30 January 2013

The Iceman Cometh

It is good to know that the personal is still political, because a major international finance story has linked very closely with my own local politics this week.

In the midst of the excitement over David Cameron opening his mouth and saying something you might have missed the news that European Free Trade Court delivered an important ruling on 28th of this month in the case between those huge bastions of the global economy the EFTA Surveillance Authority and the European Commission.

According to the website of the Committee to Oppose Third World Debt,

'The judgement clearly states that it is not the responsibility of the parent nation of a banking company to cover the costs of the guarantees to their banking system, and the safety net structure must be financed by the banks themselves. This implicitly confirms that the normal liquidation process, as applied to Landsbanki (Iceland mother company) is quite correct when a bank, even too big to fail, has greater liabilities than assets. Which would be the case for most of the big European banks if the toxic assets on their balance sheets were counted at their real value.'

The case was brought on behalf of the UK and Netherlands, whose citizens has been the target of aggressive selling by the Icelandic bank as it began to fail. These loans were not covered by national guarantees, meaning that savers were set to lose all their money. You may recall Gordon Brown's use of terrorist legislation to seek to freeze Iceland's assets to force the country to pay debts its banks had incurred that had already bankrupted it ten times over.

This ruling cuts right to the heart of the decisions of governments in all the world's leading capitalist countries to provide massive bailouts to support their banks, arguing that they had a legal responsibility to do so. Surely this strengthens the case for arguing that debts incurred to fund such bailouts are odious.

And the personal aspect? Well before I became elected to Stroud District Council a very unwise investment of £2.5m was made in Icelandic bank Glitnir. That money was recently returned and has been a windfall in the recent budget-setting period. As Green members of the administration we have been managed to argue for half a million to be invested in a hydro generation scheme at our district council offices.

23 January 2013

The Art of the Hypothetical

The news, to my rather simplistic way of thinking, is about stuff wot happened. Today's headlines make clear just how wrong I am about this. Today's news is dominated not by events but by a speech that didn't happen twice. First David Cameron moved his speech to avoid the tactlessness of metaphorically bombing the EU on the day of the Franco-German love-in; then he postponed it because there was disastrous news from Algeria. Today what has been billed as a 'long awaited speech', although other than journalists it is hard to find anybody waiting with much excitement, will finally be given. It was so unwelcome in Europe that Cameron ended up delivering it in the last place he wanted: London.

I fear that the outcome of the speech will be to show the Conservatives' approach to Europe as weak and misguided. For some of their less informed supporters, the ones who are considering voting for UKIP, it might seem appropriate to adopt a position of superiority, lecturing the 26 other countries of the EU about what is best for them. This is a posture learned on the playing-fields of Eton where the empire is a fond memory for which such schools and their games masters continue to take credit. In the world where the rest of us  live, Europe is a social club where we feel rather comfortable and where most members operate social, cultural and infrastructural systems we find generally superior to our own.

In such a club you cannot make the rules on your own: you make them by agreement or you are forced to leave. This seems genuinely incomprehensible to the Tories who think we can operate our selfish individualist model of neoliberal capitalism, dump on all the systems our 'European partners' have put in place to protect their peoples and our planet, and still be invited to the party. The Tories' attitude to Europe is the ultimate example of the free-riding of the rational economic man.

The question of a referendum that is at the heart of today's speech is an entirely hypothetical one. What will we be voting to leave or stay in? The crisis in the Eurozone and the fiscal pact that the majority of EU members are now signed up to is in itself not in fînalalised. Cameron vetoed our membership but that leaves open so many questions that a wholesale renegotiation is inevitable. The smart move would be to get ahead in those negotiations, which the better players of the EU game are no doubt doing right now, while Cameron is losing friends in Europe in a desperate attempt to keep friends in his own party.

The very sad thing is that the Euro-sceptics inside the Conservative party have totally outflanked the Cameroons. They know that his strategy of hypothesis-testing is bound to fail. They know that they have already succeeded in making a decision to leave Europe a possible outcome for the first time in three decades. Their understanding of Europe is better, and so it their understanding of politics.

22 January 2013

Of Resources and the Origins of War

If, in response to the emerging detail on the horrors of the attack on the Algerian gas-plant, you have found yourself asking ‘What on earth were they doing in the desert?’ you would probably have moved rapidly on to realising that they were guaranteeing the lifestyle to which you, and I, have become accustomed. The idea of raiding the globe for resources, and using the necessary amount of violence to ensure access, has been a commonplace to the powerful nations of the world. It is this commonplace that the idea of a bioregional economy seeks to challenge.

We need to understand our economy as a post-colonial economy and, since Britain could be argued to have invented the most successful method of colonial exploitation, it is my view that we have a particular responsibility for identifying and challenging this view of how we undertake the provisioning of our most basic resources: energy and food. The curious informal partnership between the British state and the East India and other trading companies enabled the massive expansion of markets for our goods and source of the resources we need to make them and to feed our expanding lifestyles.

Once we had found a method for controlling global trade and profiting from it, the pressure to produce goods and services within our own territory waned. In fact, British economists specifically argued that such a strategy was misguided, partly as a result of their own experience but, perhaps more importantly, to persuade other nations to join a trading system within which Britain was already dominant. The spread of the market model, as an economic reality and a mythological force, was essential to the extension of the Great Powers of 18th and 19th century Europe. Adam Smith provided the myth of ‘the bartering savage’ while Galton provided the parallel myth of the racial superiority of the caucasian and ‘Ricardo had erected it into an axiom that the most fertile land was settled first’ (Polanyi, 1944: 192), suggesting that what was taken from the indigenous peoples of colonised lands could have been only marginal lands. John Locke  gave the  jusification for enclosing land, writing that putting a fence around land and improving it through agriculture gave settlers a right to own the land.

Between them these mental constructs provided intellectual cover for the adventures of the far from noble savages who travelled the world seeking fame, resources and profit from the late 15th century onwards.  This caused a fundamental change in our attitude to geopolitics: the central role of foreign policy was now ensuring access to resources rather than protecting the nation’s borders. As Polanyi has it, ‘no people could forget that unless they owned their food and raw material sources themselves or were certain of military access to them, neither sound currency nor unassailable credit would rescue them from helplessness’ (Polanyi, 1944: 199).

This domination, based around an extending empire backed up by financial and military power has made it seem entirely natural to us that the resources of the world can belong to us in exchange for money. It is not surprising, however, that those who live in those lands that are now occupied by massive extraction plants and suffer the consequent pollution do not see things this way. Years ago now I wrote an article called ‘Fascism or Bioregionalism’ but it might have rather been called ‘Colonialism or Bioregionalism’. My commitment to a bioregional future is based around the need to reduce carbon emissions and build stronger, more resilient communities. But there is also a commitment derived from the Quaker peace testimony that requires us to seek out the origin of all wars. In today’s world it is the global supply chains that impose our greed on the land of others that are the greatest source of conflicts present and future.

18 January 2013

Potholes in the Amazon Business Plan

It may be a sign that being a district councillor is getting to me, but I have begun to take an unreasonable amount of interest in potholes. Or perhaps it is because I have now been living without a car for three months, and from the saddle of a bike one's intimacy with the road surface increases considerably. There were two things that really set me to thinking about this most mundane of issues. The first was when I hit a large and definitely new pothole close to my house, in the dark, and was nearly thrown into the path of traffic. The second was a conversation I had with a road-mender, who told me he paid his taxes to have the roads fixed and yet they were becoming worse by the year.

In a way typical of the present approach to public concerns, the government has established a 'report a pothole' website. This is reminiscent of the 'cones hotline' fiasco, and about as likely to result in any action. The 'politics of austerity' means that we must put up with roads full of holes along with a postal service that is no longer reliable and rapidly rising waiting-lists for operations.

So what is the economics of potholes? As usual we need to dig a little bit deeper than questioning who pays and who benefits. The fundamental question is who causes damages to the roads, and do they take responsibility for that damage? Many years ago I stood as a general election candidate in Preseli Pembrokeshire. One of the hot local debates was about the trans-European highway that would traverse the constituency on its way from Latvia to Dublin. This, it was argued, would bring jobs and growth. That was a lie of course. The jobless Welsh citizens watched huge lorries pass through their villages taking products made by low-paid Latvian workers to consumers in Ireland whose purchases were funded by a Celtic boom that has now busted.

The purposes of the guff about trans-European highways was to persuade politicians to spend money upgrading the roads. In contrast to my last post, here we see the European Union most under corporate pressure, with its Council Directive 96/53/EC of 25 July 1996 obliging us to upgrade our roads to permit 40-tonne axle lorries by January 1999. As ever larger lorries have pounded our carriageways costs have risen and the quality of the road surface has declined. This is the reality of the single market: the exploitation of vulnerable workers and the expansion of pointless road freight.

And here is where the pothole whinge meets the other first-world problem of the Christmas period: items bought online that did not arrive in time for Christmas. Because many of the trucks that were hammering the highways during the last month have been delivering items bought from Amazon. The same Amazon that does not pay any tax. So to answer the road-mender's question, if the companies who use the roads for free as part of the slimline business model avoid paying their share of the cost of maintaining them, your taxes can never be stretched far enough to ensure that you will have a comfortable ride.

17 January 2013

The Banality of Evil and the Death of Aaron Swartz

A guest post by Penelope Ciancanelli

Most of what needs to be known about the suicide of internet activist Aaron Swartz has been written in the hundreds of stories easily found on the internet. I commend them all to you because there is surprisingly little duplication and a great deal of evidence explaining why so many privileged and educated people in the US now fear rather than respect its criminal justice system. Indeed if any good is to come out of this case (which is, in itself to be doubted), it will be in greater public scrutiny of a criminal justice system that has long been out of control.

Few of the facts in the Swartz case are in dispute. Swartz admitted he illegally downloaded hundreds of scholarly articles from JStor via a net-book which was surreptitiously connected to a mainframe at MIT that supports access to its library’s subscription services. Upon discovery of the hack by the private security employed by MIT, the case was turned over to the police service of the city of Boston who then--and here it gets a big vague--gave it over to the secret service of the US federal government. Why the secret service involvement?

According to the mission outlined on the website of the US secret service, their agents get involved when there is significant economic or community impact, organized criminal groups involving multiple districts or transnational organizations are involved or a criminal scheme involves new technology. What Swartz did has nothing to do with their self stated mission.

However since 9/11, the various pieces of badly drafted legislation passed in the Bush presidency to fight terrorism have allowed agency mission creep of considerable proportions. Indeed, on a quiet day at the Boston division of the secret service why not have a nosy around incidents at MIT. Maybe that is all that happened; or perhaps a source at MIT called their office, the service peoplehad nothing better to do and the rest, as they say, is charges of 35 years in prison.

Te secret service involvement did not prevent JStor (the injured party) from refusing to press charges, once it understood the nature of the hack. However, MIT, where the hack took place, was not as clear-minded and its managers dithered. Perhaps this dithering encouraged the secret service to further involvement and taken together led the federal prosecutor for this district, the US district attorney Carmen M Ortiz, to believe the case had greater importance than it had--all of which is pure speculation. As a result, any link between this suppression of secret service involvement and the vigor with which the US district attorney for Massachusetts (Carmen Ortiz) pursued the case against Swartz is impossible to assess.
However, her zeal does stand in strong contrast to the general tenor of prosecutorial life under the agency’s leader, Attorney General Eric Holder. He has generally preferred settling out of court and nearly all the white collar crimes of the Wall Street Banksters have been settled rather than tried.

This contrast between prosecutorial zeal at the district level and lassitude at the federal level is even more odd when one considers Ortiz and Holder have known each other since the early 1980s when the pair worked together on Abscam (a convoluted FBI sting operation aimed at prosecuting influence peddling by state and federal officials). Moreover, more than anyone Eric Holder is responsible for Ortiz’s appointment as the Massachusetts District Attorney. One would have thought the reason for choosing her was his expectation she would share his stance towards plea bargaining rather than jailing white collar criminals. In the Swartz case, Ortiz acted opposite to his general stance and that is what draws attention.

Tere is no doubt the tragedy of this case is the driving to distraction of a gentle genius by a rather insecure and truculent district attorney who finds it sufficient to defend her actions as follows: ‘Stealing is stealing, whether you use a computer command or a crowbar, and whether you take documents, data or dollars’, she said. ‘It is equally harmful to the victim whether you sell what you have stolen or give it away.’

It is as if no amount of schooling in the law, in life and in court is allowed to diminish the simple-minded clarity of a rather simple-minded prosecutor. Bit of a shock to realize she might very well believe what she said despite the fact there was no victim: JStor acknowledged, after the fact, the need to make academic papers more easily available to the public taxpayers who paid for most of their production. The authors of those papers had long ago given over their copyright to the publisher, as a condition of publication. And the publishers long ago gave ownership of the papers to JStor. No one was injured.

It would be easy to attribute the actions of Ortiz to some grand federal plan to prevent digital piracy at any cost. However the facts in the case make a smaller more parochial more pathetic kind of sense. A truculent and rather unsophisticated prosecutor endowed a trivial case with an importance it did not have because important people were involved and because the young offender pissed her off. He pissed her off because he was privileged, smart and spoke truth to power, something she never had the luxury of doing. The lesson here is the banality of the probably motive for the evil actions. Envy with a badge, a gun and privileged access to courts ought to make us all uneasy.

Are there any open access lessons in this? You bet. Those of you at universities, go talk to the head librarian about serials prices, see if the librarian has records for the price hikes for the past decade. Ask yourself: how does it happen that what I write/referee/edit is owned by a multinational media conglomerate who charges my university multiples of my salary to read what I and my colleagues have written? Open access matters and there is a duty to find out why.

One place to start is Ciancanelli, P. (Re)producing universities: knowledge dissemination, marketpower and the global knowledge commons in the World Yearbook of Education. Sage. 2008: 67-84. I hope you can find your way past the pay-wall but if not, contact me direct: pciascuno@gmail.com

Editor's note: although some delightful images of Aaron Schwartz are available on the web the software used for this website would not allow me to use any of them because of IP restrictions. How sad and desperately ironic.

16 January 2013

TINA Makes an Unwelcome Return

The voice of authority telling you that you cannot possibly think a certain way or that their view of the world is simple common sense is hard to resist, especially when it is intoned with the upper-class accent that we have learned to defer to. So it is that Cameron and Osborne tell us that we are a trading nation and that the Europe we want is the Europe of markets and competition. So it was when they told us that there was no alternative to the politics of austerity and the destruction of our welfare state. They are deeply wrong on both counts.

Such powerful manipulation of our thinking must be challenged. We must actively resist the 'England Good; Europe Bad' mantras that are issuing forth from both the Tories and UKIP and being fanned into a bushfire of anti-European sentiment by an irresponsible and ill-informed media. So let's start now by recalling some of the policies from Europe that have made our lives better in this country than they would have been had the free market of Beecroft and Paterson.

Let's start with the End-of-Life Vehicle Directive. This is a practical policy devised by European Greens to challenge the throwaway culture of contemporary capitalism. The Directive passes responsibility for the disposal of cars back to the manufacturer, thus putting a cost incentive behind attempts to improve recyclability of components and reuse of materials used in the manufacture of cars. The WEEE Directive achieves similar objectives in the case of electronic equipment.

The REACH regulation is a system for the Registration, Evaluation, Authorisation and Restriction of Chemical Substances. It is an attempt to acknowledge that fact that new chemicals are proliferating in our environment. It is clear that the interests of corporate industry have had too much influence over this regulation, as a critical account by Anne Chapman describes, but it is at least an attempt to gain social and political control over this potentially most destructive of industries. Where would we be without the EU regulating the chemical industry?

The European regulation that is a key target of the marketeers and that working people would miss most is the Working Time Directive. This has been subject to vilification akin to the fictional attempts to straighten out bananas, but in reality it is a system of reasonable boundaries to protect workers against exploitation. Who except the likes of Beecroft could object to requirements such as 'a minimum daily rest period, of 11 consecutive hours in every 24' or 'paid annual leave of at least four weeks per year'?

The very aspects of the European project that the Tories and their business friends would seek to support are the same ones that I deplore: the pro-corporate market that is not obliged to consider the needs of people or the environment. It is only our 'European partners', and amongst them the powerful Green Group in the European parliament, who are protecting us from such a fate, as the three parties who dominate Westminster politics and the strange purple party that dominates the debate on Europe sacrifice everything of true value for the sake of economic growth.

10 January 2013

Welfare as Fairness

The debate about changes to welfare payments is being held in a rationality vacuum. It rarely rises above the intellectual level of the Jeremy Kyle show, and such divisive rhetoric is used as window to confuse those who might otherwise be in a position to observe the totally reprehensible decision by MPs to effectively cut the payments to a whole range of the country's most vulnerable people.

The economics of this situation is simple and straightforward and revolves around the concept of the 'marginal propensity to consume', another concept due to Keynes. According a a paper relating inequality with the failure of demand and hence the Recession, Matthew Drennan of Cornell University writes the following:

'He [Keynes] inferred from his analysis of the average and marginal propensity to consume that as aggregate income rises, the average propensity to consume (APC) falls. Thus in the long-term the economy would face slower growth or stagnation. To postpone such a development, Keynes believed that a more equal distribution of income would make effectivedemand stronger than a less equal distribution of income.'

In other words, increasing inequality makes a return to growth more difficult to achieve - the first economic blunder of the Tories' decision to cut welfare payments.

But as readers of this blog will know, I do not share the general view that a return to growth should be the primary target of economic policy. We can draw a more interesting conclusion from this idea of the marginal propensity to consume, since what is not consumed is saved, suggesting it arises from 'spare' income. Hence the marginal propensity to consume is higher amongst those with lower incomes.

Now of course much of this 'consumption' is pointless, energy-intensive and probably adds little if anything to human well-being. None the less it is clear that if the share of income spent on consumption is higher amongst the poor, including those receiving welfare payments, then a reduction to their incomes that is equal in percentage terms to the reduction in the income of somebody higher up the income ladder, will hurt the poor proportionately more.

This is why talk of everybody facing an equal percentage reduction in their income is entirely misguided and invidious. When those in well-paid employment have their incomes reduced they simply save a bit less; their consumption patterns barely need to change. In contrast, exactly the same percentage reductions to those on low incomes will immediately cut into their spending, and often reduce their spending on essentials such as heating and food.

This is a small matter of applying our knowledge about income and spending habits to our policy-making. The much wider question of why we transfer money to the poorer members of society, how this relates to the strength of our society, our happiness and sustainability should be the real focus of debate about 'welfare'. My Green House colleague Brian Heatley and I undertook some ground-clearing to facilitate such a debate which you may find of interest.

5 January 2013

Evolution become Conscious

Following up on my earlier post about 'joining the evolution', Michael Dunwell, my fellow green economist from the Forest of Dean, writes to tell me that Teilhard de Chardin thus described the human race in his book The Phenomenon of Man, published posthumously in 1955. It prompts me to post a talk I gave at a seminar in London on Europe Beyond Growth shortly before Christmas.

I’m going to start by saying something about science. On Monday I listened to Evan Davies interviewing fisheries minister Richard Benyon about his decision to oppose the latest EU fisheries proposal which Benyon claimed he was doing ‘on scientific grounds’. Davies brought in the top fisheries scientist from Defra, who argued for the EU proposal. Evan Davies seemed genuinely perplexed by the inability of the scientists to agree. He was seeking a ‘right’ answer, that was scientifically proved and unassailable.

Years ago I put together a report called ‘I Don’t Know Much About Science But I Know What I Like’. It’s Martin Amis’s joke but I’ve always enjoyed it. The reason I enjoy it is that it achieves with wit and brevity the task of challenging the right of science, usually in this context meaning statistical evidence, to trump other forms of thought.

Caroline Lucas has said that we are going to be the first species that is able to scientifically monitor our own extinction. Consecutive reports from the IPCC suggest that she is right about this, but I am a bit more optimistic. My optimism organises itself under my latest personal mantra: ‘Join the Evolution’ and it works like this.

We are unique in being a self-conscious animal. When other animals receive indications that they are reaching the limits of their evolutionary niche they respond to these by finding a new niche, or by failing to reproduce, or otherwise by ensuring that their numbers decline. As humans we are too clever for that. We can use our clever minds and our technology to keep pushing the boundary outwards, ignoring and filtering out the clear evidence that the ecological safety-limits have been exceeded.

So as a self-conscious animal we need to evolve self-consciously. We need to find a way to get a collective grip on ourselves, to stop believing our own fantasies, to get back down to earth. This is what I mean by ‘joining the evolution’,  and I would argue that it is a desire to do something like this that has brought you here today.

So I have nothing against science, and I think being able to prove that resources are not limitless and have some idea of the scope of the problem we are facing is vitally important in convincing those trapped in the scientistic mind-set. But it is not going to save us. We need much more human solutions to do that.