Category Archives: Economics

Let’s Play The Embassy Polka!

Did anyone catch the news that the British embassy has pulled out of Tehran? The UK has withdrawn its entire staff and closed the embassy. The Iranians responded by promptly passing a bill that expelled the British ambassador, but that’s largely to save face at home, eh? *lol* The UK then threw the Iranian ambassador out of the country. Why wait until the British staff were out of the country? Easy: the long shadow of the 1979 hostage crisis.

This tit-for-tat embassy shuffle was sparked by an attack on the British compound by an unruly mob which appeared to contain Basij elements. Those are the street militia that the state use for routine thuggery when uniforms are inappropriate on the front pages. I would surmise that elements within the state almost certainly approved the attack, even if only tacitly. The crowd’s animus came from the latest round of sanctions levelled at the Islamic Republic for the nuclear weapons programme it is widely presumed to have going. (I, for one, think the intelligence is credible; the mullahs have a very good strategic reason for wanting one, and the wide dispersal and burial of facilities is kinda suspicious…)

What this leaves us is the biggest diplomatic spat the Iranians have had for a while. Not only have the Brits pulled out, but the French and German ambassadors have been recalled for ‘consultations’, and the EU foreign ministers are meeting in Brussels to discuss joint statements or action. The Iranians and Brits not getting along is old news — think back to the Anglo-Iranian Oil Company monopoly and the 1953 coup; and hell, they only reestablished diplomatic relations in 1999 — but the rest of Europe getting behind the Brits in this is interesting to me. There’s a lot of money at stake, after all.

Think about it: What’s the one thing preventing much stronger action against Iran, specifically an oil embargo that would cut off their cash supply? It might drive the economy further into the ditch. A lot of countries depend on Iranian oil, and they are a huge contributor to the OPEC cartel. Getting enough countries to go along would be tough, since places like China and Russia could step in (China with more oil purchases, the Russians with cheap credit). This means that if Europe or Japan closed the spigot on Iranian oil it would likely only hurt them. And if you don’t know how messed up the European and Japanese economies are right now you’ve been asleep for way too long…

This makes it striking to me that the British foreign minister has said that the UK is behind the idea of oil sanctions, and would be willing to impose them unilaterally if the EU as a whole demurs (which is likely). Given the much more hawkish foreign policy of Sarkozy’s France I would not be surprised if he went along; the French don’t need the oil the way a lot of southern European countries do anyhow. The risk of damage is much lower for these two giants, so this would be more of a symbolic power-play, part of a steady ratcheting-up of pressure on Tehran.

Will it work? That is, will is stop the nuclear programme? Not in my opinion, but it will be interesting to watch this latest chapter in the long Iranian melodrama play out.

Fascism And The Debt Crisis

There is a class war in American to-day. But despite what you hear on Fox, America is in no danger of becoming ‘socialist’; it’s in danger of becoming a fascist state. This budget argument, and the ideologues in the House, exemplify this overall trend exceedingly well. I have tried to stay out of this mess because it’s so tangential to what I’m focussing on this summer, but I’m a bit angry to-day so I’m going to rant and vent. (And yes, I’m aware that I just linked to Glenn Beck above; the man is such a raving moron that I can’t believe anyone takes a thing he says seriously. When he says “do your homework”, it’s more than apparent than no-one in his audience does.)

The United States has been drifting steadily rightward since the 1960s; earlier if you count the massive post-war military build-up as a right-wing nationalist project and, incidentally, I would. The Cold War had nothing to do with democracy — the US did more to crush democracy in the Global South than the Soviets could have dreamt of doing. The whole ideological framework of the post-war period is a contest between capital, and specifically American corporations on the global stage, and the command economies that tried to escape this system. Their solutions, of course, were idiotic; the Leninist-Marxist and Maoist governments were deluding themselves. But I’m drifting from the point, so let’s get back to fascism.

We can define this ideology of government pretty easily by noting that it always contains the following elements: it is nationalistic, in that it espouses a chauvinistic attitude towards the world and waves the flag, so to speak; it is militaristic, in that it argues for national strength and uses jingoism to maintain virility and authority in the world; it is collectivistic, in that it seeks to mobilize the whole nation, or at least, the ‘authentic’ parts; it is eugenicist, in that it favours specific policies regarding birth and death in service of a higher cause; it is populist, in that it appeals to class-conflict and conspiracy theories; and it is authoritarian, in that it aims to indoctrinate everyone with a uniform message and denies the principle of loyal opposition, so vital to democratic systems.

All of these features are in ample display in the American right, and I should not have to provide examples for that to be quite obvious. Republicans, and frequently Democrats as well, wrap themselves in the flag, worship the military and military spending, push a uniform political/social message via propagandistic media, force the government into your reproductive lives, issue divisive statements and rally people around economic issues, and frequently defy the right of an informed citizenry to criticize the government. And, wow, for populist conspiracy theories look no further than Glenn Beck; I was appalled to hear my grandmother repeat his bizarre argument that financier George Soros is a “puppetmaster”. Try to remember how the Nazis used the Jews and repeat after me: scapegoating is populist manipulation! Anyway, looking at this stuff it becomes apparent that the only common elements of fascism missing in the United States are the anti-clericalism and anti-capitalism that emerged with Italian fascism.

The most threatening aspect of this political project, and clear evidence that it is working, lies in the media. 80% of our news sources are controlled by a half-dozen large corporations, and most of the rest are trying to get big or be purchased by one. These companies are often nakedly partisan and slant the news to suit their political or financial interests. Some of this is the simple effect of market forces — capitalism dictates that any profitable enterprise find a market, and why should the purveyors of news be immune? This is why public news broadcasters exist in the first place, from BBC to NPR (which explains why Republicans would love to destroy the latter; its lack of an agenda allows it to aim for accuracy first).

The whole media edifice, and in particular the News Corp brands like Fox, exemplify that great principle of authoritarian propaganda from Goebbels to Stalin: Repeat a lie often enough and it becomes the truth. Turning the news into entertainment, as Fox has, makes for a successful business model, but it eviscerates reality in the process. We no longer hear of the world as it is, but rather, as certain ideologues wish it was or conspiracy theorists think it is. The success of right-wing punditry in the United States would make any authoritarian state envious.

Now, as regards this current budget and debt argument in Congress … What.The.Fuck?! The Republican brand seems to have been thoroughly coöpted by slavering imbeciles, competing with each other to show how much drool they can spill from their crooked mouths. Who are these freshman “tea party” fools? It’s bad enough that so many of them are proud creationists — I mean, what century is this? The material evidence for evolution is unassailable, and it takes a wilful ignorance to pass this over in favour of bronze-age mythology that is poorly translated or understood. But again, I’m off topic: What about their economics?

The issue these Republicans have over the debt ceiling revolves around a total resistance to tax increases, when this is absolutely the way to approach closing the deficit. Austerity measures enacted swiftly in other countries have all contained a mixture of spending cuts and new revenue, and while we fall closer to default like the insolvent southern European nations, those thrifty northern Europeans have been addressing their budget issues effectively. For cryin’ out loud, check out some of the coverage of this in The Economist, a free trade-supporting publication if ever there was one. But all we hear from those “tea party” lunatics is the same old rhetoric about supply-side economics that has been debunked by practical experience again and again and again.

Even a cursory examination of economic history will show you that the closer one gets to unregulated laissez-faire the greater the risk of economic melt-down, not to mention the accumulation of wealth at the top while the bottom 90% suffer. The notion that cutting taxes leads to greater investment, and hence job growth, is complete bullshit. Why not do your homework, America, and note that every significant tax decrease (including the gargantuan one Bush passed in 2001) has been followed by a decline in investment. No kidding. Why bother with risky investments when you can sit back and rake it in? Conversely, if a smaller slice of the profit will reach their own wallets, the wealthy have usually been driven to greater investment, since rapid growth in overall income is the only way to grow their own share. Logical, no? So why is it so damned hard to understand?

As to the tax rates themselves, this is another piece of ideological crap pedalled by class-warriors who want to expropriate more wealth to themselves. You want to see higher growth? Enact sensible taxation and investment. Why do you think that the Scandinavian countries are routinely classed amongst the most economically competitive and successful on the planet, despite having some of the highest tax rates?

Let’s take a look at the top tax brackets during the greatest period of economic growth in American history, the post-war 1950s and 1960s. For taxable wages over $400,000: 1951, 91%; 1952–1953, 92%; 1954–1963, 87%; 1964, 77%. And for taxable wages over $200,000: 1965–1967, 70%. The richest individuals are taxed at less than half that last figure now, and one-third the upper brackets from this period. Yet this is when the American middle class came into existence in the first place! This is the period that created our consumer culture, gave everyone a car and a teevee and a refrigerator, and moved millions into clean suburban neighbourhoods. Where was all that wealth coming from? High corporate investment and substantial government investment in infrastructure!

Now, remind me why cutting taxes on the top earners is necessary for economic growth. Oh, wait: you can’t. Taxing the wealthy has not led to any statistically-significant drop in economic growth, and the periods of highest taxation for the wealthiest have usually been in periods of rapid overall economic growth. America, you are being lied to in the name of a class war stoked by the wealthiest and playing on your ignorance. Wake the hell up! The middle class is disappearing, real wages have stagnated since the 1970s, fewer people can actually afford their lifestyles or homes, and the infrastructure that made this country a post-war powerhouse is crumbling into dust (collapsing bridges, anyone? *sheesh*).

Take a quick look at the periods of peak unemployment and poverty through 2001. Pay attention to the years in which these recessions take place. November 1948–October 1949; July 1953–May 1954; August 1957–April 1958; April 1960–February 1961; December 1969–November 1970; November 1973–March 1975; January 1980–July 1980; July 1981–November 1982; July 1990–March 1991; March 2001–November 2001. And need I remind you that George W. Bush began his presidency with a budgetary surplus, before plunging the country into its greatest peace-time deficit spending and a massive recession — more than one, technically.

Okay, now note the conspicuous absence of Democratic presidencies in most of these periods. Where are the Kennedy-Johnson years? Carter? Clinton? Not that their policies are necessarily the issue here, since they often observed the same economic principles. My point is that there is no correlation between the so-called “tax-and-spend Democrats” and recession or unemployment — quite the opposite, in fact. If you want an economic collapse, vote Republican and your chances probably go up, statistically-speaking.

My underlying reason for delving into this is that Americans are being effectively manipulated into supporting policies that are not in their best interest and which are founded on lies. Even that patron saint of the “tea party” crowd, Ronald Reagan, raised taxes when it became apparent that his tax cuts had led directly to an economic downturn. Meaning, he was actually pragmatic and smart enough to recognize when he was wrong. Somehow the modern Republican party has missed this pragmatism and embraced a kind of mediaeval dogmatism which allows of no deviation from the sacred gospel of low taxes.

Frankly, it’s disgusting, and insulting to the many Republicans I have called friends through the years. Conservatism is an honourable political stance, no matter what you think of it personally. Propaganda and deception on the current scale is anything but honourable. The extraordinary facility which the American right has demonstrated in crafting and disseminating a message is rightly the envy of would-be dictators everywhere. And while the Global South has, since the end of the Cold War, been shaking off the authoritarian régimes often imposed in the name of American strategic interests and embracing democracy, the land of its birth is steadily shrinking from it.

What happened to the public interest? Or to integrity? We elect whores to Washington, and then wonder why everything is so jacked up for us. If you want to fix the debt issues, get the damned lobbyists off of Capitol Hill; the ghost-written legislation their servile congressmen have been passing is a big part of the problem. Next, revisit the facts about progressive tax systems and their place in economic growth. Finally, stop listening to the damned lies purveyed by corporate media!

A long time ago the World War II journalist William Shirer predicted that one day the United States might go fascist by popular vote. With each passing year I grow more convinced that it will happen in my lifetime. And I am not happy.