Friday, July 1, 2016

Michael Hudson — The Silence of the Left: Brexit, Euro-Austerity and the T-TIP

The media in the United States have treated the British vote against remaining in the European Union (EU) as if it is populist “Trumpism,” an inarticulate right-wing vote out of ignorance at being left behind by the neoliberal economic growth policy. The fact that Donald Trump happened to be in Scotland to promote his golf course helped frame the U.S. story that depicts the Brexit vote as a “Trump vs. Hillary” psychodrama – populist anger and resentment vs. intelligent policy.
What is left out of this picture is that there is a sound logic to oppose membership in the EU. It is Nigel Farage’s slogan, “Take Back Control.”
The question is, from whom? Not only from “bureaucrats,” but from the pro-bank, anti-labor rules written into the eurozone’s Lisbon and Maastricht treaties.…
The Left, whose leaders have conflated neoliberal globalization with internationalism and solidarity, is ceding its territory to the Right as a result of losing the working class.
What used to be a socialist left has been silent about the fact that there are very good reasons for people to say that this is not the kind of Europe they want to be a part of. It is becoming a dead zone. And it cannot be “democratized” without replacing the Lisbon and Maastricht treaties on which it is founded, and removing German opposition to public spending on recovery for Spain, Italy, Portugal, Greece and other countries.
What is remarkable is that in the face of rising resentment by the “losers” from neoliberalism – the 99 Percent – only the nationalist right-wing parties have criticized the EU’s neoliberalism and the T-TIP. The formerly left-wing Socialist parties of France and Spain, German Social Democrats, Greek Socialists and so forth have endorsed the neoliberal, pro-financial program of austerity and rollbacks on labor union power, wages and pensions. So the riddle is, how did originally pro-labor parties become anti-labor?…
The Silence of the Left: Brexit, Euro-Austerity and the T-TIP
Michael Hudson


Ryan Harris said...

This is probably a dumb question, but why does Spain have a persistently high unemployment rate? I understand all the problems with the EU structure but it seems like there is more going on than just that. There has to be some other economic or social differences that change their employment picture

John said...

Ryan, if you consider that Spain's fascists weren't the most intelligent economic managers, from the 1939 right up until 1978 with the restoration of democracy, then you have nearly forty years of economic mismanagement by bungling and backward reactionaries running a huge European country while the rest of Europe pulled away economically, scientifically and intellectually. Not the most fertile soil for economic development.

And then you have to understand what kind of country it was before the fascist takeover: Spain had a relatively small industrial sector while a reactionary landed gentry in league with the Church controlled the country, and had done so for hundreds of years. The destruction of the landed gentry in other parts of Europe spurred modernisation and progress. Spain came to this late in the day. The Republic had started to do something about this backwardness and the anarchists went even further: real economic and intellectual development of an agrarian and economically retarded country. The extremely destructive civil war - that is a Soviet and Western war against the Republic and the anarchists - sent Spain back heaven knows how many years. As Orwell noted somewhere, given a choice between a democratic Republic and the anarchist revolution on the one hand and fascism on the other, the Soviet Union and the Western powers came together to destroy the anarchists while they split over the Republic. The Western powers essentially backed the fascists, and the Soviets backed all manner of communists. The Republic could not survive.

Since 1978, even with the restoration of democracy, the same elites who owned and controlled the country during fascism have been in positions of economic power. It's not easy to turn that around. Given all the problems it has had to contend with, Spain has made relatively good progress. It's adoption of the euro has taken it backwards.

I'd like to hear Ignacio's views on this.

jrbarch said...

Australia votes ..... zzzzzzzz!

Some samples from #ausvotes

Overheard at the polling booth (Twitter):

"apparently State and Federal Elections are different"

"which is the party that supports nature, is it the Greens?"

"No, I can't see a donkey vote option, just get your name signed off and don't write anything"

"Why can't we be voting for cats? No wait, that would be even harder"

"this is like the line to get into the cricket"

"Geez, that Senate paper was an exercise in origami"
(it measured around 600mm x 250mm)

"It's like filling out the Dead Sea Scrolls"

"you shouldn't have to wait half an hour to vote ... you should pay me to vote"

Bob said...

Ivory tower champagne sipping Leftists have always been anti-labour...

John said...

"The Left, whose leaders have conflated neoliberal globalization with internationalism and solidarity, is ceding its territory to the Right as a result of losing the working class."

If the "Left" move so far to the Right that they are no longer different to the Right, how are they still the Left? That's not the Left. That's called the Right. There are now many rightwing parties in the UK. The so-called Left isn't internationalist in the traditional sense. They've created a new definition and expect everyone to swallow it.

In the same way, I really can't fathom why anybody would call the Democratic Party a leftwing or liberal or a progressive party. It's a rightwing neoliberal/neoconservative party. The only noticeable difference between it and the Republicans is that the Democrats have dopey Hollywood celebrity supporters while the Republicans have Chuck Norris. The political difference is that the Democratic Party has now not only displaced the Republican Party but in fact is the Republican Party as once defined.

Meanwhile what is called the Republican Party, not to be confused with the Democratic Party that has become the Republican Party but does not have the good manners to change its name, has split into two wings. The "moderate" wing of the Republican Party is now living in a twilight zone of its own creation. The rest of the Republican Party is living inside an alternate reality within a parallel universe inside a different dimension of the twilight zone. Unless you wish to do irreparable damage to the English language, it is best to refrain calling the Republican Party "conservative", and in the same way to refrain calling the Democratic Party "liberal" or "progressive" and certainly not "leftwing".

Andrew Anderson said...

and removing German opposition to public spending on recovery for Spain, Italy, Portugal, Greece and other countries. Bill Mitchell

1) Allow inherently risk-free individual citizen, business, local government, etc. accounts for all Eurozone citizens at the ECB so as to provide an alternative payment system to the one that depends on banks.

2) Distribute new Euros equally to all Eurozone citizens, including Germans, into those (individual citizen) accounts and who can complain?

This is Steve Keen's "A Modern Jubilee" with the additional wrinkle of ECB accounts for all to provide an alternative payment system to the one that depends on banks.

Kaivey said...

New Labour still leaves a bitterness in the mouth which is sort of like poison. My friend, though, who was high up in the Civil Service and worked under ministers, says they saved the NHS, though. I guess it was either completely sell out or give the One Percent some of what they wanted.

John said...

Kevin, your friend is utterly deluded, unless he means it in the same way Blairistas claim New Labour saved Iraq. Read NHS Plc by Allyson Pollock, the foremost health policy academic in the UK. I read it some time ago, and there may be a newer edition. It's common to hear that for all its faults at least New Labour saved the NHS. It's just another New Labour myth.

There's a half-decent review in the Guardian, in which even this New Labour house journal is shocked by the neoliberal vandalism:

Matt Franko said...

John here is UKIP on the brexit:

Quote: ""We have fought against the multinationals..the big merchant banks..big politics..lies, corruption & deceit"

Where is all of the racism you claim they have? Fascism or wtf?

Hudson here has a point.... but I still say he should hang it up and retire already..

Matt Franko said...

The left are basically all female....

Kaivey said...

Apparently all the gold that the spanish stole from the Incas help led to spain's decline. Rather like the oil curse. Below is a copy and paste with a link about this:

Impact of Inflow of Gold on Spanish economy

For me, the most interesting thing is the theory that the sudden influx of gold actually contributed to Spain’s relative decline and low living standards in future centuries. How could an influx of gold cause this?

One theory suggests that – because the Spanish had so much gold, they could easily buy commodities from other countries without producing them itself. Because consumer goods could easily be bought, there was little incentive to produce goods and undertake the necessary investment and develop the technology to produce goods. Therefore, it is argued this ‘easy wealth’ was a factor in limiting economic development.

In macro terms, we could see Sixteenth Century Spain has a country with a very large trade deficit – financed by capital inflows (stolen gold). But, this is an unbalanced economy – consumption enables high current living standards, but when the gold dried up, Spanish business and industry had been left behind other European nations. Nations without a windfall of gold had a much greater drive to create wealth rather than just consume it.

Therefore, the sudden inflow of gold was not good for the long term development of the Spanish economy. But, partly explains why the Spanish economy came to lag behind the rest of Europe until the post war period.

Matt Franko said...

"The United States is locked into a two-party system that blocks opponents of neoliberalism."

What planet is Hudson living on?

Matt Franko said...

Kevin all of the other nations were under the metals at the same time....

Large mining strikes would lead to better economic outcomes for a while...

Matt Franko said...

"That is why Bernie Sanders found it necessary to run as a Democrat – despite the fact that the Democratic Party apparatus if firmly controlled by its main Wall Street and corporate campaign contributors."

Now reduced to making excuses for Bernie... pretty sad...

Kaivey said...

Thankyou, John, I have to admit I was a bit surprised when my friend said that. He actually worked, though, for some Tory ministers. Thanks for the article, I will be able to discuss that with him the next time we go for a pint.

While I'm here, his office was given the task to draw up plans to cut back the Civil Service for the last Conservative government. He did a lot of work on this on his own, but then he noticed he wasn't getting any emails anymore, which was a sign that your job was on the chopping block. He was about third in rank in his office, quite near the top. He then got the message he was being made redundant.

Kaivey said...

He's 70, that amazed me. A terrific guy.

Kaivey said...

Planet Earth.

Matt Franko said...

"This leaves it to Donald Trump to denounce the Democrats as supporting corporatism at the expense of labor."

He is doing more than that he has said he will immediately withdraw from TPP and implement tariffs...

Kaivey said...

The article goes in to say that the UK got just the right amount of gold, enough to make itself rich, but not too much, so its entrepreneurs still felt the need for the industrial revolution. But I don't know if that is just conjecture, or not?

Kaivey said...

He seems to be a better bet than Hilary. Although some of his consultants look dodgy. At least there is a gamble with that he might turn out to be different. A big if, though. But I think it is best not to go with the devil you know on this one.

Matt Franko said...

Kevin UK was using silver...

Look into the 19th century author Alexander del Mar who was a mining engineer who also wrote on the topic of using the metals in numismatics....

Here is his wiki and most of his books are available online for free

He was the one I can first identify as correctly identifying the word "money" as a metonym (type of figure of speech)

John said...

Matt: "We have fought against the multinationals..the big merchant banks..big politics..lies, corruption & deceit"

Sure, that's true. I've heard their spiel for many years now, and it's easily explained. They've realised that the old industrial heartlands that mindlessly voted Labour for decades have been forgotten or ignored by the new class of frappe coffee drinking Labour elites. There are millions of votes and well over a hundred seats to be had. UKIP can't challenge the Conservatives, so they don't try, although they occasionally do for gimmicky and PR reasons. But the real prize is the old industrial Labour heartlands, where you are told to retrain as a software programmer for a job that doesn't exist or told to aspire be an entrepreneur. Meanwhile, UKIP has a very seductive story to tell, most of it preposterous and some of it vaguely true: Labour is only interested in gay rights, immigrants, international aid, multinationals, the financial sector and real estate, sending our brave boys to illegal wars, etc. All neo-fascists have the same lines. What else are they going to say? Tell them the truth about what they really think?

Matt: "Where is all of the racism you claim they have? Fascism or wtf?"

Well, as I said in another thread a lot of their stuff is dog whistle politics, but occasionally it isn't. When it isn't, it becomes very clear who and what they are. The most recentexample was the referendum poster straight out of Nazi Germany propaganda. Note, the poster was NOT similar to the famous Nazi propaganda - it was IDENTICAL in almost every respect. Why was it identical? Because UKIP had seen it, decided they liked it, and then used an IDENTICAL photographic shot (except for the faces being Syrian refugees not Jewish refugees) for their own propaganda. Note that there was condemnation across the board for using this famous piece of Nazi propaganda. Nigel Farage defended it again and again. He genuinely did not understand what the fuss was about. Apparently, that's his famous lack of political correctness that is supposed to be such a winner with the public.

There is also the fact that any time there has been any undercover reportage from UKIP events, the true face emerges: extreme racism, hate speech, misogyny, homophobia, anti-Semitism, Islamophobia. Some prominent UKIPers claim Jews have divided loyalties, all immigrants should be "sent back", Britishness is "waving the National Front flag a bit National Front was a violent neo-Nazi organization]", women are "sluts" if they don't clean their homes, Africa is "bongo-bongo land", floods are caused by homosexuality, Jews murdered each other during the Holocaust. Sometimes prominent UKipers can't help themselves and tweet this stuff.

Here are a few more choice quotes:

Here is a supremely demented example of anti-Semitism that does the rounds in pro-Nazi revisionist "history" conferences:

On top of all this, as I said elsewhere, why is UKIP unique in being staffed by former members of violent neo-Nazi organizations, and why does Nigel Farage employ as his political agent a former member of a violent neo-Nazi organization? No other major political party does so, so why does UKIP? As far as I know, David Cameron does not befriend and employ former members of violent neo-Nazi organizations. Neither does Jeremy Corbyn. Neither does Nicola Sturgeon. Neither does Tim Farron. Neither does Natalie Bennett. Neither does, well, to keep it short, anyone ever in the history of politics in the United Kingdom except for Nigel Farage and UKIP. Why is that?

Tom Hickey said...

If the "Left" move so far to the Right that they are no longer different to the Right, how are they still the Left? That's not the Left. That's called the Right. There are now many rightwing parties in the UK. The so-called Left isn't internationalist in the traditional sense. They've created a new definition and expect everyone to swallow it.

"Workers of the world, unite! (Proletarier aller Länder vereinigt Euch) — Marx & Engles, Communist Manifesto

The Left was established as internationalists, based on worker solidarity, as in "comrade."

The leadership of the Left in the West was coopted by status, power and wealth and joined the bourgeoisie while still supposedly representing the Left. They are now all neoliberal tools and need to be replaced.

In the US, there is basically one party - the business party. It has two factions, called Democrats and Republicans, which are somewhat different but carry out variations on the same policies….Noam Chomsky

Tom Hickey said...

The left are basically all female....

I guess it's only the ladies that have rocks now.

Tom Hickey said...

Thanks Kaivey interesting article.

Impact of Inflow of Gold on Spanish economy

Andrew Anderson said...

"In the US, there is basically one party - the business party." Noam Chomsky via Tom

Because: "The business of America is business." Calvin Coolidge

Therefore: "What's good for Business is good for America." unknown

Corollary: Low interest rates are good for America.

Caution: BUT not if the means of producing low interest rates bypasses the citizenry, including workers and the poor.

Ignacio said...

This is probably a dumb question, but why does Spain have a persistently high unemployment rate? I understand all the problems with the EU structure but it seems like there is more going on than just that. There has to be some other economic or social differences that change their employment picture

This is not a dumb question, it's a pretty complex issue actually. But you can probably find similarities inside USA, when you compare the poor regions to the richest regions, and some regions with higher structural unemployment plus what regions have been affected by globalisation etc., think why they are like that and you can extrapolate the issues to some regions of Spain.

The reasons are multiple and come both from structural to cyclical problems . First a disclaimer: the statistics in Spain re. unemployment are probably more accurate than elsewhere in Europe and developed nations, this is twofold: while some governments prefer to report measures similar to U3 (total bullshit) the data reported by the organism here is what there is, and on top of that there has always been a lot of unreported sub-employment. When you compare between employment to population ratios and take into account other demographic data (like population pyramid) the situation still looks pretty dire, and likely worse that other countries, but not actually that different.

Still, what John says is mostly true, but the situation was a bit different prior to the crisis and years before, but for some historical context I'll make a quick summary. First in the last years of the Franco regime, some people got into positions of power to shape economic policy and tried to open up and grab certain work share (this was during the years of the oil crisis of 70's), the 'technocrats' (same ones nowadays go around crying the government has too much debt and how are we going to pay up pensions etc…) mostly coming from an OPUS background opened up to Europe and also USA, a lot of manufacturing was then moved to Spain (and some of ti still is retained as the plants here are quite efficient, in fact my original home had nearby a Ford manufacturing plant which still creates a lot of direct and indirect unemployment). There was a lot of manufacturing to serve large France and German firms with middle tier capital goods and parts.

As you can imagine the expansion of the EU, the euro and globalisation in general changed that. A lot of that manufacturing moves to East Europe (Poland, Balkans, etc.), and many business were wiped although specialised manufacturing was retained. Also changes in trends and failures to adapt wiped many traditional industries during the 90's. Spain never quite achieved what, probably, was the initial intentions of some politicians and business: a development of an equivalent to the German 'Mittelstand' which is what gives (well, or gave) strength to German economy. Is important to remember Spain was isolated from international trade for decades after the civil war, is like going to Cuba nowadays, after decades of isolation.

However this is also a simplification, because Spain is not an homogeneous country, actually is very similar both in population ans physical size to that of California, but probably with a much higher internal difference amongst regions. A lot of the high unemployment in Spain comes from the South and it balances out with lower unemployment in northern part of the country. So is very similar in that regard to other countries like Italy, with the difference that the population in Spain is much higher in the South than in the North (with the exceptions of Barcelona + Madrid which make about 1/4-1/5 of the population). Traditionally the South of Spain had been agrarian, and in many regards the social structure was quasi-feudal still in some places as said by John (classism still is a big thing in many places in Andalusia, wonder why traditionally left parties have had such high support in the region). Low value added economic structure + seasonality… you know the story.


Ignacio said...


After the 80's and as globalisation and opening to the East accelerated there was a move by the elites to make of Spain the retirement asylum of Europe + vacations place, and with that propel construction as one of the engines of the economy. This was particularly the policy of the "conservative" party up from late 90's to prior crisis (you know how it all ended, with the euro internal contradictions just adding fuel to the fire due to massive transaction capacity to leverage credit from Central to South Europe) . Lot of people made a lot of money and the status quo was strengthened (and still is ripping off the benefits of the cohorts of enablers who enjoyed it, of which i know a lot). The key issue right here is that there was an 'open borders' policy back then as it favoured business interests and the population of Spain increased between 5 and 7 millions (which is a lot, considering the total population is around 46 mill nowadays), all that on the backbone of construction (and partially tourism).

When that income was gone and nothing was left to sustain it (because you can only import so much income through tourism, which is also very sensible to external stability and growth, so a poor substitute for internal led growth), unemployment skyrocketted and we.

Wherever you have bubbles sustaining economic activity you are in for a story on pain when they explode, places like London, California or Canada could learn about this… An other lesson to learn is about the external constraints due to balance of trade issues: nothing can stay unbalanced forever towards one side and at some point something will give in, "exports are bad and imports are good" is a simplistic assumption that will lead to structural issues on the long run, and those lead to social and political problems.

Ignacio said...

Oh, I forgot to add that this is one of the reasons why the stupid story that you can just impose "structural reforms" in one place and expect to come with a similar economic structure like that of Germany is well, that, stupid. There was no Marshall plan for Spain, and Spain was decades behind Germany just when it entered the EU due to historical reasons, it was in no position to compete for many of the high value added business and wouldn't ever be due to entry barriers.

Not like Germany is really interested in any of that, why would a firm like Siemens be interested with someone competing for their share of business? They wouldn't! But the juicy market for German banks on the other side, and all those BMW's they could sell! Just imagine!

An other important thing is that you don't have the internal mobility inside Europe to absorbe those shocks, neither the fiscal transfers. The reason a country like USA doesn't blow up and fragment is because people can move from one state to an other, and Federal transfers can give some breathing capacity to poorer regions. But is not the same in Europe, you are not going to get 5 million Spaniards suddenly migrating to Germany (and less so because is not like low wage earners are that much better in practice in Germany, as the real situation right there is a lot of subemployment due to Hartz reforms), competing for the same low wage jobs with both Germans and Turks, there are language, cultural and actual physical limitations.

Because this is not the Europe of the 60's where low wage employment was abundant and Spaniards could migrate to Germany and easily get employment there, the problem would be that that people would be competing with the locals and then you get things like Brexit, or actual bad outcomes like outright racism etc.

John said...

Ignacio, that's an excellent reply. Although there are now many good books on the Greek crisis and a few on Ireland, but as far as I can see nothing that details Spain's crisis but within the larger historical and political context you've described. Any recommendations? Something that especially concentrates on Spain's recent history since entering the EU and the adoption of the EU but also takes in the growing north-south divide and the remarkable take off of Catalonia.

Anything that especially makes Aznar and his government look particularly bad would be very welcome! By the way, how is Aznar now viewed? Hopefully like the total shit he was.

Given all the disadvantages during the 20th century, the wonder of Spain is that is is as advanced as it is. But then, as you say, a good deal of that is regional, just as it is in Italy with it's very visible north-south divide, and here in the UK after nearly forty years of deliberate vandalism in order to break the unions, deindustrialise and instead financialise.

Ignacio said...

John I cannot recommend any books which cover it exhaustively on English, even in Spanish I don't know of any which approach the whole issue holistically, there are books on different issues though (from the bubble to coverage of the public Cajas system which was involved on the buildup of the bubble). But is not something I'm too kin on reading books about tbh.

About Aznar, he still has contacts and influence within the party, but still has diminished. Certainly there is some people who probably look back with ignorant nostalgia, but the development of the crisis and post-bubble period has hurt the image. Aside of the popularity of Aznar was severely hurt by his foreign policy in his second term, and many people still rightfully disdain him for that. However as far as causality attribution goes, when the worst come in the PSOE was holding office, so it didn't get any better, so overall I'm not sure how he will end up being depicted in history.

Ryan Harris said...

In all the articles I read, there always appeared to be a tacit acceptance of what should be intolerable. Thanks for the background guys, understanding the context and a bit of back history helps.

Ryan Harris said...

Despite the partial and incomplete industrialization of Spain, other Service industry differences you describe, culturally Spain is fairly similar to the rest of Europe in so many ways, yet the economic disparity is large and the EU can't bridge the gap. Imagine if Merkel succeeds in expanding EU to the pacific and bosporus like she has talked about. Russia, Turkey and Caucasians are enormously different culturally, economically and socially, it would rip the union apart, I think.

Ignacio said...

One of the reasons the tolerance for pain seems higher in Spain is family, social and institutional safety nets. Still a lot of people is having a lot of problems, one of the last estimates I saw was that around 1.2-1.5 mill families were w/o any income whatsoever, there are families surviving on pensions of the grandfathers etc.

High unemployment is neither something cultural, in the mid 70's unemployment was just a slow as Scandinavian countries. But from the oil shocks forward, with all later developments pushed towards higher structural unemployment, this includes the introduction to the labor market of women, de-industrialization towards the East, inflated exchange rates due to the Euro, moving towards a more season-based and cyclical business model etc.