psychic income, a failure to recognize the enormous good they do for the world.”


This seems completely right to me. When you make a billion dollars a year, you can buy anything you want — which means that goods and services yield almost no marginal utility. What you crave, then, is what money can’t buy: respect.

 

Actually, I’ve seen this in action at meetings where financial big wheels and professors mingle.

 

You’d think that the people with the big bucks would be confident; on the contrary, they’re insecure, because they want respect for their minds. And I know for a fact that some of Obama’s big-money early backers were motivated in large part by the lure of being in the inner circle in a way that someone like Hillary, with her long record and connections, couldn’t offer.

 

And now Obama says what anyone paying attention would: that these big-money people were, to some extent, making their money in socially destructive ways — and they go insane, precisely because in their hearts they know that he’s right.

 

And because money talks in politics, this pettiness, this display of ego and hurt vanity, may have disastrous consequences.


-----------------------------------------

 

Write a Comment

 

John Brian Shannon Vancouver, Canada

 

As per usual. Prof. Krugman hits the nail squarely on the head.

 

He profoundly chooses to associate economics, fiscal policy and the stock markets themselves, with the psychology of human beings.

 

Economics, among other things, is an abstract of human behavior as it relates to the needs, wants and desires of humans.

 

That same human desire for security and respect that drives hedge-fund managers to achieve, drives every teacher, attorney, trades-person and all other workers.

 

Those workers who can see the tangible results of their day's work report a feeling of deep satisfaction and self-worth when viewing their finished product, written words or artistic images.

 

At an ephemeral level, doctors, actors and professional athletes measure the results of their work by the response of their particular audience.

 

Among the most difficult to grasp, are the visible benefits brought to citizens by hedge-fund managers. Where can they go to see the fruits of their particular labour?

 

The can't run their hand over a new car that they have played a part of assembling, nor can they see their students progressing well, nor will they see the doctor's view of the happiness of a family with their freshly-delivered infant.

 

While hedge-fund managers may contribute much to a nation's success, they can be defensive because they can't see the tangible results of their work and neither can anyone else.

 

While economics can exist as an abstract - human beings cannot exist as an abstract, nor can they live inside one.

 

johnbrianshannon@gmail.com 

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This Is a Recovery Worth Getting Excited About

This Is a Recovery Worth Getting Excited About | Politics for the 21st Century | Scoop.it

This is a services economy experiencing a serious services recovery... and it has absolutely nothing to do with the size of total government, which is still shrinking

 

MAR 9 2012, 10:49 AM ET 104

 

Hey everyone? This is what a real recovery looks like.

 

The economy added 227,000 jobs in February, and the unemployment rate held steady at 8.3%, even as more people joined the work force. The day's news is good. The trend line is even better.

 

The economy has added 730,000 jobs in the last three months, which puts us on pace to add nearly 3 million jobs in 2012, after adding 1.6 million in 2011.

 

The last 12 months of job growth was the best in five years. Long-term unemployment -- the most intractable tragedy of the Great Recession -- is ticking down. Wages are still low, and unemployment is still way too high among minorities and low-skilled workers. And we could still get creamed by a freak gas spike. But this is a recovery worth getting excited about....

 

To read the entire article in The Atlantic, click on the hyperlinked (in black) article title...

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What Ails Europe?

What Ails Europe? | Politics for the 21st Century | Scoop.it

By PAUL KRUGMAN
Published: February 26, 2012

Things are terrible here, as unemployment soars past 13 percent. Things are even worse in Greece, Ireland, and arguably in Spain, and Europe as a whole appears to be sliding back into recession.

 

Why has Europe become the sick man of the world economy? Everyone knows the answer.

 

Unfortunately, most of what people know isn’t true — and false stories about European woes are warping our economic discourse.

 

Read an opinion piece about Europe — or, all too often, a supposedly factual news report — and you’ll probably encounter one of two stories, which I think of as the Republican narrative and the German narrative. Neither story fits the facts.

 

The Republican story — it’s one of the central themes of Mitt Romney’s campaign — is that Europe is in trouble because it has done too much to help the poor and unlucky, that we’re watching the death throes of the welfare state. This story is, by the way, a perennial right-wing favorite: back in 1991, when Sweden was suffering from a banking crisis brought on by deregulation (sound familiar?), the Cato Institute published a triumphant report on how this proved the failure of the whole welfare state model.

 

Did I mention that Sweden, which still has a very generous welfare state, is currently a star performer, with economic growth faster than that of any other wealthy nation?

 

But let’s do this systematically. Look at the 15 European nations currently using the euro (leaving Malta and Cyprus aside), and rank them by the percentage of G.D.P. they spent on social programs before the crisis. Do the troubled GIPSI nations (Greece, Ireland, Portugal, Spain, Italy) stand out for having unusually large welfare states? No, they don’t; only Italy was in the top five, and even so its welfare state was smaller than Germany’s. So excessively large welfare states didn’t cause the troubles.

 

Next up, the German story, which is that it’s all about fiscal irresponsibility. This story seems to fit Greece, but nobody else. Italy ran deficits in the years before the crisis, but they were only slightly larger than Germany’s (Italy’s large debt is a legacy from irresponsible policies many years ago). Portugal’s deficits were significantly smaller, while Spain and Ireland actually ran surpluses.

 

Oh, and countries that aren’t on the euro seem able to run large deficits and carry large debts without facing any crises. Britain and the United States can borrow long-term at interest rates of around 2 percent; Japan, which is far more deeply in debt than any country in Europe, Greece included, pays only 1 percent.

 

In other words, the Hellenization of our economic discourse, in which we’re all just a year or two of deficits from becoming another Greece, is completely off base.

 

So what does ail Europe? The truth is that the story is mostly monetary. By introducing a single currency without the institutions needed to make that currency work, Europe effectively reinvented the defects of the gold standard — defects that played a major role in causing and perpetuating the Great Depression.

 

More specifically, the creation of the euro fostered a false sense of security among private investors, unleashing huge, unsustainable flows of capital into nations all around Europe’s periphery. As a consequence of these inflows, costs and prices rose, manufacturing became uncompetitive, and nations that had roughly balanced trade in 1999 began running large trade deficits instead. Then the music stopped.

 

If the peripheral nations still had their own currencies, they could and would use devaluation to quickly restore competitiveness. But they don’t, which means that they are in for a long period of mass unemployment and slow, grinding deflation. Their debt crises are mainly a byproduct of this sad prospect, because depressed economies lead to budget deficits and deflation magnifies the burden of debt.

 

Now, understanding the nature of Europe’s troubles offers only limited benefits to the Europeans themselves. The afflicted nations, in particular, have nothing but bad choices: either they suffer the pains of deflation or they take the drastic step of leaving the euro, which won’t be politically feasible until or unless all else fails (a point Greece seems to be approaching). Germany could help by reversing its own austerity policies and accepting higher inflation, but it won’t.

 

For the rest of us, however, getting Europe right makes a huge difference, because false stories about Europe are being used to push policies that would be cruel, destructive, or both. The next time you hear people invoking the European example to demand that we destroy our social safety net or slash spending in the face of a deeply depressed economy, here’s what you need to know: they have no idea what they’re talking about.

 

 

COMMENTS:

 

John Brian Shannon - Canada


Thank you Professor Krugman for putting in the effort to visit Europe to find out first-hand just what the situation 'on the ground' is. Sometimes just being where the story is playing out can crystallize one's thinking immeasurably. All journalists know this, but it does involve much effort and inconvenience. More power to you, Sir!

 

The prevailing attitude in North America towards the EU, is that Europe is failing economically on account of it's socialist welfare policies. Wrong.

 

There are many other reasons for poor economic performance besides socialist policy in certain European countries - and in North America, by the way.

 

What? North America? We're not performing badly because of socialist policies! Exactly my point. Neither is Europe.

 

So, if socialist nations are the problem, why is Sweden outperforming almost everyone, in every good statistic? Why is tiny Liechtenstein outperforming every economy on the planet? Why is Switzerland outperforming much of the world? Why is Norway doing better than most? Just for fun, take a look at Australia's economy.

 

At Wikipedia: enter, "Economy of Sweden" (or any nation) to see how they are doing.

 

There are many examples of socialist economies kicking the per-capita daylights out of North America.

 

The problem is not socialist policy. The problem is bad policy.

 

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Art's comment, February 27, 2012 7:06 AM
ArtPlanet Earth
Australia? Going well?

Australia is the next Ireland, haven't you heard. A massive property bubble built on foreign debt with average house prices about 7 times average earnings (before tax).

Australia now has a net foreign debt of about $700 Billion Dollars, that is net, after Australia's investments overseas are taken into account. That is almost 60% of their GDP. The sin that Australia committed is that they allowed too much foreign capital to flow into their economy which entered via the Australian Banks borrowing money offshore and then on lending it to fund house mortgages. Sound familiar? The Free Market Theory of adults exercising free choice to borrow money from banks and then if they can't pay that back its theirs and the banks problem falls down miserably when banks are too big fail and the poor old taxpayer has to step in. Yes sensible regulations on capital flows are required. And all this borrowed money from overseas sloshing around the economy pumped up government revenues, pumped up wages and incomes to such an extent that government became wasteful and people spent money on too many overseas holidays and cheap foreign goods made in China that they didn't need.

Australia is a Basket case just waiting to happen, as soon as China stops paying horrendously high prices for Australia's Iron Ore and Coal the Australian Mining Bubble will burst then so will the Australian Property Bubble burst and Australia will be just as bankrupt as Ireland.

-------------------------------------------------------------------------------------
Response to Art by:

John Brian Shannon - Canada

Hi Art,

Well, this is what Wikipedia says about Australia:
http://en.wikipedia.org/wiki/Economy_of_Australia

The economy of Australia is one of the most developed, modern market economies in the world, with a GDP of approximately US$1.23 trillion.

In 2011, it was the 13th largest national economy by nominal GDP and the 17th largest measured by PPP adjusted GDP, representing about 1.7% of the World economy.

Australia was also ranked the 19th largest importer and 19th largest exporter.

In 2011 the Australian economy was the fastest growing advanced economy in the world.

The average middle aged adult has a yearly worth of over $350 000, making Australians per capita some of the wealthiest people in the world.

The Australian economy is dominated by its service sector, representing 68% of Australian GDP.

The agricultural and mining sectors (10% of GDP combined) account for 57% of the nation's exports.

Public finances

Public debt 30.3% of GDP (2011 est.)
Budget deficit A$20.3 billion (2011-12)
Revenues A$350.0 billion (2011-12)
Expenses A$365.8 billion (2011-12)

Economic aid - donor status: ODA, $2.5 billion (2005/06 Budget)
Credit rating Standard & Poor's:
AAA (Domestic)
AAA (Foreign)
AAA (T&C Assessment)
Outlook: Stable
Moody's:
Aaa
Outlook: Stable
Fitch:
AAA
Outlook: Stable
Foreign reserves US$41.212 billion (March 2011)

Not only that, but Australia enjoys a favorable trade surplus and GDP grew by 3.3% last year.

Hmm. Not bad. Nice weather too.

Cheers! JBS
John Brian Shannon's comment, February 29, 2012 3:25 AM
ArtPlanet Earth

Dear Paul,

What ever caused the crisis doesn't change the fact that the money is no longer there to continue supporting the welfare state to same lavish degree as was the case in the past.

You also have other factors at play, the mobility of people and their money is so much higher than at any period in the past. If the wealthy don't like you policies and your tax rates they will take themselves, their capital and their money elsewhere.

So Paul you are right in a sense that what happened doesn't mean the total destruction of the welfare sector, state funded education, government funded health care, but it does mean it will need to be significantly reduced.

Welfare choices will need to be made, do you give it to people who do not practice individual responsibility and represent an ever increasing intergenterational welfare dependency. Or do you give it to those who do show individual responsibility and have fallen on hard times.

Feb. 27, 2012 at 12:46 a.m.

RECOMMEND 2

----------------------------------------------------------------------------------

John Brian Shannon - Canada **** NYT Pick ****

Hi Art,

With respect, you need to take a closer look at the 'economies of Europe' which I did yesterday. Moat are socialist, some are not. All have much higher spending for citizens welfare and higher minimum wages (significantly) than North America.

Even a perfunctory Wikipedia search using:

Economy of Sweden
Economy of Switzerland
Economy of Liechtenstein
Economy of Norway

and others will show you that these nations are doing light-years better than us! Zero or very low debt (less than 40% GDP) no deficit financing required, high employment, low crime, excellent health care systems and long life expectancy, etc... etc...

Yes, socialist countries in Europe are far out-performing us on almost every statistic!! - Except gross size and total deficit/debt.

The NYT comment forms do not allow many links to prevent spammers (I'm guessing) but there is a wealth of information for you on these topics at my politics blog - along with my comments to some of Prof. Krugmans' blogs. Along with some charts.

The link to the Economist's global debt clock is there also, so that you can compare various features of different countries' economies.

Please visit my blog:
http://www.scoop.it/t/politics-in-the-21st-century

Here is the Economist's global debt clock:
http://www.economist.com/content/global_debt_clock

Cheers! JBS
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World debt comparison: The global debt clock | The Economist

World debt comparison: The global debt clock | The Economist | Politics for the 21st Century | Scoop.it

Click on the title to link directly to The Economist global debt clock.

 

The global debt clock is an interactive map of the world featuring relevant information on government debt. 

 

There is a slider bar across the bottom so that you can research year by year. The default year setting is 2010, so set the bar for the year you wish to research before anything else.

 

 

Canada's 2012 breakdown from The Economist:

 

81.6% - Canada debt-to-GDP for 2012

 

$1,377,975,342,466 - Canada Public debt

 

$39,883.18 - Canada Public debt per person

 

34,523,561 - Canada Population

 

4.8% - Canada Total annual debt change

 

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From tragedy to farce

From tragedy to farce | Politics for the 21st Century | Scoop.it
HAPPY endings were never much of a feature of classical Greek tragedies. Talks around a further bail-out of Greece have run the gamut of modern literary genres, taking in drama and thriller.

 

On the streets of Greece, meanwhile, protestors have continued to demonstrate against the planned spending cuts. Events have taken an ugly turn, with some protestors burning the German flag while some right-wing newspapers have cast Germany’s chancellor, Angela Merkel, as a Nazi.

 

The wrangling underscores how unlikely it has become that a successful Greek bail-out can be crafted. The first reason is simply a question of timing. The country has to have a new deal in place by mid-March if it is to avoid defaulting on €14.5 billion ($19 billion) of maturing bonds. An element of that is likely to include a significant measure of debt-forgiveness by banks holding Greek government bonds.

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Pain Without Gain

Pain Without Gain | Politics for the 21st Century | Scoop.it

By PAUL KRUGMAN
Published: February 19, 2012

 

Last week the European Commission confirmed what everyone suspected: the economies it surveys are shrinking, not growing. It’s not an official recession yet, but the only real question is how deep the downturn will be.

 

And this downturn is hitting nations that have never recovered from the last recession. For all America’s troubles, its gross domestic product has finally surpassed its pre-crisis peak; Europe’s has not. And some nations are suffering Great Depression-level pain: Greece and Ireland have had double-digit declines in output, Spain has 23 percent unemployment, Britain’s slump has now gone on longer than its slump in the 1930s.

 

Worse yet, European leaders — and quite a few influential players here — are still wedded to the economic doctrine responsible for this disaster.


For things didn’t have to be this bad. Greece would have been in deep trouble no matter what policy decisions were taken, and the same is true, to a lesser extent, of other nations around Europe’s periphery.

 

But matters were made far worse than necessary by the way Europe’s leaders, and more broadly its policy elite, substituted moralizing for analysis, fantasies for the lessons of history.

 

Specifically, in early 2010 austerity economics — the insistence that governments should slash spending even in the face of high unemployment — became all the rage in European capitals. The doctrine asserted that the direct negative effects of spending cuts on employment would be offset by changes in “confidence,” that savage spending cuts would lead to a surge in consumer and business spending, while nations failing to make such cuts would see capital flight and soaring interest rates. If this sounds to you like something Herbert Hoover might have said, you’re right: It does and he did.

 

Now the results are in — and they’re exactly what three generations’ worth of economic analysis and all the lessons of history should have told you would happen. The confidence fairy has failed to show up: none of the countries slashing spending have seen the predicted private-sector surge. Instead, the depressing effects of fiscal austerity have been reinforced by falling private spending.

 

Furthermore, bond markets keep refusing to cooperate. Even austerity’s star pupils, countries that, like Portugal and Ireland, have done everything that was demanded of them, still face sky-high borrowing costs. Why? Because spending cuts have deeply depressed their economies, undermining their tax bases to such an extent that the ratio of debt to G.D.P., the standard indicator of fiscal progress, is getting worse rather than better.

 

Meanwhile, countries that didn’t jump on the austerity train — most notably, Japan and the United States — continue to have very low borrowing costs, defying the dire predictions of fiscal hawks.

 

Now, not everything has gone wrong. Late last year Spanish and Italian borrowing costs shot up, threatening a general financial meltdown. Those costs have now subsided, amid general sighs of relief. But this good news was actually a triumph of anti-austerity: Mario Draghi, the new president of the European Central Bank, brushed aside the inflation-worriers and engineered a large expansion of credit, which was just what the doctor ordered.

 

So what will it take to convince the Pain Caucus, the people on both sides of the Atlantic who insist that we can cut our way to prosperity, that they are wrong?
After all, the usual suspects were quick to pronounce the idea of fiscal stimulus dead for all time after President Obama’s efforts failed to produce a quick fall in unemployment — even though many economists warned in advance that the stimulus was too small. Yet as far as I can tell, austerity is still considered responsible and necessary despite its catastrophic failure in practice.

 

The point is that we could actually do a lot to help our economies simply by reversing the destructive austerity of the last two years. That’s true even in America, which has avoided full-fledged austerity at the federal level but has seen big spending and employment cuts at the state and local level.

 

Remember all the fuss about whether there were enough “shovel ready” projects to make large-scale stimulus feasible? Well, never mind: all the federal government needs to do to give the economy a big boost is provide aid to lower-level governments, allowing these governments to rehire the hundreds of thousands of schoolteachers they have laid off and restart the building and maintenance projects they have canceled.

 

Look, I understand why influential people are reluctant to admit that policy ideas they thought reflected deep wisdom actually amounted to utter, destructive folly. But it’s time to put delusional beliefs about the virtues of austerity in a depressed economy behind us.

 

 

COMMENTS:

 

John Brian Shannon - Canada

 

So, you're saying that the austerity measures created or contributed to the possible upcoming recession in the EU?

 

With the greatest respect Professor, it is exactly the lack of austerity which have caused those economic problems, in the first place!

 

Had balanced budgets among EU governments been standard practice, governments today could have easily cruised along bypassing the turmoil we now see.

 

I liken this to the difference between GM, Chrysler and Ford's economic policy over the past decade. GM and Chrysler were buried in debt and other financial obligations beyond their ability to meet and required government loans or loan guarantees - while Ford almost effortlessly continued on with its low debt, sound and utterly practical business plan.

 

Rather than reward Ford for their excellent economic planning, the federal governments of the U.S. and Canada rewarded GM and Chrysler for NOT doing so!

 

As for the timing of EU austerity policy - there is never a good time to adopt better economic plans, so just do it!

 

Why? It is the only time that the politics will work.

 

For responsible governments, trying to bring in balanced budgets or other fiscally-responsible economic policies during prosperous times is a nonstarter. It being the best way to get voted out of power.

 

While the attention of the public is on the economy and to prove that they are actively pursuing a fix, politicians have only this short window of time to reset their economies and thereby get re-elected.

 

The electoral cycle and it's own set of requirements have led us ever further away, year in and year out, from sound economic policy becoming enacted in advance of any crisis.

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The Rest of Europe vs. Germany

The Rest of Europe vs. Germany | Politics for the 21st Century | Scoop.it

By FLOYD NORRIS
Published: February 16, 2012

 

The German economy has been one of the wonders of the world over the last couple of years. While the rest of Europe staggered, German unemployment fell to the lowest level in decades.

 

Angel Gurría is the general secretary of the O.E.C.D.

 

This week the Organization for Economic Cooperation and Development, the club of developed economies around the world, issued a new “Economic Survey of Germany.” The biggest challenge it could find facing the country was finding enough workers.
It recommended steps to encourage more women to work.

 

“Please accept our sincere congratulations for a well-managed economy,” said Angel Gurría, the O.E.C.D.’s secretary general, in a speech in Berlin. The country’s “growth model has been so successful in navigating through the stormy waters of the crisis.”

The German labor system, with its incentives to move workers to part time rather than lay them off, does appear to have been critical in keeping the country’s unemployment rate from rising more than it did during the credit crisis.

 

But the decline of unemployment since then has more to do with the fact that Germany — perhaps unintentionally but certainly effectively — has managed to assure that its currency is undervalued, both relative to that of its neighbors and to much of the rest of the world. That has helped the country’s exporters and brought more business to the country.

 

In the Great Depression, many countries tried devaluations to gain export advantages over rivals. The strategy became known as “beggar thy neighbor.” It generally failed to work because other countries responded with their own devaluations.

Now some of Germany’s neighbors have been reduced to begging. They cannot take a page from the Depression playbook and devalue their own currency. They no longer have one.

 

The creation of the euro a dozen years ago at first seemed to provide a bonanza to many countries that adopted the currency. Their borrowing costs fell, as currency risk seemed to vanish and interest rates converged with the already low German rates.

That cheaper credit helped them to borrow and grow. But most did little to hold down labor costs, or to enact structural reforms to let them cope with an environment where they could no longer regain competitiveness through currency devaluation.

 

The result is that unit labor costs, one measure of competitiveness between economies, fell in Germany while they were rising in other countries. Since the crisis, they have stabilized and even declined in many countries, but they are not close to making up the difference. German costs are not rising either.

 

That makes it much harder than it used to be for the rest of the countries in the euro zone to compete with Germany. Germans are correct when they say that it was mistakes made by the other countries — whether in allowing real estate bubbles in Spain and Ireland or borrowing too much and failing to enact structural reforms in Italy — that caused the problems. But the euro has become a straitjacket for troubled economies trying to recover.

 

For Germany, the problems of its neighbors have helped it compete against non-European exporters, like Japan and the United States. The value of the euro is set by markets, but it seems reasonable to think it is based on some sort of average condition in the euro zone. If Germany still had its own currency, it would no doubt be stronger than the euro is now.

 

The impact of currencies could be seen earlier this month on successive days when Nissan, the Japanese automaker, and Daimler, the German maker of Mercedes cars, announced profits. Nissan moaned about the yen, which makes it very difficult to make money exporting cars from Japan, while Daimler forecast strong earnings if the euro stays where it is. The euro has lost a third of its value against the yen since the credit crisis began.

 

The O.E.C.D. report is worth reading for its explanation of labor policies that other countries should consider. In good times, many German workers work overtime but are not immediately paid for it. Those hours are credited to their account, and when times get rough they go on part time but are paid full-time wages, with the difference coming out of the account. Another government policy allows companies to reduce hours with the government making up two-thirds of the lost pay.

 

Those policies no doubt reduce hiring when times are good, but also hold down layoffs when times are bad.

 

Not all is rosy in the German labor market. Felix Hüfner, an O.E.C.D. senior economist in charge of the German desk, told me that he was worried about the fact that about two-thirds of younger German workers did not have permanent jobs. Instead, they have “fixed-term contracts,” which make it easier for companies to let them go when the contracts end. Germany may, he said, be in danger of becoming a “two-class society,” with most older workers in a protected group and most younger ones outside of it.

 

The euro zone is also starting to look like a two-class society, with Germany and a few other northern countries in the top class and most of the rest in the bottom tier. France is somewhere in between.

 

Within each class, attitudes are hardening against the other. “The birth defect of the euro was to put very different cultures of economic activity in the straitjacket of a single currency,” a commentator, Jan Fleischhauer, wrote in the German weekly Der Spiegel after an Italian cruise ship ran aground last month.

 

“Be honest,” he added. “Did it surprise anyone that the unlucky captain of the Costa Concordia is Italian?” He asked whether anyone could imagine that a German, or even British, captain would have behaved as the Italian did.

 

An Italian newspaper, Il Giornale, fired back with a front-page article denouncing the Der Spiegel commentary. “We are persons to avoid, a burden for Europe,” the author, Alessandro Sallusti, wrote. “The Germans are a superior race. We have already read that in the speeches of Hitler.”

 

Germans are increasingly angry about having to bail out Greece and other countries, while those countries react bitterly to being forced to take orders from Berlin. The Financial Times reports that “a right-wing Greek newspaper depicts Angela Merkel, Germany’s chancellor, in a Nazi uniform above the headline ‘Memorandum macht frei’ — an allusion to the memorandum in which Greece’s foreign creditors demand more austerity measures and to the Auschwitz slogan.”

 

One of the great accomplishments of the European Union has been an end to the possibility of war in a Continent that started two world wars in the last century. But the euro increasingly appears to be a step too far, or perhaps not far enough. A currency union cannot endure if countries pursue very different economic, regulatory and fiscal policies.

 

Greece is an outlier, a country that lied its way into the euro and should have been kicked out when that became known years ago. But other countries are also at severe disadvantages to Germany now, after a decade in which labor costs diverged so sharply. Neither austerity nor structural reforms are likely to improve their competitiveness in the near future. German inflation could help, but that is an idea with no traction in Germany.

 

The euro has been very good to Germany, but if the country wants to continue to reap the benefits it needs to do more than angrily pay for bailouts while increasing its demands. Having already imposed an unelected prime minister on the Greeks, it now wants elections delayed to assure that the government continues to follow proper policies.

 

The two classes of Europe need to either get different currencies or become much more integrated by agreement, not dictation.

 

One trouble with “beggar thy neighbor” is that the neighbors don’t like it. During the Depression, they could retaliate by devaluing their own currencies. Now they are simply getting angry, and hitting back at Germany the only way they can, with Nazi allusions and, in Athens, burning buildings.

 

Floyd Norris comments on finance and the economy at nytimes.com/economix.
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Victor Grossman, "Germany: Presidents Come and Presidents Go"

Germany: Presidents Come and Presidents Go
by Victor Grossman


Berlin and its surroundings have had plenty to keep it occupied: an airline strike, a short strike of the bus, streetcar, and subway lines, the euro crisis, and price increases. Or, on the happier side, warmer weather and the film Berlinale, with visits by many stars and an interesting, international mix of films often by young and new filmmakers. And the successful resistance to the Nazi attempts every February to show their strength in Dresden.

But then, right in the middle of all this, President Christian Wulff resigns! This has been in the making since December, it was no surprise but rather a drawn-out misery. But when it happened it was still quite an event -- the second resignation of a German president within two years! Its immediate cause was a move to remove his immunity to charges on bribery cases by the legislature of his original state of Lower Saxony. He quit, angrily, claiming he had made some mistakes but done nothing illegal. He must now worry about the charges and possible loss of his government pension.

Now the politicians must scurry around to find a successor, very quickly, in fact, since constitutional rules demand a new president within thirty days -- by March 18th. But first, here are some of the basic facts.

First it was disclosed that Wulff had used the good graces of a very wealthy friend and supporter to borrow money at an unusually favorable interest rate to renovate a home for himself -- actually a modest-looking building, no fancy villa or semi-palace. Then it was found that he tried to get the newspaper BILD, the rottenest but most influential rag in Germany, like the New York Post in many ways, not to publish this story, or at least to wait till they met. He used voice mail and his words were angry, though not obscene, but ended with a veiled "or else." That "or else" was immediately publicized by BILD (and all the others) as proof that he was against freedom of the press.

Then they started hunting for all possible misdeeds, often from the years before he became president. And whaddayaknow, they found things. Like almost every major party politician (and others as well), Wulff took occasional advantage of offers to spend pleasant vacations here and there at the expense of wealthy friends. In the most noted case, a film entrepreneur invited him for a few days to his small vacation hotel on an island in the North Sea. In one case, while he was minister president of the state of Lower Saxony, i.e. before he became president, he had accepted better plane seats than those he had paid for

All of this was reprehensible -- but small potatoes, very small potatoes. When you start looking through recent West German history, you find many top politicians who, like Helmut Kohl, have been involved in bribery paid to them or (illegally) their party's war chests amounting to tens and hundreds of thousands and even millions by major trusts and monopolies.

Indeed, and no doubt far more seriously, among Wulff's nine predecessors as president since 1949, the first one had voted for the law granting full power to Hitler in 1933, the second one, an engineer, had built barracks for concentration camp prisoners at the base for V-1 rockets at Peenemunde and elsewhere, another had concealed and long denied his former membership in the Nazi Party, his successor had been not only a member of that party but also a storm trooper, his successor, quite liberal in office, had been an officer in the terrible murderous siege of Leningrad during the war. Another, too young for such a background, had long been the assistant of a key Nazi legal expert who remained a leading professor long after the war.

As I see it, Wullf's misdeeds are run-of-the-mill perks, illegal but committed by many if not most politicians, and incomparably less earnest than many preceding him.

So why did the mass rag BILD and then all the others jump on him? My very personal suspicion is because Wulff, though otherwise a typically conservative politician, was decent enough to publically reject discrimination against immigrant groups, even saying, very courageously, that Islam had now become part of the German scene as legitimately as Christianity or Judaism. This view is anathema to right-wingers generally, and BILD is a main purveyor of hate-the-Muslims propaganda. Indeed, BILD printed installments of the book by a major proponent of such hatred, the politician and banker Thilo Sarrazin. In my view this is one likely possibility for the philippic campaign against the otherwise relatively harmless Christian Wulff.

Where do we go from here? A special body to select a new president will consist of all deputies to the Bundestag plus an equivalent number of politicians or celebrities chosen by Germany's sixteen states. The total of 1,240 will then vote, needing an absolute majority on the first two tries. If that proves impossible, a simple plurality would then suffice. The two parties currently running the government, the Christians and the Free Democrats, will have a slim a majority of one to three votes; since the vote is secret and there are often renegades, this means that Angela Merkel is hunting for a candidate who will also be supported by the Social Democrats and the Greens. In calling for consultations with them, she pointedly failed to invite the only other party, the Left party, whose more than 120 votes might just make a difference (as they did when Wulff barely won out two years ago). This snub could lead the Left, once again, to put up its own candidate, even without any chance of success.

The president in Germany has few powers: he can veto laws but does so very rarely; he (or possibly she) welcomes heads of state, goes on state visits abroad, and makes hopefully historic speeches every so often on the state of the country, without sounding too partisan. But turmoil between now and the election next month can shake things up considerably -- while distracting attention from other matters.

One possible candidate is the man whom Wulff just barely beat two years ago: the East German pastor and Red-hunter who administered the archives about the Stasi (State Security apparatus of the East German Democratic Republic) and made a name for himself as a conservative, extremely anti-Left, whose Stasi files were used in ways reminiscent of FBI files during the McCarthy period to criminalize thousands, including many only because of unavoidable and often totally innocuous contacts of one kind or another with the Stasi, totally destroying their careers and often their lives. Joachim Gauck smiles in a friendly way; he even cries when discussing supposed terrors in the bad old days (although he was treated in a very benign manner considering that he was a very pro-western pastor -- some claim he himself had Stasi ties). But he is only one of a series of candidates now being discussed. Perhaps, by the time you read this, one of them will have been chosen. I hope it is not Gauck.

Victor Grossman, American journalist and author, is a resident of East Berlin for many years. He is the author of Crossing the River: A Memoir of the American Left, the Cold War, and Life in East Germany (University of Massachusetts Press, 2003).
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Children 'tied to economics' - Victorville Daily Press

Children 'tied to economics' - Victorville Daily Press | Politics for the 21st Century | Scoop.it
Children 'tied to economics' Victorville Daily Press SAN BERNARDINO • Children born into poverty are twice as likely to be in special education, 30 percent more likely to never go to college and 70 percent more likely to be arrested for committing...
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Europe’s Economic Suicide

Europe’s Economic Suicide | Politics for the 21st Century | Scoop.it

With European leaders doubling down on their failed policies, it’s getting harder and harder to believe that anything will get them to change course.

 

READ ALL COMMENTS

 

My comment:

 

John Brian Shannon Vancouver, Canada

 

The Euro was doomed to failure from the start IF all of Europe did not convert to the Euro early on.

 

Having a centralized currency in some parts of Europe while national currencies operate in other parts of Europe (operating together and against each other) in some jurisdictions is unworkable.

 

It would be the equivalent of having an Eastern U.S. dollar and a Western dollar in the U.S.A.

 

Obviously, both regional currencies would trade at a different value and compete against each other with the goal of defeating the competing currency. Effectively, one region of the U.S. would be at economic war with another region of the U.S.!

 

Currency speculators worldwide would be quick to make that opportunity work for them - regardless of the economic consequences to either region!

 

Which is exactly what has been happening in Europe since 2000 and to think otherwise is to be looking through the wrong end of the telescope.

 

The quiet, almost polite, currency/economic war raging in Europe over the past decade increased unemployment, lowered profits, decreased confidence domestically and abroad and charted an erratic path for the often different national economic systems there.

 

This wound in the very fabric of Europe won't heal until the decision is made to either drop the Euro completely - or the European nations embrace one currency.

 

If that decision is deferred much longer, Europe will continue to lose economic power, until there is complete and utter economic failure there.

 

JBS

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Paranoia Strikes Deeper

Paranoia Strikes Deeper | Politics for the 21st Century | Scoop.it
Gas prices are bringing out the crazy during this campaign season.

 

By PAUL KRUGMAN
Published: March 22, 2012

Stop, hey, what’s that sound? Actually, it’s the noise a great political party makes when it loses what’s left of its mind. And it happened — where else? — on Fox News on Sunday, when Mitt Romney bought fully into the claim that gas prices are high thanks to an Obama administration plot.

 

This claim isn’t just nuts; it’s a sort of craziness triple play — a lie wrapped in an absurdity swaddled in paranoia. It’s the sort of thing you used to hear only from people who also believed that fluoridated water was a Communist plot. But now the gas-price conspiracy theory has been formally endorsed by the likely Republican presidential nominee.

 

Before we get to the larger implications of this endorsement, let’s get the facts on gas prices straight.

 

First, the lie: No, President Obama did not say, as many Republicans now claim, that he wanted higher gasoline prices. He did once say that a cap-and-trade system for carbon emissions would cause electricity prices to “skyrocket” — an unfortunate word choice.

 

But saying that such a system would raise energy prices was just a factual statement, not a declaration of intent to punish American consumers. The claim that Mr. Obama wanted higher prices is a lie, pure and simple.

 

And it’s a lie wrapped in an absurdity, because the president of the United States doesn’t control gasoline prices, or even have much influence over those prices. Oil prices are set in a world market, and America, which accounts for only about a tenth of world production, can’t move those prices much. Indeed, the recent rise in gas prices has taken place despite rising U.S. oil production and falling imports.

 

Finally, there’s the paranoia, the belief that liberals in general, and Obama administration officials in particular, are trying to make driving unaffordable as part of a nefarious plot against the American way of life. And, no, I’m not exaggerating. This is what you hear even from thoroughly mainstream conservatives.

 

For example, last year George Will declared that the Obama administration’s support for train travel had nothing to do with relieving congestion and reducing environmental impacts. No, he insisted, “the real reason for progressives’ passion for trains is their goal of diminishing Americans’ individualism in order to make them more amenable to collectivism.” Who knew that Dagny Taggart, the railroad executive heroine of “Atlas Shrugged,” was a Commie?

 

O.K., this is all kind of funny. But it’s also deeply scary.

 

As Richard Hofstadter pointed out in his classic 1964 essay “The Paranoid Style in American Politics,” crazy conspiracy theories have been an American tradition ever since clergymen began warning that Thomas Jefferson was an agent of the Bavarian Illuminati. But it’s one thing to have a paranoid fringe playing a marginal role in a nation’s political life; it’s something quite different when that fringe takes over a whole party, to the point where candidates must share, or pretend to share, that fringe’s paranoia to receive the party’s presidential nod.

 

And it’s not just gas prices, of course. In fact, the conspiracy theories are proliferating so fast it’s hard to keep up. Thus, large numbers of Republicans — and we’re talking about important political figures, not random supporters — firmly believe that global warming is a gigantic hoax perpetrated by a global conspiracy involving thousands of scientists, not one of whom has broken the code of omertà. Meanwhile, others are attributing the recent improvement in economic news to a dastardly plot to withhold stimulus funds, releasing them just before the 2012 election. And let’s not even get into health reform.

 

Why is this happening? At least part of the answer must lie in the way right-wing media create an alternate reality. For example, did you hear about how the cost of Obamacare just doubled? It didn’t, but millions of Fox-viewers and Rush-listeners believe that it did. Naturally, people who constantly hear about the evil that liberals do are ready and willing to believe that everything bad is the result of a dastardly liberal plot. And these are the people who vote in Republican primaries.

 

But what about the broader electorate?

 

If and when he wins the nomination, Mr. Romney will try, as a hapless adviser put it, to shake his Etch A Sketch — that is, to erase the record of his pandering to the crazy right and convince voters that he’s actually a moderate. And maybe he can pull it off.

 

But let’s hope that he can’t, because the kind of pandering he has engaged in during his quest for the nomination matters. Whatever Mr. Romney may personally believe, the fact is that by endorsing the right’s paranoid fantasies, he is helping to further a dangerous trend in America’s political life. And he should be held accountable for his actions.

 

A version of this op-ed appeared in print on March 23, 2012, on page A29 of the New York edition with the headline: Paranoia Strikes Deeper.

 

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535 Comments

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John Brian Shannon Vancouver, Canada


President Barack Obama has some great plans for a sustainable energy future for America.

 

I wrote him a letter a few weeks ago asking about American energy policy.

 

He was kind enough to respond to me personally and his very informative letter is available to read at my website (just not enough character space in this comment form to copy and paste it) at:

http://johnbrianshannon.com

 

Here is a tiny sample of the Tweets (quotes from his letter) that I sent out to my followers:

 

"...we cut net [oil] imports by 10 percent—or a million barrels a day—in the last year alone."

 

"United States military—the largest energy consumer in the world—is also doing its part..."

 

"...U.S. has nearly doubled renewable energy generation from wind, solar, and geothermal sources.."

 

"...Dept of the Interior to allow the development of enough clean energy on public lands to power three million homes."

 

"...repeatedly called on Congress to stop giving away $4 billion/yr in oil subsides to the oil companies ..."

 

"...all companies drilling for gas on public lands to disclose the chemicals they use."

 

"...natural gas experts believe will support more than 600,000 jobs by end of the decade."

 

I fully realize that this is just a fraction of the information included in his letter to me, I urge you to read it in full as it is a very informative document.

 

For additional information visit: http://keystonexl.net

 

 

Very Best Regards, John Brian Shannon

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What Greece Means

What Greece Means | Politics for the 21st Century | Scoop.it
Like other European nations forced to impose austerity in a depressed economy, Greece seems doomed to many more years of suffering.

 

 

By PAUL KRUGMAN
Published: March 11, 2012

So Greece has officially defaulted on its debt to private lenders. It was an “orderly” default, negotiated rather than simply announced, which I guess is a good thing. Still, the story is far from over.

 

Even with this debt relief, Greece — like other European nations forced to impose austerity in a depressed economy — seems doomed to many more years of suffering.

 

And that’s a tale that needs telling. For the past two years, the Greek story has, as one recent paper on economic policy put it, been “interpreted as a parable of the risks of fiscal profligacy.” Not a day goes by without some politician or pundit intoning, with the air of a man conveying great wisdom, that we must slash government spending right away or find ourselves turning into Greece, Greece I tell you.

 

Just to take one recent example, when Mitch Daniels, the governor of Indiana, delivered the Republican reply to the State of the Union address, he insisted that “we’re only a short distance behind Greece, Spain and other European countries now facing economic catastrophe.” By the way, apparently nobody told him that Spain had low government debt and a budget surplus on the eve of the crisis; it’s in trouble thanks to private-sector, not public-sector, excess.

 

But what Greek experience actually shows is that while running deficits in good times can get you in trouble — which is indeed the story for Greece, although not for Spain — trying to eliminate deficits once you’re already in trouble is a recipe for depression.

 

These days, austerity-induced depressions are visible all around Europe’s periphery. Greece is the worst case, with unemployment soaring to 20 percent even as public services, including health care, collapse. But Ireland, which has done everything the austerity crowd wanted, is in terrible shape too, with unemployment near 15 percent and real G.D.P. down by double digits. Portugal and Spain are in similarly dire straits.

 

And austerity in a slump doesn’t just inflict vast suffering. There is growing evidence that it is self-defeating even in purely fiscal terms, as the combination of falling revenues due to a depressed economy and worsened long-term prospects actually reduces market confidence and makes the future debt burden harder to handle. You have to wonder how countries that are systematically denying a future to their young people — youth unemployment in Ireland, which used to be lower than in the United States, is now almost 30 percent, while it’s near 50 percent in Greece — are supposed to achieve enough growth to service their debt.

 

This was not what was supposed to happen. Two years ago, as many policy makers and pundits began calling for a pivot from stimulus to austerity, they promised big gains in return for the pain. “The idea that austerity measures could trigger stagnation is incorrect,” Jean-Claude Trichet, then the president of the European Central Bank, declared in June 2010. Instead, he insisted, fiscal discipline would inspire confidence, and this would lead to economic growth.

 

And every slight uptick in an austerity economy has been hailed as proof that the policy works. Irish austerity has been proclaimed a success story not once but twice, first in the summer of 2010, then again last fall; each time the supposed good news quickly evaporated.

 

You may ask what alternative countries like Greece and Ireland had, and the answer is that they had and have no good alternatives short of leaving the euro, an extreme step that, realistically, their leaders cannot take until all other options have failed — a state of affairs that, if you ask me, Greece is rapidly approaching.

 

TO READ THE ENTIRE ARTICLE, CLICK ON THE ARTICLE TITLE WHICH WILL TAKE YOU TO THE FULL ARTICLE AT THE NEW YORK TIMES WEBSITE

 

---------------------------------------------------------------

 

COMMENTS:

 

John Brian Shannon - Canada

 

(MY COMMENT RECEIVED A NEW YORK TIMES EDITOR'S "PICK")


The fix for all of this is so laughably simple IF it is done at the right time.

 

The fact that it isn't simply handled suggests, not an economic problem, but rather a political one.

 

In 1990, Canada was in terrible shape. One-third of all federal gov't revenues went towards interest payments on Canada's debt and deficit financing and we were mere months away from our credit rating plummeting to junk bond status.

 

In 1991, former Prime Minister Brian Mulroney and his finance minister Michael Wilson imposed a 7% general sales tax on just about everything purchased in Canada which gave them the fiscal muscle to stage a successful rescue plan.

 

The tax brought in uncountable billions of dollars - dramatically lowering the deficit and paying down federal government debt - both of which were at historic highs.

 

In addition to scheduled debt paydowns over the next 7 years, any surplus government revenues were directed to 'shovel-ready' infrastructure projects.

 

The Goods and Services Tax, combined with deficit elimination and debt paydown and national infrastructure projects - reset Canada's economy from the then worst, to one of the strongest economies in the G8.

 

And all it took was two courageous politicians. They made it look easy!

 

As any engineer can tell you - find the best working model and emulate it, for best results.

 

If other nations had done the same there would have been no defaulting, no crisis, no obscene federal gov't deficits & debt, no nothing!

 

Only economic bliss.

 

---------------------------------------------------------------

 

---A NYT reader was kind enough to point out one of my stated facts was incorrect and I have adjusted my comment accordingly---

 

(Thank you to VinceToronto, ON - for pointing out my error and for making available the correct information.)

 

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Inequality Trends In One Picture

Inequality Trends In One Picture | Politics for the 21st Century | Scoop.it

November 3, 2011, 10:02 AM

 

Just an addendum on the role of the top 1 percent versus the college-noncollege differential.

 

Here, from the CBO report, are the changes, in percentage points, of the shares of income going to three groups.

 

The top quintile excluding the top 1 percent – which is basically the abode of the well-educated who aren’t among the very lucky few – has only kept pace with the overall growth in incomes.

 

Just about all of the redistribution has taken place from the bottom 80 to the top 1 (and we know that most of that has actually gone to the top 0.1).

 

It’s a tiny minority, not a broad class of well-educated Americans, who have been winning here.

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FP Letters to the Editor: Keynes wasn’t a Keynesian | FP Comment | Financial Post

FP Letters to the Editor: Keynes wasn’t a Keynesian | FP Comment | Financial Post | Politics for the 21st Century | Scoop.it

Special to Financial Post Feb 24, 2012 – 9:02 PM ET | Last Updated: Feb 24, 2012 9:13 PM ET

 

This comment from: Jean-Pierre Aubry, economist and associate fellow, CIRANO; Jean Mair, economist; ­Ottawa -- refers to an original article by Maxime Bernier “Give Keynes the boot” posted on FP, Feb. 15, 2012

 

Maxime Bernier, Minister of State in the Harper government, states that sustainable growth cannot be achieved with more government spending, more debt and more taxes. That’s the Keynesian solution.

 

It has failed.

 

But this description of the Keynesian solution is totally wrong. John Maynard Keynes never recommended maximizing the economic potential of an economy in the long term by continuously increasing government spending and the public debt.

 

Rather, the Keynesian solution refers to the temporary use of government spending, increasing the debt of the government, when there is a recession and economic activity falls short of potential output (i.e., the level of output that the economy is capable of producing on a sustainable basis.) Such spending is designed to provide only a temporary boost to the economy, limiting the depth of the downturn and speeding up the recovery.

 

When economic activity returns to its potential, the government pulls back its spending, runs a budgetary surplus and reduces the ratio of public debt to GDP to where it was before the downturn began.

 

In his letter, Mr. Bernier recognizes that the Harper government’s Economic Action Plan and especially the component related to investment on collective infrastructure helped to reduce the depth and length of the recession. As it turns out, this is a good example of a true Keynesian solution. Mr. Bernier’s recognition that the plan was helpful in stimulating demand and economic activity during the recession contradicts his comment that stimulus has no effect on overall demand.

 

Mr. Bernier suggests that a government aiming to reduce permanently the size of its budget should first cut spending, and then taxes, to ensure that it does not create a structural deficit.

 

But what has the Harper government done since it came to office in 2006? It started by increasing its expenses and making large cuts in taxes. This has contributed to the transformation of a structural surplus of about $15-billion into a structural deficit of at least $15-billion. Why did it do this?

 

One reason was because its expectations of economic activity and thus of government revenue were too optimistic.

 

Because of these measures, Canada entered the recession without a fiscal cushion. And without this fiscal cushion, the increase in the size of the government debt during the downturn has been much higher than it would have been had they preserved a sizeable cushion.

 

And because of these measures, the size of expenditure cuts now requires to restore financial equilibrium is much larger.

 

Jean-Pierre Aubry, economist and associate fellow, CIRANO; Jean Mair, economist; ­Ottawa

 

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John Brian Shannon comments  on Jean-Pierre Aubry's post:

 

I quote Jean-Pierre Aubry; "One reason was because its expectations of economic activity and thus of government revenue were too optimistic. Because of these measures, Canada entered the recession without a fiscal cushion. And without this fiscal cushion, the increase in the size of the government debt during the downturn has been much higher than it would have been had they preserved a sizeable cushion. And because of these measures, the size of expenditure cuts now requires to restore financial equilibrium is much larger."

 

All too true.

 

People can say whatever they want about former Premier of Alberta, Ralph Klein - but one thing that cagey old rancher, "Colombo" style journalist and wily politician knew enough to do, was to under-estimate revenues every year - and in every department of the government.

 

Because of that, Alberta went from near insolvency during Ralph's tenure, to a budget surplus.

 

Many people blamed Ralph for "all the cuts" - but really, the alternative (a provincial default) would have been light-years worse.

 

It was lost on some people that budget deficits pile up for years, sometimes decades, in our democratic, free spending system - and eventually, a "bad guy" must come along and fix the almost unsolvable mess.

 

Their "reward" is to get voted out of office! Thanks for that. Its not just Ralph who received voter's un-thanks. The tag team of Jean Chretien and Paul Martin saved Canada from a fate worse than present-day Greece! Look what happened to them!

 

Our system is faulty because it punishes the only politicians who actually take a principled stand, knowing full well they may lose the next election on account of it. It is shameful.

 

Because of this flaw in the system, provinces and the federal government stagger from obscene deficit to short-term surplus every decade or two with no end in sight.

 

Finance Minister Jim Flaherty, are you listening?

 

johnbrianshannon@gmail.com 

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Canada’s competitive edge in corporate taxes at risk

Canada’s competitive edge in corporate taxes at risk | Politics for the 21st Century | Scoop.it

BILL CURRY AND KEVIN CARMICHAEL
OTTAWA AND WASHINGTON— From Thursday's Globe and Mail


Published Wednesday, Feb. 22, 2012 12:50PM EST
Last updated Thursday, Feb. 23, 2012 6:41AM EST



Canada’s reputation as a low-tax destination for business investment is poised to take a hit as key provinces balk at further cuts, just as plans heat up in Washington to slash much-higher U.S. corporate rates.

 

Federal Finance Minister Jim Flaherty has steadily cajoled provincial governments to cut business taxes since 2007, with the goal of bringing the combined national corporate tax rate to 25 per cent. Now at just over 26 per cent, the minister’s target appears in reach – but the campaign is suddenly losing steam.

 

How to get out of the RRSP season rat race
British Columbia announced in this week’s budget that it may raise its corporate tax rate from 10 per cent to 11 per cent in 2014. It also cancelled a planned drop in the small business tax rate. The move comes as Ontario, too, is expected to shelve plans for further corporate tax cuts.

 

Yet in the U.S. capital on Wednesday, President Barack Obama unveiled a proposal that would cut the top U.S. corporate tax rate to 28 per cent from 35 per cent, while offsetting lost revenue by closing tax loopholes.

 

The prospect of the U.S. lowering its corporate tax rate and simplifying its tax code will raise further questions about Canada’s capacity to compete in a fast moving global economy. Even with its current advantage on corporate taxes, the Bank of Canada says Canadian companies are largely uncompetitive internationally, representing one of the biggest constraints on economic growth. The thrust of the U.S. debate on taxes could force Canada’s government to rethink its own approach.

 

The Obama administration’s announcement makes a lower corporate tax rate a bipartisan issue, as all four men competing for the Republican presidential nomination have said they would reduce the statutory rate on business profits. Mitt Romney, the front-runner, would drop the rate to 25 per cent.

 

No change is likely until after the election, but with support for a change strong in both parties, it’s reasonable to expect the U.S. will overhaul its tax code once the November vote determines which party enters negotiations with the upper hand.

“If it’s only about rates, people can match you very easily,” said Glen Hodgson, chief economist at the Conference Board of Canada and a former Finance official. “If it’s about designing a tax system that promotes growth, that’s harder to match.”

 

Canada’s labour movement insists slashing corporate taxes is no example to follow. Canadian Auto Workers president Ken Lewenza points to the fact that companies are posting large profits even while workers pay the price through heavy job losses in manufacturing. He said this year’s closure of a London, Ont., locomotive manufacturing plant – leaving 700 people out of work – shows corporate incentives don’t protect jobs.

 

“Everybody’s using the carrot. Nobody’s using the stick,” he said. “If people want to just continue to trust that these corporations are going to invest and are going to make a commitment to our communities like London – like the Caterpillar situation – all of the statistics would prove that that’s just a falsehood.”

 

Canada’s slight change in direction marks the apparent end of a long trend. Since 2000, the federal rate has dropped from 28 per cent in 2000 to 15 per cent as of Jan. 1, 2012, which is the last of a series of promised cuts.

 

The issue of corporate tax cuts has been hotly debated in federal and provincial campaigns, with NDP opposition leaders in Ontario and Ottawa promising to pay for new spending through higher corporate tax revenues. But the historical numbers show the connection between the tax rate and revenues is not black and white.

 

For instance, in 1970 when the federal corporate tax rate was 40 per cent, Ottawa’s corporate tax revenues were 2.7 per cent of GDP, or 15.8 per cent of Ottawa’s total revenue. In 2006 – when the rate was 21 per cent – the revenues were 2.6 per cent of GDP and 16 per cent of the total.

 

By 2010, the rate was 18 per cent, and corporate tax revenues were 1.8 per cent of GDP and 12.6 per cent of total revenue. The 2010 numbers – the most recent available – were affected by the recession and the drop in corporate profits.

 

Economist Don Drummond, who recently provided detailed cost-cutting advice to Ontario in advance of its provincial budget, was not allowed to recommend higher taxes in his report. However, he did call for Ottawa and the provinces to work on closing corporate tax avoidance loopholes.

 

The report warned that Ottawa and the provinces need to curb “aggressive tax planning” by corporations that are shifting losses across Canada to reduce or avoid taxes in the province where income is earned.

 

“All of these activities can unduly reduce provincial tax revenue,” the report stated, estimating that closing these loopholes could raise an additional $200-million a year for Ontario alone.

 

In a statement to the Globe, Mr. Flaherty urged provinces to keep working to lower business taxes.

 

“The Obama administration’s proposal [Wednesday] reflects the reality of competitive taxes creating economic growth and jobs,” he said.

 

 

 --------250 comments--------

 

JBSCanada (John Brian Shannon)
3:47 AM on February 24, 2012


I'm all for competitive tax rates for corporations, etc.

 

But we don't have to match the U.S. dollar for dollar and percentage rate for percentage rate.

 

It is a privilege to live, work and play in Canada, compared to most of the countries in this world. The very same applies to corporations, if you want among the best countries in which to set up a business venture, Canada is it.

 

Yes, if you set up shop here, you get to live here!! Bonus for you! Can't wait to arrive? I don't blame you.

 

We are a stable democracy, we have 95%+ literacy, workers are skilled, the environment is clean, our health care system - although expensive (which ones aren't?) allows for a healthy society, compared with many other countries.

 

I could go on about all the benefits of Canada - but that's the Prime Minister's job!

 

To help you understand what I mean, Canada is like a fine restaurant - you don't give the best food away for nothing, nor do you dicker on the price! You want to eat here? This is the menu. Can't afford it? Try a cheaper food place, maybe QUALITY isn't 'your thing'.

 

We do not need to 'give away the farm' in order to maintain a good economy. We need our politicians pounding the streets of world capitals, telling business leaders about the many benefits of Canada.

 

When you sell brand new Mercedes cars, you don't need to worry about competing with K-cars!!

 

Canada is like the 'Mercedes of nations' - it is time to stop giving it away, time to stop competing against K-cars - because we don't need to!

 

What we do need is REAL SALESPEOPLE to sell Canada's benefits to the world - and NOT at a discounted price.

 

JBS

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Partying Like It's 1934

Partying Like It's 1934 | Politics for the 21st Century | Scoop.it

February 21, 2012, 8:32 AM

 

A while back I read Lionel Robbins’s 1934 book The Great Depression; as I pointed out, it was a Very Serious Person’s book for its era.

 

Its solution was a return to the gold standard — which would have made things worse — and free trade, which was basically irrelevant to the problem of insufficient demand.

 

So have the VSPs learned anything these past 78 years? No.

 

When I read headlines about the call by European leaders for action to stimulate growth, I wondered for just a second whether there was a crack in the austerian consensus. But noooo. The answer of the leaders to a severe shortage of demand — the private sector simply isn’t spending enough — is, wait for it, deregulation and trade liberalization.

 

This is not so much a bad idea as an irrelevant one.

 

What would it do to reduce the burden of household debt? What would it do to narrow the destructive German surplus?

 

The beginning of any understanding of macroeconomics is the realization that what’s good from a micro point of view can often be irrelevant or even harmful from a macro point of view when the economy is depressed. But that hard-won insight has now been willfully forgotten.

 

Hopeless.

 

 ----------------------------------------------------------------

 

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John Brian Shannon - Canada


Rather than talk about what's not working, let's talk about what has been proven to work - and work well. (Entertaining economist columns aside).

 

Last recession, Canada was almost where Greece is today. Huge debt, growth going backwards, job losses, underground economy decreasing the tax revenue, credit downgrades for the federal government - I could go on.

 

If it had not been addressed and confronted head on, Canada's situation would have turned out worse than what we are seeing in present-day Greece.

 

Former Prime Minister Jean Chretien and his Finance Minister Paul Martin, instituted a general sales tax of 7% in 1990 (in many cases replacing, or at least streamlining all Canadian sales taxes) AND introduced solid austerity measures to stem the bleeding and to appease credit-rating agencies.

 

It worked! Not only did it work, it worked fantastically. Within seven years of the introduction of the Goods and Services Tax and within five years of the austerity measures becoming enacted in Canadian law, Canada enjoyed a ZERO budget deficit - and that, from all-time record highs!

 

Again, we had been on track to do worse than what Greece is doing now.

 

It should be noted that quite apart from the deficit reduction program, any surplus revenue no matter the size, was quickly directed to 'shovel ready' national infrastructure projects to help stimulate the economy.

 

http://www.theglobeandmail.com/report-on-business/economy/the-lesson-from-canada-on-cutting-deficits/article2243702/print/
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Reversing Local Austerity

Reversing Local Austerity | Politics for the 21st Century | Scoop.it

February 17, 2012, 10:40 AM

I’m going to break blog silence just for a minute to put up something related to what I’m working on that should also, I believe, be part of current discussion.

 

One question that arises when we talk about the possibility of reversing the disastrous push for austerity runs something like this: “OK, you say you want more government spending, but what should it spend money on?” The truth is that I think the perceived lack of shovel-ready projects was overstated even in 2009, but it was a real concern.

 

The point I want to make is that matters now are actually a lot easier: we could get a fairly big fiscal bang just by resuming aid to state and local governments, allowing them to reverse the big cuts they have recently made.

 

So here’s my chart. It shows employment by state and local governments, which has fallen around half a million, with the majority of the cuts coming from education. Moreover, the baseline should not be zero; it should be normal growth, say along with population growth. So I’ve indicated what would have happened to state and local employment if it had grown at its usual rate of 1% a year:

 

This suggests to me that we could put well over a million people to work directly, and probably around 3 million once you take other effects into account, without any need to come up with new projects; just transfer enough money to state and local governments to let them return to doing the essential business of government, like educating our children.

 

This isn’t the whole of what we should be doing, by a long shot. But anyone who thinks we don’t have good ways to stimulate demand can be refuted with this observation alone.

 

 

COMMENTS:

 

John Brian Shannon
February 20, 2012, 11:40 PM


Professor Krugman has included some insightful information very necessary to this discussion.

 

He is one of a small number of people who want to educate people on the path towards a solution.

 

My only disagreement with his school of thought is; merely printing more money will only add to the problem in the long term. It is this policy which has gotten us to the point we now find ourselves.

 

See where we are: http://www.brillig.com/debt_clock

 

However, he is right, spending money on 'shovel ready' infrastructure projects and re-investment in education are great ways to stimulate the economy of both the nation and presently jobless individuals - people who, through no fault of their own, now find themselves costing their country money - instead of contributing to the success of their nation! Previous federal governments having adopted the wrong policies, are to blame for their situation.

 

My thought is to adopt Canada's extremely successful solution.

 

When Canada faced similar problems, our then Finance Minister Paul Martin, employed a two-track solution which, in hindsight, has worked miracles for Canada's economy.

 

First, austerity to stem the bleeding (elimination of waste, duplication of services, etc).

 

Second, a Federal Sales Tax of 7% on everything Canadian's purchase, which brought in billions of dollars of revenue & solved the entire problem within seven years.

 

End of federal government deficit and end of problem!

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Top US general cautions Israel, says attack on Iran would be ‘destabilizing’ - The Hill's DEFCON Hill

Top US general cautions Israel, says attack on Iran would be ‘destabilizing’ - The Hill's DEFCON Hill | Politics for the 21st Century | Scoop.it

I wouldn't suggest, sitting here today, that we've persuaded them that our view is the correct view and that they are acting in an ill-advised fashion,” he said of Israel. “But we've had a very candid collaborative conversation. We've shared intelligence. And I was in Israel about three weeks ago and spent two days there with the senior leaders. And so we’re continuing that dialogue.”

 

Top U.S. intelligence officials told senators this week that Iran is only likely to attack the U.S. or its allies if it is provoked, but an increasing number of lawmakers are calling for the U.S. to consider military action against Iran as a pre-emptive measure.

 

Senior U.S. officials, including Defense Secretary Leon Panetta, have said all options are on the table when considering military action towards Iran. But President Obama has reiterated his commitment to using a series of oil and financial sanctions to persuade Iran to abandon its nuclear weapons ambitions.

 

Dempsey expressed his concern about what would happen if Israel did launch a strike against Iran and whether the U.S. would be vulnerable to retaliatory actions.

 

“That's the question with which we all wrestle,” he said. “And the reason that we think that it's not prudent at this point to decide to attack Iran.”

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Cosmopolitanism - Wikipedia, the free encyclopedia

Cosmopolitanism - Wikipedia, the free encyclopedia | Politics for the 21st Century | Scoop.it

From Wikipedia, the free encyclopedia

 

Earthrise from Apollo 8


Cosmopolitanism is the ideology that all human ethnic groups belong to a single community based on a shared morality. Cosmopolitanism may entail some sort of world government or it may simply refer to more inclusive moral, economic, and/or political relationships between nations or individuals of different nations. A person who adheres to the idea of cosmopolitanism in any of its forms is called cosmopolite.[citation needed]

 

A cosmopolitan community might be based on an inclusive morality, a shared economic relationship, or a political structure that encompasses different nations. In its more positive versions, the cosmopolitan community is one in which individuals from different places (e.g. nation-states) form relationships of mutual respect. As an example, Kwame Anthony Appiah suggests the possibility of a cosmopolitan community in which individuals from varying locations (physical, economic, etc.) enter relationships of mutual respect despite their differing beliefs (religious, political, etc.).[citation needed]

 

Contents 
1 Etymology
2 Philosophical cosmopolitanism
2.1 Philosophical roots
2.2 Modern cosmopolitan thinkers
3 Contemporary cosmopolitan thinkers
4 Political and sociological cosmopolitanism
5 Cosmopolitan art
5.1 Art Deco
6 See also
7 Notes
8 Resources
9 External links

 

Etymology

 

The word derives from Greek cosmos Κόσμος (the Universe) and polis Πόλις (city).[citation needed]

 

Philosophical cosmopolitanism

 

Further information: Global justice, Moral universalism

 

Philosophical roots


Cosmopolitanism can be traced back to Diogenes of Sinope (c. 412 B.C.), the founding father of the Cynic movement in Ancient Greece. Of Diogenes it is said: "Asked where he came from, he answered: 'I am a citizen of the world (kosmopolitês)'".[1] This was a ground-breaking concept, because the broadest basis of social identity in Greece at that time was either the individual city-state or the Greeks (Hellenes) as a group. The Stoics, who later took Diogenes' idea and developed it into a full blown concept, typically stressed that each human being "dwells […] in two communities – the local community of our birth, and the community of human argument and aspiration".[2] A common way to understand Stoic cosmopolitanism is through Hierocles' circle model of identity that states that we should regard ourselves as concentric circles, the first one around the self, next immediate family, extended family, local group, citizens, countrymen, humanity. The task of world citizens becomes then to "draw the circles somehow towards the centre, making all human beings more like our fellow city dwellers, and so forth."[3]

 

 

Modern cosmopolitan thinkers

Immanuel Kant, who argued for a ius cosmopoliticum


In his 1795 essay Perpetual Peace, Immanuel Kant stages a ius cosmopoliticum (cosmopolitan law/right) as a guiding principle to protect people from war, and morally grounds this cosmopolitan right by the principle of universal hospitality. Kant there claimed that the expansion of hospitality with regard to "use of the right to the earth's surface which belongs to the human race in common" (see common heritage of humanity) would "finally bring the human race ever closer to a cosmopolitan constitution".[4]

 

The philosophical concepts of Emmanuel Levinas, on ethics, and Jacques Derrida, on hospitality, provide a theoretical framework for the relationships between people in their everyday lives and apart from any form of written laws or codes. For Levinas, the foundation of ethics consists in the obligation to respond to the Other. In Being for the Other, he writes that there is no "universal moral law," only the sense of responsibility (goodness, mercy, charity) that the Other, in a state of vulnerability, calls forth. The proximity of the Other is an important part of Levinas's concept: the face of the Other is what compels the response.

 

For Derrida, the foundation of ethics is hospitality, the readiness and the inclination to welcome the Other into one's home. Ethics, he claims, is hospitality. Pure, unconditional hospitality is a desire that underscores the conditional hospitality necessary in our relationships with others. Levinas's and Derrida's theories of ethics and hospitality hold out the possibility of an acceptance of the Other as different but of equal standing. Isolation is not a feasible alternative in the world, therefore, it is important to consider how best to approach these interactions, and to determine what is at stake for ourselves and the others: what conditions of hospitality to impose, and whether or not we have responded to the call of the Other. Further, both theories reveal the importance of considering how best to interact with the Other and others, and what is at stake.

 

A further state of cosmopolitanism occurred after the Second World War. As a reaction to the Holocaust and the other massacres, the concept of crimes against humanity became a generally-accepted category in international law. This clearly shows the appearance and acceptance of a notion of individual responsibility that is considered to exist toward all of humankind.[5]

 

Philosophical cosmopolitans are moral universalists: they believe that all humans, and not merely compatriots or fellow-citizens, come under the same moral standards. The boundaries between nations, states, cultures or societies are therefore morally irrelevant. A widely cited example of a contemporary cosmopolitan is Kwame Anthony Appiah.[6]

 

Some philosophers and scholars argue that the objective and subjective conditions arising in today's unique historical moment, an emerging planetary phase of civilization, creates a latent potential for the emergence of a cosmopolitan identity as global citizens and possible formation of a global citizens movement.[7] These emerging objective and subjective conditions in the planetary phase include improved and affordable telecommunications; space travel and the first images of our fragile planet floating in the vastness of space; the theory of global warming and other ecological threats to our collective existence; new global institutions such as the United Nations, World Trade Organization, or International Criminal Court; the rise of transnational corporations and integration of markets often termed economic globalization; the emergence of global NGOs and transnational social movements, such as the World Social Forum; and so on. Globalization, a more common term, typically refers more narrowly to the economic and trade relations and misses the broader cultural, social, political, environmental, demographic, values and knowledge transitions taking place.

 

Contemporary cosmopolitan thinkers

 

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A number of contemporary theorists propose, directly and indirectly, various ways of becoming or being a cosmopolitan individual.

 

Thich Nhat Hanh discusses what he calls "Interbeing" as a way of living one's life in relation to others; "Interbeing" might easily be compared to cosmopolitanism. Nhat Hanh's philosophical beliefs are grounded in the precepts of Buddhist teachings, which involve compassion and understanding to protect and live in harmony with all people, animals, plants, and minerals (88). He further describes what he calls "Mindfulness Training of the Order of Interbeing" as being aware of sufferings created by, but not limited to, the following causes: fanaticism and intolerances that disrupt compassion and living in harmony with others; indoctrination of narrow-minded beliefs; imposition of views; anger; and miscommunication (89-95).[8] Understanding and compassion for others seems to be achieved by the understanding of others' suffering and the root causes of suffering. Therefore, to be responsible is to recognize and understand suffering, which then leads to compassion. It is through this process that others can be recognized as people.

 

Other theorists, philosophers, and activists contend that recognizing suffering is necessary to end violence. In Scared Sacred, Velcrow Ripper takes a journey to different sites of great suffering that ultimately leads him toward developing compassion.[9] In "The Planet", Paul Gilroy explores how the construction and naturalization of race and the hierarchies produced by difference shape the hatred of others. It is the deconstruction of these ideologies that can lead to the compassion and humanization of others. Thus individual responsibility is being aware of what Judith Butler calls the precariousness of life in self and other; being a cosmopolitan seems to be, above all, a social, ethical enterprise.

 

In Cosmopolitanism: Ethics in a World of Strangers, Kwame Anthony Appiah notices something important about how social ethics seem to operate: Whatever obligation I might have to another, especially a foreign other, that obligation does not supersede the obligations I have to those people most familiar to me. However, as Judith Butler questions, "at what cost do I establish the familiar as the criterion" for valuing others? (Precarious Life 38).[10] If I value the familiar more than the foreign, what are the consequences? Paul Gilroy offers a possible alternative to this emphasis on familiarity arguing that "methodical cultivation of a degree of estrangement from one's own culture and history ... might qualify as essential to a cosmopolitan commitment" (The Planet 67). This estrangement entails a "process of exposure to otherness" in order to foster "the irreducible value of diversity within sameness" (67).[11]

 

Estrangement, therefore, could lead to de-emphasising the familiar in ethics by integrating otherness.

 

For Gilroy, being cosmopolitan seems to involve both a social, ethical enterprise and a cultural enterprise. In "The Planet", Gilroy describes the cases of Tom Hurndall (80) and Rachel Corrie (81); each seems to exemplify what might be considered Gilroy's figure of the cosmopolitan. Both Hurndall and Corrie removed themselves (geographically) from their home cultures, presumably both physically and mentally estranging themselves from their own cultures and histories. Interestingly, though, Hurndall and Corrie were both killed in 2003 (in separate incidents) and their stories might serve as affirmations of familiarity, rather than models of estrangement. Gilroy’s model of estrangement might actually undermine itself through its examples; this might be construed as a failure of Gilroy’s theory to address the practical difficulties of estranging oneself from the familiar.[12]

 

Cosmopolitanism is a broader concept than world government[citation needed]


Some forms of cosmopolitanism also fail to address the potential for economic colonization by powerful countries over less powerful ones.[citation needed] Frantz Fanon, in “The Wretched of the Earth”, observes that when nations achieved independence from European colonizers, frequently there was no system in place to secure their economic future, and they became "manager[s] for Western enterprise...in practise set[ting] up its country as the brothel of Europe" (154).[13] When "third world" nations are drawn into economic partnerships with global capital, ostensibly to improve their national quality of life, often the only ones benefitting from this partnership are well-placed individuals and not the nation itself.

 

Further, Mahmood Mamdani in Good Muslim, Bad Muslim suggests that the imposition of Western cultural norms, democracy and Christianity to name only two, has historically resulted in nationalist violence;[14] however, Appiah has implied that democracy is a pre-requisite for cosmopolitan intervention in developing nations (Kindness to Strangers 169).[15] Cosmopolitanism, in these instances, appears to be a new form of colonization: the powerful exploit the weak and the weak eventually fight back.[citation needed]

Much of the political thinking of the last two centuries has taken nationalism and the framework of the sovereign nation-state for granted. Now, with the advance of globalization and the increased facility of travel and communication, some thinkers consider that the political system based on the nation-state has become obsolete and that it is time to design a better and more efficient alternative.

 

Jesús Mosterín analyzes how the world political system should be organized in order to maximize individual freedom and individual opportunity. Rejecting as muddled the metaphysical notion of free will, he focuses on political freedom, the absence of coercion or interference by others in personal decisions. Because of the tendencies to violence and aggression that lurk in human nature, some constraint on freedom is necessary for peaceful and fruitful social interaction, but the more freedom we enjoy, the better.[16]

 

Especially, there is no rational ground for curtailing the cultural freedoms (of language, religion and customs) in the name of the nation, the church or the party. From this point of view, Internet provides a much more attractive model than the nation-state. Neither is there any just reason for restraining the free circulation of people, ideas or goods. Mosterín thinks that the nation-state is incompatible with the full development of freedom, whose blossoming requires the reorganization of the world political system along cosmopolitan lines. He proposes a world without sovereign nation-states, territorially organized in small autonomous but not-sovereign cantonal polities, complemented by strong world organizations.[17] He emphasizes the difference between international institutions, led by representatives of the national governments, and world or universal institutions, with clearly defined aims served by directors selected by their personal qualifications, independently of any national bias or proportion.

 

Political and sociological cosmopolitanism

Ulrich Beck (b. May 15, 1944) is a sociologist who has posed the new concept of cosmopolitan critical theory in direct opposition to traditional nation-state politics. Nation-state theory sees power relations only among different state actors, and excludes a global economy, or subjugates it to the nation-state model. Cosmopolitanism sees global capital as a possible threat to the nation state and places it within a meta-power game in which global capital, states and civil society are its players.

 

It is important to mark a distinction between Beck's cosmopolitanism and the idea of a world state. For Beck, imposing a single world order is considered hegemonic at best and ethnocentric at worst. Rather, political and sociological cosmopolitanism rests upon these fundamental foundations:

 

"Acknowledging the otherness of those who are culturally different"
"Acknowledging the otherness of the future"
"Acknowledging the otherness of nature"
"Acknowledging the otherness of the object"
"Acknowledging the otherness of other rationalities"

Emmanuel Levinas argued for cosmopolitanism in terms of moral choices in conscience supporting the "Other".


A number of philosophers, including Emmanuel Levinas, have introduced the concept of the "Other". For Levinas, the Other is given context in ethics and responsibility; we should think of the Other as anyone and everyone outside ourselves. According to Levinas, our initial interactions with the Other occur before we form a will—the ability to make choices. The Other addresses us and we respond: even the absence of response is a response. We are thus conditioned by the Other's address and begin to form culture and identity. After the formation of the will, we choose whether to identify with the addresses by others and, as a result, continue the process of forming identity.[18]

 

During this process, it is possible to recognize ourselves in our interactions with Others. Even in situations where we engage in the most minimal interaction, we ascribe identities to others and simultaneously to ourselves. Our dependence on the Other for the continuous formation of language, culture, and identity means that we are responsible to others and that they are responsible to us. Also once we've formed a will, it becomes possible to recognize this social interdependence. When we have gained the capacity for recognition, the imperative is to perform that recognition and thereby become ethically responsible to the Other in conscience.[19]

 

Cosmopolitanism shares some aspects of universalism--namely the globally acceptable notion of human dignity that must be protected and enshrined in international law. However, the theory deviates in recognising the differences between world cultures. Thus, a "cosmopolitan declaration of human rights" would be defined in terms of negatives that no one could disagree over.[citation needed]

In addition, cosmopolitanism calls for equal protection of the environment and against the negative side effects of technological development. Human dignity, however, is convoluted because it is necessary to first distinguish who has the right to be respected and second to consider what rights are protectable. Under cosmopolitanism, all humans have rights; however, history shows that recognition of these rights is not guaranteed.[citation needed]

As an example, Judith Butler discusses a Western discourse of "human" in Precarious Life: The Powers of Mourning and Violence. Butler works through the idea of "human" and notes that "human" has been "naturalized in its 'Western' mold by the contemporary workings of humanism" (32). Thus, there is the idea that not all "human" lives will be supported in the same way, indeed, that some human lives are worth more protection than others.

 

This idea is reiterated in Sunera Thobani's "Nationality in the Age of Global Terror," where she discusses a discourse in which Muslim people fall into a good/bad dichotomy: a "good Muslim" is one who has been Westernized and a "bad Muslim" is one who visibly rejects Western cultural influences. Thobani notes that it is through media representations that these ideas become naturalized. Individuals who embrace Western ideals are considered fully "human" and are more likely to be afforded dignity and protection than those who defend their non-Westernized cultural identities.

 

According to those who follow Beck's reasoning, a cosmopolitan world would consist of a plurality of states, which would use global and regional consensus to gain greater bargaining power against opponents. States would also utilise the power of civil society actors such as Non-governmental organizations (NGOs) and consumers to strengthen their legitimacy and enlist the help of investors to pursue a cosmopolitan agenda.[citation needed]

 

Other authors imagine a cosmopolitan world moving beyond today's conception of nation-states. These scholars argue that a truly cosmopolitan identity of Global Citizen will take hold, diminishing the importance of national identities. The formation of a global citizens movement would lead to the establishment of democratic global institutions, creating the space for global political discourse and decisions, would in turn reinforce the notion of citizenship at a global level. Nested structures of governance balancing the principles of irreducibility (i.e., the notion that certain problems can only be addressed at the global level, such as global warming) and subsidiarity (i.e., the notion that decisions should be made at as local a level possible) would thus form the basis for a cosmopolitan political order.[20]

 

Daniele Archibugi proposes a renewed model for global citizenship:[21] institutional cosmopolitanism. It advocates some reforms in global governance to allow world citizens to take more directly a part into political life. A number of proposals have been made in order to make this possible. Cosmopolitan democracy, for example, suggests strengthening the United Nations and other international organizations by creating a World Parliamentary Assembly.[22]

 

Cosmopolitan art

Art Deco


Art Deco is a cosmopolitan modernist art form that fuses artistic themes from classical civilization, medieval civilization, and modern civilization. In architecture it represents the fusing of neoclassical architecture based on Greco-Roman classical architecture, medieval architecture including Gothic cathedrals, and futurist architecture; examples of this fusion in Art Deco architecture include the Chrysler Building in New York City.

 

See also

Anti-nationalism
Anti-patriotism
Cosmopolitan (disambiguation)
Cross-culturalism
Democratic globalization
Diogenes of Sinope
Europeanism
Existential migration
Global Citizens Movement
Global justice
Globalization
Interculturalism
Internationalism (politics)
Liberalism
Multiculturalism
Patriotism
Polyculturalism
Rootless cosmopolitan
Transnationalism
World citizen

 

 

Notes

 

^ Diogenes Laertius, "The Lives of Eminent Philosophers", Chapter VI, line 63.
^ Nussbaum, Martha C. (1997). Kant and Stoic Cosmopolitanism, in The Journal of Political Philosophy, Volume 5, Nr 1, pp. 1-25
^ Ibid: p. 9
^ Immanuel Kant. 'Toward Perpetual Peace' in Practical Philosophy-Cambridge Edition of the Works of Immanuel Kant. Gregor MJ (trans.). Cambridge University Press, Cambridge. 1999. p329 (8:358).
^ Beck, Ulrich (2006). The Cosmopolitan Vision, Cambridge: Polity Press, p. 45
^ Appiah, Kwame Anthony (2006), Cosmopolitanism. Ethics in a World of Strangers, London: Penguin Books
^ GTI Paper Series see Dawn of the Cosmopolitan: The Hope of a Global Citizens Movement, paper #15, and Global Politics and Institutions, paper #3
^ Thich Nhat Hanh, Being Peace. (1987) Berkeley: Parallax, 1996.
^ Ripper, Velcrow. Scared Sacred. National Filmboard of Canada. 2004
^ Butler, Judith. Precarious Life: The Powers of Mourning and Violence. New York: Verso, 2004
^ Gilroy, Paul. After Empire: Multiculture or Postcolonial Melancholia. New York: Columbia UP, 2005.
^ Gilroy, Paul. After Empire: Multiculture or Postcolonial Melancholia. New York: Columbia UP, 2005.
^ Fanon, Frantz. “The Pitfalls of National Consciousness" in The Wretched of the Earth.
^ Mamdani, Mahmood. Good Muslim, Bad Muslim: America, the Cold War, and the Roots of Terror. New York: Pantheon Books, 2004.
^ Appiah, Anthony Kwame. “Moral Disagreement” and “Kindness to Strangers” in Cosmopolitanism: Ethics in a World of Strangers. New York: W. W. Norton and Co., 2006. Pp.45-68, 155-174.
^ Mosterín, Jesús (2008). La cultura de la libertad. Madrid: Espasa-Calpe. 304 pp. ISBN 978-84670-2697-9.
^ Mosterín, Jesús (2005). “A World without Nation States”. Acta Institutionis Philosophiae et Aestheticae (Tokyo), vol. 23 (2005), pp. 55-77.
^ Emmanuel Levinas. Totality and Infinity. An Essay on Exteriority. Lingis A (trans) Duquesne University Press, Pittsburgh, PA 1998. pp84, 100-101
^ Emmanuel Levinas. Totality and Infinity. An Essay on Exteriority. Lingis A (trans) Duquesne University Press, Pittsburgh, PA 1998. pp84, 100-101
^ GTI Paper Series see Global Politics and Institutions, paper #3
^ Daniele Archibugi, The Global Commonwealth of Citizens: Toward a Cosmopolitan Democracy, Princeton University Press, 2009.
^ Daniele Archibugi, Debating Cosmopolitics, London: Verso, 2003.
[edit]Resources

Amanda Anderson. 1998. Cosmopolitanism, Universalism, and the Divided Legacies of Modernity. In Cosmopolitics: Thinking and Feeling beyond the Nation, edited by P. Cheah and B. Robbins. Minneapolis and London: University of Minnesota Press.
Ankerl, Guy (2000). Global communication without universal civilization. INU societal research. Vol.1: Coexisting contemporary civilizations : Arabo-Muslim, Bharati, Chinese, and Western. Geneva: INU Press. ISBN 2-88155-004-5.
Daniele Archibugi and David Held. editors, 1995. Cosmopolitan Democracy. An Agenda for a New World Order. Cambridge: Polity Press.
Kwame Anthony Appiah, 2006. Cosmopolitanism: Ethics in a world of strangers. New York: W. W. Norton and Co.
Simon Caney, 'Cosmopolitanism' in Duncan Bell (ed.), Ethics and World Politics (Oxford University Press, 2010)
Luke Martell. 2008. Beck's Cosmopolitan Politics Contemporary Politics 2008.
Bruce Robbins. 1998. Comparative Cosmopolitanisms. In Cosmopolitics: Thinking and Feeling beyond the Nation, edited by P. Cheah and B. Robbins. Minneapolis and London: University of Minnesota Press.
2005. The Political Philosophy of Cosmopolitanism, edited by Gillian Brock and Harry Brighouse. Cambridge University Press.
2005. Power in the Global Age, by Ulrich Beck. Cambridge: Polity Press.
Kleingeld, Pauline; Brown, Eric. Edward N. Zalta. ed. Cosmopolitanism (Fall 2002 ed.). The Stanford Encyclopedia of Philosophy.
ref 1: GTI Paper Series see Dawn of the Cosmopolitan: The Hope of a Global Citizens Movement, paper #15, and Global Politics and Institutions, paper #3

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