economic crisis

The yellow peril

economic crisis, UK politics
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Lenny on the budget:

However, the government does have a strategy, which involves terrorising and cajoling people. They have talked up the need for cuts, quite relentlessly, once in office. They have tried to create a panic about the state of the public finances, simulating a Greek-style shock, though in fact the fiscal situation is better than it was thought it would be. They have used the budget to not merely cut, but threaten severe attacks on all non-ringfenced public spending, slashing an average of a quarter of the budget across departments. But their real target is, and always has been, welfare. They hope that by scaring people about what they will do to education, transport, justice, etc., they will gain support if they suddenly decide to shift more of the burden to welfare.

And on the subject of welfare, quelle surprise, they are coming back for more. To begin with, promises enshrined in the coalition agreement that supposedly protected the poorest, such as the pledge not to attack bus travel subsidies and winter fuel payments for pensioners, are about to be tossed overboard. The welfare system is experiencing a phased attack, each additional blow intended to gain acquiescence and soften people up for more. The FT approves, editorialising in favour of more welfare cuts, and cuts in public sector pay, to avoid cuts in other areas such as justice and transport. The Economist agrees, bemoaning the fact that no party could publicly call for attacks on welfare during the election, but insisting that welfare must bear more of the burden. This is the ruling class in full battle cry – bail out the banks, pay off the bond traders, keep the basic infrastructure working, and make the poorest bear the cost.

The Tory budget would not be possible without the LibDems. Had they not gone into coalition with the Tories, the latter would’ve had to form a minority government and not have the support to put through such a radical plan. There’s not much difference in the three parties’ economic views, but only the Tories see the current crisis as an opportunity. And because the LibDems have committed themselves to support the coalition for its full term, they have no room to negotiate (assuming they’d even want to); they’re stuck with the Tories and no longer believeable as a sensible alternative to either them or Labour. Phil thinks he knows what that means for the party’s longer term future:

For a variety of reasons – some positional, some tribal – the possibilities open to the Lib Dems have been massively reshaped by their alliance with the Tories. The formation of the coalition, in and of itself, will have made it almost impossible to take the Lib Dems seriously as a party of the centre-left, or even the centre, for a very long time; I don’t think the party leadership realised just how big a break they were making with the old tradition of ‘equidistance’, let alone the party’s more recent position on Labour’s left-libertarian flank. But there was also a second miscalculation, and a larger one. The coalition is designed as a long-term project, with a five-year expiry date – and every day of those five years will bring negotiations, adjustments, decisions to retreat from Lib Dem priorities or accede to Tory policy. In other words, the Lib Dems are locked in to a process of rapprochement with the Tories: they’re not merely a satellite of the Tory planet, they’re a satellite in a decaying orbit.

This is roughly what happened to D66 in Balkenende’s second to last government. A left-liberal party like the LibDems, they too sold out their principles for government participation and were punished by the voters in the next elections, dropping to only two seats in parliament. It was only thanks to a clever repositioning as the anti-Wilders party that they managed to come back, but it took years.

The root causes for both parties’ behaviour are the same. Though they are described as being leftwing, on economic issues they’re on the right, comfortably neoliberal and firm believers in capitalist realism: the idea that the current system is the best we can do and can only be tweaked, not changed. They distinguish themselves through social issues that are far less rooted in ideology. So if you agree on the fundamental economical questions, what’s left is just a series of issues you can trade with other parties. Labour may be a bit more gay friendly but that’s offset by the Tories opposition to 90 days detention, etc. So for the LibDems working with the Tories was no different from working with Labour, even though voters disagreed. The endresult: this budget, which lets the poor pay for the crimes of the rich.

UPDATE: The Liberal Democrats are already paying the price for enabling the Tories:they’re going down in the polls. Of course, if the coalition does stay the course this may not matter; a lot can happen in five years. But it would fit the pattern D66 has established: doing well in opposition as the respectable party, plummeting when in government.

Garbage collectors on strike with Queensday

economic crisis, Oh Those Crazy Cloggies, Unions
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garbage left behind after Queensday 2009

The picture above shows just a little of the garbage left over at the end of Queensday last year. Held on the 30th of April, the birthday of our previous queen, Queensday is one of our most important holidays, in which we can indulge in our traditional vices of drink and commerce. It’s a day when, as one wag described it, one half of the Dutch population is selling the contents of their attics to the other half and the city in which the most of this is done is Amsterdam, party central on Queensday. It all makes for quite a lot of mess.

And this year the garbage collectors are threatening to strike. Not just on the day, but the entire week from Queensday, which also includes a potential Ajax championship celebration as well as Rememembrance Day on May 4th and Liberation Day on May 5th. It’s perhaps the worst period in the year to have this strike, hence a good way for the unions to pressure the city.

For the garbage collectors are not just striking for themselves, but for all municipal civil servants. The demands are modest — basically wanting to keep salary levels matching inflation — but the Dutch city councils have refused so far to meet them. My sympathies therefore are with the garbage collectors and I’ll make sure to keep my own (modest) garbage safe until the end of the strike…

Kyrgyzstan

economic crisis, Life under Capitalism, video
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Does anybody know what’s going on in Kyrgyzstan? Massive riots there in the past few days, as showcased in the video below:



From Wikipedia:

The riots stem from growing anger against the government of President Kurmanbek Bakiyev and the sluggish economy, and follow the government’s closure of several media outlets. Protesters took control of a government office in Talas on April 6, and on April 7 clashes between protesters and police in the capital Bishkek turned violent. At least 65 deaths and 400 injuries have been confirmed.[2] Overnight it was reported that President Bakiyev had fled the capital in his private jet south to Osh, and that opposition leaders were forming a new government led by former foreign minister Roza Otunbayeva.[3][4]

The 2005 Tulip Revolution doesn’t seem to have brought the desired results then: the government brought down now is the same as was swept to power then. The Tulip Revolution was the result of a genuine frustration and anger swept up into a manufactured revolution and as the sadly defunct blog Apostate Windbag pointed out at the time, this was likely to dissappoint and lead to a desire for a new and better revolution. Judging by what’s being reported as happening this time, the new revolts have not been co-opted (yet), aren’t stage managed and p.r. friendly.

On a more general note, I have the feeling that what’s happening in Kyrgyzstan will be repeated elsewhere soon and we’re in for a rough decade. The media might make optimistic noises about the end to the economic crisis, but for countries like Kyrgyzstan where in the past two decades things have only gotten worse it’s far from over. We’re seeing the end result of several decades of unrestricted capitalism and it’s no wonder it’s the more vulnerable countries that bubble over: they have nothign left to lose.

The stupidity at the heart of the European Union

economic crisis, Life under Capitalism
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The Netherlands needs to cut 29 billion euros of government spending by 2015 or we are dooomed, according to the Centraal Plan Bureau, the Dutch economic measurement agency. That’s roughly 1750 euros for each and every one of us that the government needs to save on us. It’s a big challenge as the news media have been busy telling us, with tough choices needing to be made, to make sure that the effects of the economic crisis as well as the continued aging of the Dutch population won’t make government debt unmanageable in the coming decades. The idea is that by saving this money now, we can bring current government debt down enough to put it roughly in balance with future budgetary surpluses, if I understand everything correctly. Simply put, it’s just like I need to make sure my credit card debts can be covered by my future earnings, so if I earn less I need to spent less, even if I never quite get out of debt.

This idea that countries like consumers need to be careful with their “credit cards” is deeply embedded in our political and economical consensus, a sign of good government. Within limits this is indeed true — history is littered with countries brought to ruin by bad financial management and uncontrollable debts. But in the last three decades, with the triumph of neo-liberal economics the ideas about what is an unacceptable level of debt have become increasingly stringent. Within the EU this level is now defined as an annual budget deficit of more than 3% of the GDP, ever since the Maastrict Treaty. With the economic crisis this idea had to be temporarily abandoned to combat recession, but already the EU is demanding its member countries start reducing their deficits again. This is part of the background assumptions that went into the CPB’s report and why we need to save 29 billion so quickly, despite the hardships this will bring. The Netherlands isn’t allowed by the EU to have longterm budget deficits of more than 3% GDP, we had to spent more than that to “fix” the economic crisis, hence we now need to cut spending drastically to get back on track.

But in the end this is still just an assumption, not a law of nature, but all our econo-political discussion is straightjacketed in it. We don’t argue about if and why we need to save 29 billion euros by 2015, but how we could do is and whether or not various political parties have the courage for it. In this context and while thinking and reading about this, I was struck by something Paul Cotterill said on Though Cowards Flinch, on “the stupidity at the heart of the European Union“:

The issue for here is that a process of technocratic economic management signed into law under the Maastricht treaty, under a particular set of economic conditions which the then policy makers assumed would last for ever, is now adding to an already considerable burden on people who did not make the crisis, and did not gain from the booms that caused it.

As a result there is a real possibility of major social unrest in many European countries, including explosions of racial hatred as workers take it out on themselves; this is the antithesis of what the European Union is supposed to be about.

That, fundamentally, is the stupidity at the heart of the European Union, and reflects the key problem with it.

Much of the EU as it currently exists was designed to keep its member countries on the economic straight and narrow by mandating low inflation and low budget deficits. This automatically meant less room for spending on social welfare even during economic boom times; now that the crisis, caused by the rich has to be paid for, it is again the workers who feel the pinch. This is not a flaw in the EU, it works as designed.

Bos want smaller, safer Dutch banks

Dutch politics, economic crisis
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Fucking rich coming from the man who allowed the takeover of ABN-Amro which laid bare the weaknesses of the overextended Dutch banking system. When he had the opportunity to do something to stop the rot, he declined to take action. What’s more, even now he may say he wants smaller banks, but the takeover of ABN-Amro by Fortis is still going ahead. Surely that would be the first thing to stop if he really meant what he said?

The problem with Wouter Bos is that he’s a product of the same system he supposedly wants to reform, a minister for a social democratic party who before he went into politics fulltime worked for decades at Shell in various management and consultant positions. Of course any social democratic principles his party adhered to had been long ago been abandonded under the previous party leaders, most notably Wim Kok, who had urged his members to “let go of the social democratic plumage” (prompting the Socialist Party to later remark that “it can get cold without feathers”). Other than some platitudes about “equal opportunities” and the like the PvdA has long since resigned itself to the status quo and in time has become just as much a supporter of it as the liberal or christian-democratic parties. It is therefore not suprising that despite their presence in the current Dutch government, it is ill-suited to handle the crisis. there has been some tough talka bout bankers taking their responsibilities and anger about their bonuses, but any real measures to radically change the system are not even considered. It’s subsidies for banks, some halfhearted measures to alleviate the pain in other sectors and budget cuts or tax hikes for everything else.