We’re all Doomed!

It seems like everyone, right now, is convinced of their own doom. The pages of the Guardian are full of angry leftie types who feel betrayed by 52% of the electorate, while the pages of the red-top papers are little better and filled with angry accusations of treachery and imagined attempts to subvert the result of the Brexit vote. Bizarrely, every side feels under threat simultaneously, but in crazy times like these maybe they’re all right. When the rules of the game fall apart, no-one can be sure anymore what it takes to win, or what winning even means, even if the team captains themselves were the ones who shot the referee and are now warring for possession of the rule book. The village has to be destroyed in order to save it.

According to Google and Wikipedia, the original sense of the word doom was judgment, someone receiving what they deserved:

Old English dōm ‘statute, judgement’, of Germanic origin, from a base meaning ‘to put in place’; related to do.

And there’s certainly a lot that needs judging. The Brexits and Trumps of the world weren’t random events, they were responses to the faults that run through the way we organise the world, and the increasingly desperate papering over the cracks. Every system contains the seeds of its own destruction (as Marx supposedly said of capitalism), and when those seeds germinated there were two choices:

  1. Be honest about the problems and the drastic changes required to fix them
  2. Lie, pervert and distort all law and reason to delay burying the bloated but familiar corpse as long as possible

It doesn’t take much to see which way our illustrious leaders went.

Large societies always find it hard to fundamentally reform, because the illusion of permanence is the only way they can work. Imagine what would happen if people with pounds in their pockets didn’t believe that the pound was a stable store of value, with a stable and strong government behind it? Or if they didn’t believe that their pensions would deliver what was promised? If they didn’t act as if institutions, which are composed entirely of rules and therefore in theory more mutable than anything physical, would endure forever?

In such a world, the only thing you can trust are friends and family, but no system of 60+ million people (such as the UK itself) can be run on that basis. It’s been tried in Africa and other parts of the world where small tribes were randomly allocated to states, and the result has generally been massive corruption and a state that barely functions at best. The ability to work together with strangers, the historically bizarre cultural belief that the system itself can substitute for personal links, is what makes the advanced economies work, but that very illusion means that nothing fundamental can be fixed without bringing into question the very basis of the system, even when the system is tearing itself apart. There’s always a temptation to tweak and paper over the cracks and hope.

Let’s take our current repeat of the Great Depression as an example:

  1. SUCCESS: In the post-war period, Keynesian policies created a much more equal society with a much higher standard of living for the working class than before.
  2. FAILURE: The pursuit of full employment gave organised labour a lot of bargaining power. In the 70s when the economy hit the rocks, workers were basically unable to reach a compromise with the investment class about how to divide limited spoils. The result was the three day week and a country at war with itself.
  3. SUCCESS: Margaret Thatcher broke the UK unions and redistributed power towards the investment class. After a sharp recession, the economy started functioning again and, combined with a boost from North Sea gas and oil, things seemed to improve.
  4. FAILURE: Instead of rebalancing power between labour and investors, the pendulum swung massively too far the other way. Not only was the power of organised labour destroyed, but the government deliberately pursued policies to increase competition in low-skilled jobs by bringing cheaper labour into the EU and pushing free-trade deals that facilitated off-shoring of jobs. This caused a shortage of demand for the goods being produced – the propensity to spend at the bottom is higher than the top, and there has to be enough money spent to buy the goods being produced or the economy enters a death spiral. The lesson of Keynes was ignored by Thatcher and other followers of Friedman.
  5. SUCCESS: A liberalised financial sector (also due to Thatcher) propped up consumer demand by creating a debt bubble. Secured lending on housing, and unsecured lending via credit cards, created money to plug the spending gap (yes, banks create money, and the money multiplier model is empirically wrong). Everything seemed to be OK as long as the bubble was inflating. Since the liberalisation of finance also occurred across borders, positive feedback loops crossed borders too to reinforce the bubble.
  6. FAILURE: In parts of the system, the bubble popped. Strong connections between banks meant that instead of one national bubble popping, the entire international debt bubble went pop.
  7. SUCCESS: Banks were bailed out, and continue to be bailed out (the latest being Italy’s third biggest bank, Monte dei Paschi). At first, economies were stimulated by governments to maintain consumer demand and avoid an even bigger recession. Things seemed to stabilise.
  8. FAILURE: Government debts soared faster than for a long time, causing panic among politicians and influential people. Austerity was imposed to try to slow the growth of debt or decrease debt, causing a return of the lack of demand problem which was ‘solved’ by the debt bubble in the first place. Some parts of the world entered a death spiral (Greece).
  9. SUCCESS: Everything can be solved by better public relations! Politicians rely on animal spirits to magically solve the problem. Unemployment and inflation statistics are calculated in misleading ways to make people more optimistic. Crapification is progress: zero-hours contracts and a replacement of well paid full-time roles with minimum wage and part-time jobs is presented as a good thing. In the UK, politicians succeed in restarting debt fueled house price inflation, for a time.
  10. FAILURE: It turns out that the dogs won’t eat the dog food. Long-standing anger at economic policies at the bottom combine with anger of the previously insulated to deliver Brexit and Trump. Spain is ungovernable. Le Pen and other right wing populists rise in France, Austria, the Netherlands. The 5 Star Movement has a good chance of being the biggest party in the Italian parliament, and want to withdraw Italy from the Euro.
  11. SUCCESS: ???

Another example might be our inability to solve the environmental problems of economic growth, or to accept that growth itself, of both populations and economies, is limited in a finite world.

Note that the first failure has been returning to haunt us for decades now. We started down this road because of the difficulty of maintaining a balance between demand and supply, labour and capital. Now we have exactly the same problem, but we also have:

  1. The aftermath of the biggest debt bubble in history
  2. A zombie financial system
  3. A government that regards lying (everything is fine!) and perverting justice as a problem solving mechanism (no bankers were jailed!)
  4. The disintegration of the political centre (Brexit, Trump, …)

How much easier might it have been if the fundamental flaw in the system, the need to maintain some kind of equilibrium between supply and demand, workers and capitalists, had been comprehensively solved in the seventies? But to do that would have required an admission that this man-made system can be whatever we want it to be, that the only constraint is what we’re willing to collectively live with, and admitting that would have destroyed the system all by itself. So instead we get the sticking plasters and the gradual march towards total disintegration.

The PLP Only Has Itself to Blame

Sorry for the politics! I promise normal service will resume soon, but this is the biggest political earthquake of my lifetime so I think I’ll focus on it a bit more. If you don’t want to see the politics, please filter to only see posts under gardening.

As you might be aware, there’s a coup against Jeremy Corbyn underway right now. Most of his shadow cabinet has resigned, and a vote of no confidence is scheduled for tomorrow. To me this seems like a huge, huge mistake. If the vote of no confidence passes, Jeremy has vowed to run in the new leadership election, and he probably stands a good chance of being re-elected. At that point, what is the Parliamentary Labour Party going to do? The chasm between the PLP and their voters will be clear and insurmountable, and there will be a stark choice between either representing the will of the wider Labour party or following the SDP party in breaking right and hoping that things work out better this time than last time.

The unfortunate truth is that both sides have a point. It’s true that Corbyn hasn’t demonstrated a lot of the kind of managerial competence that you might expect in the leader of a major political party. He seems to be much more in his element wandering the streets and talking to people than he does trying to orchestrate Labour’s response to the EU referendum. It’s true that his support for the Remain campaign seems to have been a bit lukewarm – he played a low-key role in the campaign and gave a nuanced view of the EU in his last minute intervention, rather than being an enthusiastic EU cheerleader. But then again, that personal touch and refusal to just go with the flow politically was why he was elected in the first place.

And this is the crux of the matter. The PLP has itself to blame because it has come to outright despise its own core voters. Out of electoral necessity, the Labour party became an alliance between socially liberal middle-class values and its traditional supporters, but now there is almost no-one in the younger ranks of Labour MPs who genuinely believes in any kind of real social democracy. They’re professional politicians, members of the managerial class who rely on focus groups and triangulation and throwing those ignoring racist working class council estate people just enough of a bone to get them to vote Labour rather than Tory. Old Labour has been completely purged.

The reason Corbyn won in the leadership election was because he was willing to advocate for something, anything, that was vaguely left of centre. He didn’t promise obvious managerial competence like some of the rest, but he did at least believe in some kind of better world, unlike most of the Blairite contenders who are perfectly happy with the status quo and whose main argument is that they might be slightly more competent and a bit less mean than the other guys.

The best choice for the PLP would have been to give Corbyn a true chance. It would have accepted the direction of travel democratically selected by Corbyn’s election and tried to offer the managerial competence that Corbyn lacked. Instead, the political pygmies and triangulators reacted with ill grace to a democratic rejection of their managerial, technocratic view of the political process, and did everything they could to destroy him short out outright rebellion. And since none of that has worked, they’re now about to tear the party about months before a possible general election because they’d rather lose than accept the risk a Corbyn-led government. God forbid that a Labour government actually tries to enact any kind of left-wing policies.

If the PLP wants a different result this time round, it needs to find a candidate to present who doesn’t just promise managerial competence and a better bedside manner as the market discipline is administered. It needs to find someone who has an actual vision for a better society that doesn’t amount to fiddling with the tax rates a bit or cutting government spending just a little bit slower. Otherwise, there’s a real risk that what they’ll get is more Corbyn, and then there’ll be nowhere left for them to go except to the life rafts.

Edit – 29/6/2016

It seems like there were more steps to the plan that I didn’t consider above. The PLP’s plan to avoid a new Corbyn win seems to be:

  1. First, try to break the man by a mob attack at the end of their night of the long knives
  2. If that fails, try to keep him off the ballot paper by means fair or foul so the party can’t re-elect him

Their goal is to avoid a true leadership contest at all costs. Plan (1) failed, so we’ll just have to see if they succeed in this terrible repudiation of democracy in the Labour party and manage to keep the membership’s preferred candidate off the ballots.

Their treatment of Corbyn is disgusting. Whatever they think of his leadership style or policies, he should be able to expect basic civility from his colleagues, and above all a supposedly democratic party should have some respect for the choice of the party membership. MPs are not, or shouldn’t be, an aristocratic class lording it over the rest of the party, and if that’s how they see their role then they don’t deserve the support of the membership.

Corbyn isn’t perfect, and perhaps he’s not the right man for the job, but he deserves better than the way he’s been treated during his leadership.

Don’t Blame the Immigrants

It seems like there’s a lot of hate going around right now from a small but vocal minority. EU nationals are being told to get on a bus, get on a plane, just go home now and abandon whatever life they’ve built for themselves here in the UK.

Even if you don’t like immigration, please don’t blame people who exercised a legal right that the British public and the British government gave them. Since the break-up of the UK is now a possibility, putting yourself in their place should be easy enough. How would you feel of you moved to Scotland years or decades ago and were subsequently abused and hounded out after an independence vote? Would you feel you’d done anything wrong by exercising your right as a British citizen to live and work in Scotland, under those circumstances? Or would you feel instead like you were being scapegoated for problems caused by others?

If you want someone to blame and harrass for historical immigration, might I suggest the following list:

  1. Anyone involved in the negotiations to join of the Harold Macmillan and Edward Heath governments in the late 60s and early 70s
  2. Anyone who voted Yes in the referendum of 1975, knowing that freedom of movement was part of the deal
  3. Anyone who lobbied for the expansion of the EU, which includes just about every British government for the last two or three decades and much of British industry
  4. Anyone in the New Labour governments after 1997 who was involved in the decision not to impose temporary restrictions when Poland and the other Eastern European states joined

The people at the bottom just trying to live their lives don’t deserve to be attacked just for being born somewhere else. If you want to blame someone, look to the powerful at home instead.

Brexit and the Crisis of the Centre

I thought I’d veer off topic a bit and enter the minefield of politics. The EU referendum is almost over and it’s looking like Remain has probably got the edge, but even if the status quo prevails for now, I doubt the supporters of Brexit will vanish.

I’ve been seriously torn during the campaign. Like most people, I don’t have much enthusiasm for the EU, but on the other hand it’s hard to see a Brexit being well managed since the Conservative party is likely to have a meltdown post-referendum. At that point, the non-manifesto published by the Leave campaign would be torn to shreds, and it’s anyone’s guess what would happen. The atmosphere is unlikely to be conducive to reasonable debate and decision-making, and that’s what worries me more than anything since I have close family living abroad in the EU on UK passports, and other family living in the UK on EU passports. I don’t really trust the reassurances about what would happen to all those people, so I’ve reluctantly decided to support Remain. But that doesn’t mean I think there isn’t a very rocky road ahead if we stay. I think things are going to get bumpy either way.

The problem is that the political centre is imploding under conflicting pressure from all sides. What we’re witnessing is a continuation of a crisis that began with the crash of 2007/2008. Before then, the acceptable part of the political spectrum was basically defined economically by ‘free-trade’, minimum interference policies. A debate was possible about how much government should spend, but pretty much anything else economically was off limits:

  1. Most governments explicitly renounced their powers to set monetary policy, and instead gave that power to ‘independent’ central banks with narrow inflation targeting objectives
  2. A number of treaties, bilateral, at the EU and WTO levels, as well as intense pressure from the economic giants, made it more or less impossible to: raise or levy import or export duties, impose restrictions on capital flows, nationalise industries, pursue an active industrial policy, …

The idea became to let the ‘market’ do what it does and then, at the discretion of national governments, possibly compensate the losers. And as long as the cake kept getting bigger it worked, most of the time, although with increasing signs of the strain. The renewed growth from the Thatcher years onwards was bought at the cost of an ever-growing asset-price bubble and a corresponding debt bubble, turbo charged even more by the supply-side policies that capped and put downward pressure on median wages. The economic model contained the seeds of its own destruction from the start, although most people were content to ignore the problems until the bubble burst and a response beyond throwing money at the problem was needed. What was needed in 2007/8 wasn’t more or less spending, but fundamental redesign of the rules of the game.

The problem is that such a solution clashed with the free-trade, globalist ideology that almost all politicians had accepted as the centre ground for their entire political careers. Since that viewpoint regarded all local difference as barriers to trade, and trade was held to be an unmitigated good, more or less the only good, that made everyone better off, it followed that local differences has to be removed from the equation. The word of the last decade or two was harmonisation, the economic elimination of space and distance. And what harmonisation meant in practice was the removal of decision making.

Instead of a system which allowed dynamic response to local problems, a system of binding rules was constructed which removed all intelligent management, under the theory that no management was even needed. This is what we see with the EU more than any other international trade body, since integration is further advanced in the EU. The effect of EU market harmonisation has been to remove the ability of national governments to respond to crises in ways that go beyond money, which wouldn’t be so bad except that the EU hasn’t stepped into the breach. Instead of intelligent regulatory adjustment, what we’ve had instead is paralysis and desperate attempts to paper over the cracks and pretend the system everyone built still works. There’s too much invested to change it, and too many stakeholders in an institution that makes it easy to block change.

That’s where the anger of Brexit comes from. The EU is deeply dysfunctional precisely because it takes away local decision making, and fails to replace it with any form of centralised decision making for the common good. Instead it leaves a vacuum where the only possible ‘winning’ policy is a race to the bottom, the economic equivalent of destroying the village to save it. To take one issue as an example, Jeremy Corbyn’s proposal to solve the wage-undercutting immigration issue, raising quality of life in the source countries, is probably the right one, but isn’t something even seriously on the table at the moment.

The status quo is clearly unsustainable. The EU needs either more integration to give it a strong executive and legislature, like the US federal government, or it needs less integration to give countries more room to solve their own problems. The problem is that neither direction seems possible given the inflexibility built into the institution. Reform will only be possible when the organisation faces a truly existential crisis, one so large it can’t be papered over any more, and at that stage there’s going to be a lot of collateral damage. Greece is just the beginning.

The question, for those whose families aren’t at risk of being torn apart by the result, is whether the UK being in when that happens is like being in the calm eye of the storm (Remain), or like being in the middle of the blast radius (Brexit). Will we be a winner of the gradual collapse like Germany, or a loser?