A message to tomorrow’s protesters
Update: The protest that I’m arguing against in the first half of the post isn’t till the 5th of November (thanks Seamus!). However, my main critique in the second half applies to both protests insofar as the first protest is focused on inequality again.
Personally I AGREE with a some of the issues being put down for the first protest – and would potentially head along if it wasn’t that the bullshit inequality line is being sold so hard (including in the picture for the site). Sigh
I see that a number of people have decided that, on Saturday, they are going to camp outside the Reserve Bank of New Zealand in Wellington to protest. After seeing a similar protest on Wall Street these protesters have stated that they are the “99%” (a statement that implies that they aren’t part of the 1% that is assumed to own most of the capital) – and they are protesting for “change”.
I understand why people feel worn down, I understand the power and importance of non-violent protest, but I have to say something that will likely upset the protesters and many of my closest friends:
This protest and its message are wrong, and by doing it you both ignoring the real issues in the world and acting in a selfish way – and for that reason I think less of every single one of you.
That’s a pretty damned cutting statement – so let me discuss why I believe this.
The New Zealand context
Nothing sounds nobler than fighting against injustice for those that are oppressed. And in truth, trying to make sure that people have an even playing field with which to take on life is one of the main justifications for government – hell its part of the “social contract” that exists between us as individuals.
And on the face of it, these protests in the US have been trying to achieve that. It is a fact that the incomes of many US citizens have stayed roughly unchanged, while the incomes of the most wealthy have increased – the disparity is not as severe as some of the numbers suggest (as there have been countervailing price changes), but it has happened.
People in the US are protesting because there seems to be no rhyme or reason to this change – furthermore, unemployment has been at 10% for a very long time, and all hope appears to be gone. The fact that so much “corporate welfare” exists in the US is also very upsetting – as it should be.
But in NZ we haven’t had any of this – in fact incomes have risen sharply across the board, unemployment is still below the levels it was a decade ago (and employment rates are much higher), and we don’t have ridiculous corporate welfare policies. We have great institutions – including the Reserve Bank – which have helped to ease the pain from the drastic global events on New Zealand.
… and yet the protesters are standing outside the very places that HELPED New Zealand during the crisis. I’m not sure if this is because they don’t understand what is going on, or because they just think it’s a great way to get attention – but it is an extremely poor idea to protest there.
If you want to “show solidarity with the US”, do it at the US embassy – not in front of the very places that have helped all New Zealander’s out during a time of global crisis.
(Update: Alex Tarrant at Rates Blog expresses similar sentiments here. Eric Crampton at Offsetting behaviour raises the idea of the South Canterbury bailout as being a relatively unjust thing to protest against, when discussing the post here.)
Fighting inequality, or just trying to get what you want from everyone else?
There is another underlying issue that exists here, one that is very important to me.
There is all this talk about “inequality” and “helping the poor” … and yet none of these people want to help the poor or reduce inequality – they just want to take from the extremely rich and give to the very rich, which happen to be themselves.
The real inequality is not within nations, it’s between nations (a good example of how to view this was given by Nigel Pinkerton a couple of weeks back) – the calls by people in the US to introduce protectionism against China, the complaints in NZ that foreigners are “taking our jobs”, are further signals of the DISGUSTING self-interest that exists in these views.
These people aren’t interested in the poor, they are interested in themselves – either that or they haven’t thought about the issue, which is pretty slack when you are going to go out and protest about it.
If we want to help the real poor we need to open borders, and make a concerted effort to help increase capital and opportunities in foreign countries – rather than just focusing on ourselves.
When I here people complain that they are the “99%” do they realise that only the top 1% of people in India have a living standard greater than the bottom decile of people in the US? Do they even care about the sheer number of people born without any opportunity to live the sort of privileged life we get.
Seriously, when I hear the complaints from these people, this is what I hear in my head:
“We want cheaper coffees and iPhones for ourselves, and people with lots of money should buy them for us”
But we can’t do anything about overseas, we can do things at home!
What a bleeding load of crap this reasoning is. If the majority of the country put pressure on politicians to open borders and send tax money overseas of course they would – it would get them frikken elected.
In reality there is a reason people need to identify themselves as part of the “99%” … its because these protests are about them getting things for themselves – not about doing what is right.
And for this reason I find the protests insulting, pure and simple.
They may as well all be carrying signs saying, “we don’t know the difference between a bank and the Reserve bank”.
Unless, that is, they’re hard-line inflation hawks complaining about the 5% CPI, and demanding tighter monetary policy…
I can see you doing that CPW – I suggest you should 😉
Reminds me of a story I heard many years ago about a student loan protest that was held around the Reserve Bank – apparently they got it mixed up with Treasury across the road. Our education system at work…
Point 2:
“There is all this talk about “inequality” and “helping the poor” … and yet none of these people want to help the poor or reduce inequality – they just want to take from the extremely rich and give to the very rich, which happen to be themselves.”
Exactly. They (the so called 99% in NZ) aspire to protest against “corporate greed” (misguidedly, against the incorrect institutions- as you state in point 1), yet they themselves are afflicted by “consumer greed” (for want of a better term) which kind of makes you think… maybe they are just being “selfish”.
…And yes. I am making a mass generalisation and assuming that they (the NZ 99%) are all self interested (“consumer greed”) and are not at all interested in the real issues of global inequality put forth by Mr. Nolan. I would still hanker on the notion that this would constitute the majority of those attending though.
Even if I’m wrong about that (it would be nice if I was), none of my assumptions negates from Point 1 that protesting the Reserve Bank of NZ is misguided given what they are supposidly protesting.
DJ – I think do you are wrong re: self interested protesters, based on my personal interactions with people involved. It’s easy to create our own dumbed-down mental stereotypes of the types of people we tend to disagree with (I catch myself out doing this often) – but not necessarily helpful in getting at the truth, which tends to be way more complex than most people are comfortable admitting.
Fair point(s) Jenny. Perhaps those you have interacted with relating to said protests have been a tad more logical and “filled-in” on the ideology and issues of real concern than those that I have had the pleasure of meeting (ie “greedy consumers”). Granted, my sample size that led me to such a pessimistic view of the protesters motives was smaller than the entire protest forecast. 🙂
I still think they may be going the wrong way about it in choosing a symbolic institution to demonise (NZRB), as oppossed to an institution that is implicitly engaged in causing strife. They may as well look up all the “Goldmans”. “Sachs”, and “Morgans” in the phone book, and then go and egg their houses.
Indeed – however, we need to be careful when we define consumer greed per see.
There is nothing wrong with having more stuff in of itself – it is the fact that we decide to put ourselves in a situation where we can have more by excluding others.
In many ways, that is what us in the West are implicitly doing to those in developing countries.
Yeah, I was being very very general in my lack of an explicit definition of “consumer greed”.
I was referring to those that only care about their own personal proliferation of material consumer goods, as oppossed to those that are aware of (and care about) the wider issues associated with modern consumerism (as per the example of having more by excluding others).
I wasn’t bagging all consumers per see. I like having stuff too 😉
I’ll be there tomorrow. I’m not there so much for myself, as I am in a fortunate situation – the author doesn’t seem to understand that someone might be concerned about more than themselves. The global financial crisis affected all countries, not just the US (obviously)… and I see this govt’s response as placing the burden disproportionately on the non-wealthy. I’m no economics whizz though so I am all ears to alternative opinions.
Hi Jenny,
I have no problem with protesting against things in of itself – in fact I don’t think there is enough of that in NZ. My issue here stems from the fact that policy action, and institutions, really did improve outcomes for people in NZ. It doesn’t make sense to me for us to complain about our central bank and government along these lines.
If we really want to fight for a moral cause, we should make people understand the scale of poverty overseas – and how by lowering resistance to integration with these countries we can make the real poor of the world better off
I’m here via Offsetting Behaviour’s link to this post Matt. There’s a lot in your post I don’t agree with, but that said, it doesn’t change the fact the post is still a stunner. There are few posts highlighting the hypocrisy of these protestors, and particularly the nonsense spoken about income inequality, than this. (Although, taking the income inequality issue further I suspect we’d ultimately fall out 🙂 )
Thanks.
These are value judgments – in most posts I like to describe things as generally as possible, but here I had to put some of my morality in. We are individuals – we should have different value judgments. I have no doubt we would have a debate about what we believe in – but that doesn’t constitute a falling out in my books 😉
Lol me again :)… I should add, by “disproportionately on the non-wealthy” I mean disproportionate effects on real-life living conditions, not necessarily in dollar terms (a 5% change in income affects someone on the minimum wage much more than it does someone on a very high wage)
Matt,
I see you are trying to sabotage the occupy movement by inducing their supporters to go to the RBNZ tomorrow three weeks early!
As to why the RBNZ: I presume that the thought process is similar to the one that made the 9/11 terrorists think the World Trade Center had something to do with world trade?
It just goes to show, once again, that I can’t read. I like to think that anyone who has previously read my posts would understand this 😉
Luckily getting dates wrong doesn’t defeat the main thrust of my post – it just ruins my carefully chosen title 🙁
I agree with you that the place that has been chosen is due to symbolism – but it is by choosing this symbol the protesters are illustrating a complete misunderstanding of the issues involved. How can you justify directly attacking an institution when you don’t understand the issue involved.
A protest against the US would suit at the US embassy.
A protest signaling frustration at the long global recession would make sense in the main street, or in front of parliament.
A protest about income inequality at the RBNZ … what?
Matt,
I’m sure people could find plenty to protest about the RB. Sure, it’s not like the Fed, which is a private institution but it still supports the global fractional reserve banking system.
It purports to have “managed” inflation remarkably well when that’s clearly not the case e.g the housing bubble.
They are the managers of our monetary system and so have every reason to be in the spotlight.
I’m sure they will enjoy the dialogue and questions about the monetary structure, debt, interest rates, banking and so on.
The root of the problem is the global banking system and all that goes with it. Whilst the protests may be somewhat imprecise about specific issues, their approach of open and engaged discussion is very clear and very refreshing.
i’m sure the RB will be more than happy to point out the error in their thinking 🙂
Matt,
I came across a reference to you blog post on the interest.co.nz and since I frequented your blog a couple of years ago, I figured you’d have something insightful and interesting to say, but sadly I’m dissappointed. Speaking as someone who has taken on the task to acquire a broad an indepth knowledge about economics and its social and political context and one is keen to attend the Occupation myself, your words come across as simplistic, petty and venal.
“We have great institutions – including the Reserve Bank – which have helped to ease the pain from the drastic global events on New Zealand.”
Rubbish. The Reserve Bank had a very marginal impact on easing the pain from the global crisis and any harm done to the economy during the great recession was largely its own doing. I remember arguing with you back in the end of 2007 that its interest rates policy was misguided, considering the economic climate at the time. And considering that the vast marjority of New Zealanders householders have fixed rate mortgages, they were stuck with the pain of high interest rates were were largely due to the Reserve Banks unnecessary OCR hikes. And the stability of New Zealand’s banking system was largely due to the seperation of roles between its finance arms and retail banking in contrast to the United States. And the Reserve Bank did little or nothing to monitor or prevent the collapse of the Finance Industry did they? Costing tens of thousands of New Zealanders millions upon millions of dollars. In many cases their retirment savings. In actual fact the Reserve Bank itself acknowldges that the banking industry’s stability was largely due to the Deposit Guarantee Scheme, provided by the State. Something which back in 2001 they argued AGAINST.
http://www.rbnz.govt.nz/faqs/3461047.html
http://www.rbnz.govt.nz/speeches/0104984.html
Though an anarchist I’d argue that we’ve suffered so little from the economic crisis largely due to the countervailing force provided by our generous social security system, something which the United States lacks. It provides for a redistributary mechanism that recycles “economic claims” to those who otherwise would lack a means of effective demand to acquire the produce of our industrial system. Ensuring that there isn’t a severe collapse in demand that has occured in the United States. Our tertiary system also mops up surplus labour that would otherwise be unallocated and through the student allowances also provides them with an income.
Our current institutional arrangements are an ackward patchwork solution to capitalisms contraditions and chronic instability. If you don’t wish to acknowledge Karl Marx’s incisively accurate analysis, read Shumpeter. The funny thing is that those with “free market” convictions are seeking to dismantle the very institutional arrangements that prevent the system from collapsing.
“The real inequality is not within nations, it’s between nations (a good example of how to view this was given by Nigel Pinkerton a couple of weeks back) – the calls by people in the US to introduce protectionism against China, the complaints in NZ that foreigners are “taking our jobs”, are further signals of the DISGUSTING self-interest that exists in these views.”
Its easy for you to castigate people when as an economist you’re at the top of the social heap, and don’t have to live with having to plod door to door desperately looking for a job, whilst you’re counting down the days until your savings are finally gone and your unemployment benefit runs out, getting more and more dispirited by the day, because a corporation has dismantled its own manufacturing and subcontracts to a factory in Mexico or China.
“If we want to help the real poor we need to open borders, and make a concerted effort to help increase capital and opportunities in foreign countries – rather than just focusing on ourselves.”
The problem is that the current process of increasing capital in developing countries has come at the cost of hollowing out the productive capacity in the Developed World. Largely because Western corportions and their shareholders seek to leverage cost arbitrage between low cost countries and the West. In Japan the process has been happening for over a decade, but the impact has been softened by the decline in Japan’s population. But the U.S. population is one of the few in the developed world that continues to grow. I think the same is true for New Zealand as well.
http://www.jil.go.jp/english/events_and_information/documents/session_1.pdf
As for myself, I firmly believe New Zealand is severely underpopulated and that we have far too much livestock and farmland. So what if we’d lose foreign exchange, we’d be far better off without our current dependance on foreign sources of finance.
Hi James,
I suspect in this context we will have to agree to disagree – as I have a fundamentally different view regarding what has happened to the one you have placed here.
The RBNZ admits itself that they failed to lift rates enough throughout 2005/06, and as a result was stuck pushing up rates in 2007 – the real kicker for them was that long rates were too low. Since then they have been working overtime to try to improve their ability to influence rates in an environment where there are chronic international imbalances.
Bank policy during the crisis was astonishingly good – it was better then I could have asked for. I have no vested interest with them, this is just a fact. The main negative is the deposit guarantees scheme – and NZ was pushed down that road by the Australian announcement that they were putting one in without tell us.
“Our current institutional arrangements are an ackward patchwork solution to capitalisms contraditions and chronic instability. If you don’t wish to acknowledge Karl Marx’s incisively accurate analysis, read Shumpeter. The funny thing is that those with “free market” convictions are seeking to dismantle the very institutional arrangements that prevent the system from collapsing.”
Institutions ARE awkward solutions to the problems of the day – that is why the democratic process needs to be there, and needs to be powerful. Hell, that is one of the reaons Schumpeter is so positive about free markets.
That is why protests and their ability to illustrate feeling are important. But it also implies that these protests, and voting, should be based on actual information – not adhoc abuse of an institution that has done an amazing job.
There are so, so, many places where there has been failure and protesters decide to pick on one of the success stories?
“Its easy for you to castigate people when as an economist you’re at the top of the social heap, and don’t have to live with having to plod door to door desperately looking for a job, whilst you’re counting down the days until your savings are finally gone and your unemployment benefit runs out, getting more and more dispirited by the day, because a corporation has dismantled its own manufacturing and subcontracts to a factory in Mexico or China.”
Because the person that is struggling in the US or NZ is inherently more valuable than the multitude of people who live in abject poverty overseas. Of course we want people to have a minimum standard of living – of course I hope society goes down a road where that is the case – but by god our focus on relative poverty within countries is sickening when there is such huge absolute poverty around the world.
Seriously, to me this is pure racism – I’m not saying that people are going out to actively be racist, just that the underlying social contract we have between us to shut other people out from our capital stock is inherently racist.
The vast majority of us in the developed world may be worse off if this is the case – but if we want to deal with inequality this IS the issue.
“The problem is that the current process of increasing capital in developing countries has come at the cost of hollowing out the productive capacity in the Developed World. Largely because Western corportions and their shareholders seek to leverage cost arbitrage between low cost countries and the West.”
I don’t agree with this – but I will focus on a couple of issue I do agree with.
The “provision of capital” I discuss is really just transfers – I don’t want the Western World to buy up the developing world – I want it to directly help it catch up through helping to build institutions and provide funds directly.
Even better, open up labour markets so that people can get equality of opportunity.
Conclusion
You might feel that all I’ve stated is empty platitudes – and that is fine. But where you see people rising against injustice I see people rising to perpetuate injustice – and the post I made was consistent with that.
When a big crisis happens its easy to “blame institutions”. And in the US they have good reason. However, in New Zealand the actions of policy makers, the structure of our social contract (with benefit provision without fixed time periods), our clear and transparent central bank, and the flexibility of our markets have combined to see incomes in New Zealand RISE while they have been plummeting in the US.
It sucks to be in a situation where people who want to work, and want to do things in society, feel excluded due to the international situation. However, these protests demean that by targeting those that helped up and showing a complete misunderstanding of what is going on.
Furthermore, I genuinely believe that if all these people cared about inequality – they would try to pressure the government to open borders and increase transfers overseas. But instead just look at the poster on the site – they keep saying “we are part of the 99%, we want the 1% to give us money” – this isn’t a moral argument, its a selfish argument.
“because a corporation has dismantled its own manufacturing and subcontracts to a factory in Mexico or China”
Yeah, screw those corporations for following the path of self-interest to the benefit of some of the poorest people in the world! Much better we trade mass poverty overseas for some exalted standard of living for the rhite people.
I am sick of the duplicity “inequality warriors”. They have spent decades telling us that the West is rich because the third world is being raped for its natural resources. And now when western corporations are hiring third world workers, we are told they are evil for doing that too.
These damn hippies cant identify a single problem they wouldnt lay at the feet of mythical corporate fat cats. This is why they have never achieved anything, they are fighting a non-existent foe on a fantastical battlefield, not operating in the real world.
Its obvious that much of their angst is related to daddy-issues. I mean, they call the establishment “The Man” FFS!
Matt,
Thanks for making the detailed and lengthly, which is more than I deserve considering my initial ad hominenem attacks. Your own comments in your original post appear to have struck a nerve.
“The RBNZ admits itself that they failed to lift rates enough throughout 2005/06, and as a result was stuck pushing up rates in 2007 – the real kicker for them was that long rates were too low. Since then they have been working overtime to try to improve their ability to influence rates in an environment where there are chronic international imbalances.”
I did acknowledge in my prior comment that the rate cuts by the Reserve Bank did alleviate the pain for mortgagees, but the effects were neither immediate nor would the pain bourne by mortgagees necessary if not for the rate hikes in late 2007. I argue that the Reserve Bank’s inflation targetting is a blunt, if not crude and even counterproductive tool to manage the economy. I would argue that the high growth rates with low inflation experienced by many of the world’s economies during the so-called “Great Moderation” due not to the performance by the world’s Central Banks but instead to an array of interacting economic forces. Theres some support given to my claims by respected academic economists though it runs against the accepted wisdom.
http://www.foreignaffairs.com/articles/54648/james-k-galbraith/the-inflation-obsession-flying-in-the-face-of-the-facts
http://keithrankin.co.nz/kr99deflation.html
a) the emergence of China as the new great industrial power (a role played by Soviet Russia during the New Economic Policy) with its massive priorly underutilized productive capacity, which has allowed them to underbid the prices that producers in already mature economies are able to set.
But when the U.S.-China Economic & Security Review Commission, a congressionally appointed panel, convened there on Sept. 23, it was not to discuss power but decline. One after another, economists, union officials, and small manufacturers took the microphone to describe the devastation Chinese competitors are inflicting on U.S. industries, from kitchenware and car tires to electronic circuit boards.
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http://www.businessweek.com/magazine/content/04_49/b3911401.htm
http://www.jstor.org/pss/25124017
b) the dramatic productivity improvements in what remains of the West’s manufacturing industry which allows them to produce more with far fewer workers.
While American manufacturing has stagnated at a time when service employment is on the rise, Cohen and Zysman argue that is at least in part an outgrowth of the fact that productivity improvements in industry over the years have led to greater job specialization, frequently masking the indirect but real ties between newly created service jobs and the manufacture of tangible products.
http://articles.latimes.com/1987-07-26/books/bk-1591_1_inexact-science
c)the job insecurity of workers alleviating the prospect of demands for compensation increases due to a labour market prefigured to demands for “Flexibility”
A typical restraint on compensation increases has been evident for a few years now and appears to be mainly the consequence of greater worker insecurity. In 1991, at the bottom of the recession, a survey of workers at large firms by International Survey Research Corporation indicated that 25 percent feared being laid off. In 1996, despite the sharply lower unemployment rate and the tighter labor market, the same survey organization found that 46 percent were fearful of a job layoff.http://www.bis.org/review/r970305b.pdf
“Bank policy during the crisis was astonishingly good – it was better then I could have asked for. I have no vested interest with them, this is just a fact. The main negative is the deposit guarantees scheme – and NZ was pushed down that road by the Australian announcement that they were putting one in without tell us.”
Yes they did, but only under the circumsntance and within the limited terms of their remit. I actually admire the transparent honesty and candour with which it approaches its description of its role within the economy. I’ve learnt alot about the workings of the financial system and its role in the capitalist economy from documents freely published by the Reserve Bank and other former central bankers around the world. The problem is that people are unfortunately informed by a simplisticly polemical and utterly misguided account of the workings of the modern monetary system. I don’t know if you’ve heard of the videos Money as Debt and worse “The Zeitgeist” which sadly account for the sad excuse of education about the economy that many people draw their understanding from. I cringe in embarassment, but its a trial to properly inform my friends who have watched the films as to the actual workings of the system.
“Institutions ARE awkward solutions to the problems of the day – that is why the democratic process needs to be there, and needs to be powerful. Hell, that is one of the reaons Schumpeter is so positive about free markets.”
Yes we shall see after the next elections if our politicians will bow to the political winds and seek to dismantle the countervailing arrangements that enable capitalism to continue to function. Especially in light of this illuminating insight into the viewpoint of John Key.
“If we cancelled welfare to 330,000 people currently on welfare, how many would starve to death? Bugger all.”
http://pundit.co.nz/content/divine-intervention-and-the-key-welfare-agenda
Seriously, to me this is pure racism – I’m not saying that people are going out to actively be racist, just that the underlying social contract we have between us to shut other people out from our capital stock is inherently racist.”
Do you not also consider the Western presumption that our preconceptions as to what constitutes wealth and our preconceived ideas as to
(continued…) Is it not racist to assume that should we transplant the institutional arrangements and approaches to development which evolved in response to distinct political and economic dynamics and social conditions that occured in Europe over the past 500 years, and merely transplant them to the verdant soil of Africa all will be well? History is replete with wellintentioned, but ultimately destructive examples of Western “experts” meddling in the affairs of other societies and cultures, particularly in Africa.
The core issue as Davidson sees it is what nations exist for: do they exist for their own sake, for the material benefit of the elites who run them, or do they exist to serve the interests of the people? What is perhaps most tragic is that Africans themselves had answered this question in the precolonial period in favor of mass citizen participation, and had their own history not been violently disrupted and ultimately rejected and forgotten, Africa would most probably look very different today.
Davidson shows that the failure of nation statism in Africa is not due to some particular African defect. The more horrific aspects of this failure are due above all to the steady bleeding of African resources into European pockets.
http://www.asmarino.com/articles/809-a-review-the-black-mans-burden-africa-and-the-curse-of-the-nation-state-by-basil-davidson–
http://www.perc.org/articles/article142.php
http://tinyurl.com/43uyddn
“That is why protests and their ability to illustrate feeling are important. But it also implies that these protests, and voting, should be based on actual information – not adhoc abuse of an institution that has done an amazing job.”
Yes well we’d all like people’s conclusions and their decisions to be motivated by well thought through logically consistent reasoning, but the unfortunate truth is that memes aren’t spread by dry discussion, but through emotional diatribes and pontification. I will freely acknowledge that the protests are probably motivated by envy of the 1%. Then again the 1% likely pursues wealth precisely to evoke that envious response. Its something Thornstein Veblen railed against as unproductive posturing in his book The Theory of the Leisure Class. But then like Marx he was a product of his time and wasn’t to acknowledge that the “primitive” savage people beyond “civilized” West possessed solutions to the contraditions besetting industrial capitalism and absentee landlord tenure. That being the commons (see Elinor Ostrom and J M Neeson) and the gift economy, which would play a role as a redistributary mechanism and is epitomized by the North American potlach and our own indigenous koha and mana huaanga. I believe a reexamination of the long abandoned and forgotten elements of our own cultural and economic past could provide the genesis for solving what are the otherwise irresolvable problems that we will be facing in the not too distant future.
Personally I’m motivated a strong aversion to authority. I can’t tolerate being beholden to anyone, whether employer or government bureaucrat or even functionary in the tertiary education system. I’ve said my piece. Hope its not too wordy and that we’re just talking past each other.
Forgive me for the bold type. I can’t seem to alter it.
Experience, however, shews, that the fancied or real insecurity of capital, when not under the immediate control of its owner, together with the natural disinclination which every man has to quit the country of his birth and connexions, and intrust himself with all his habits fixed, to a strange government and new laws, check the emigration of capital. These feelings, which I should be sorry to see weakened, induce most men of property to be satisfied with a low rate of profits in their own country, rather than seek a more advantageous employment for their wealth in foreign nations
http://www.econlib.org/library/Ricardo/ricP2a.html
Well, Kimble, none other but David Ricardo, the doyon of classical economics didn’t exactly approve of the free flow of capital internationally either. Especially since labour can’t realistically be as mobile. Even if the Powers that be wished it to be.
I am sick of the duplicity “inequality warriors”. They have spent decades telling us that the West is rich because the third world is being raped for its natural resources. And now when western corporations are hiring third world workers, we are told they are evil for doing that too.”
Well is it not suprising when the rhetoric of capitalist apologists is replete with invective such as this.
Some groups, however, were more aggressive. The American Chamber of Commerce in Shanghai, which represents more than 1,000 corporations, submitted several dozen pages and rejected most of the draft law. And, according to their own English translation, they also gave the Darwinian advice, “that the fittest survives is the basic principle of all creatures.”
http://www.inthesetimes.com/article/3017/fights_over_chinese_labor_reform/
If Americans and Europeans want to win in the 21st century, we must learn to play better in away games. As this new world dawns, we are beginning to experience the dark side of natural selection, the perspective of those selected against, rather than for. This is Darwin … wielding the sharp, pointed stick of failure. Interestingly, it is failure – most dramatically the threat of extinction – that drives evolution, not success.
http://economistsview.typepad.com/economistsview/2006/04/its_a_fish_eat_.html
Sorry the commen belief in a cabal of corporate movers and shakers swinging the distribution of income in their favour through combined action.
“We rarely hear, it has been said, of the combinations of masters, though frequently of those of workmen. But whoever imagines, upon this account, that masters rarely combine, is as ignorant of the world as of the subject. Masters are always and everywhere in a sort of tacit, but constant and uniform combination, not to raise the wages of labour above their actual rate.”
http://geolib.com/smith.adam/won1-08.html
I thought you were an economist. Have you not seen the statistics relating to the widening gulf between the compensation earned by the workforce and the executives of their corporate employers?
It would mean, as Business Week noted at the time, “that some people will obviously have to do with less…It will be a bitter pill for many Americans to swallow the idea of doing with less so that big business can have more.”
“See for yourself. Read the literature. Start with A Time for Truth, the call to arms by Richard Nixon’s treasury secretary, William Simon, the Wall Street wheeler-dealer. He argued that “funds generated by business” would have to “rush by multimillions” into right-wing causes in order to uproot the institutions and the “heretical” morality of the New Deal. He called for an “alliance” between right-wing ideologues and “men of action in the capitalist world” to mount a “veritable crusade” against everything brought forth by the long struggle for a progressive America. It would mean, as Business Week noted at the time, “that some people will obviously have to do with less…It will be a bitter pill for many Americans to swallow the idea of doing with less so that big business can have more.” But so be it.
A “bitter pill” was the least of it. This was class war ordered from the top down. Instead of creating a level playing field, government would become the agent of the powerful and privileged. Public institutions, laws and regulation, as well as the ideas, norms, and beliefs which aimed to protect the common good and helped to create America’s iconic middle class, would now be greatly weakened and increasingly vulnerable to attack
http://carnegie.org/publications/carnegie-reporter/single/view/article/item/282/
“A controlled disintegration in the world economy is a legitimate object for the 1980s.”
http://www.foreignaffairs.com/articles/31246/joan-spero/alternatives-to-monetary-disorder
http://www.newyorkfed.org/research/quarterly_review/…/v3n4article1.pdf
“I argue that the Reserve Bank’s inflation targetting is a blunt, if not crude and even counterproductive tool to manage the economy.”
I think MN is likely to agree with you. Inflation targetting is a goal in and of itself and not a tool to manage a whole economy. I dont think you will get much traction for your idea that interest rates should not have been put up to avoid pain on debtors.
“Is it not racist to assume that should we transplant the institutional arrangements and approaches to development which evolved in response to distinct political and economic dynamics and social conditions that occured in Europe over the past 500 years, and merely transplant them to the verdant soil of Africa all will be well?”
Yes, that is not racist. It may be wrong, but it is definitely not racist.
“Well, Kimble, none other but David Ricardo, the doyon of classical economics didn’t exactly approve of the free flow of capital internationally either.”
Gosh, I guess if the prophet Ricardo said it, it must be true and correct, and I must follow economical doctrine and recant my sinful assertions. Thats the great thing about economics, you can win any argument by simply pointing to something Adam Smith wrote in Wealth of Nations. We are never allowed to deviate from his teachings.
“Masters are always and everywhere in a sort of tacit, but constant and uniform combination, not to raise the wages of labour above their actual rate.”
Well durrrr. Employers dont like increasing wages. And employees do want to increase wages.
“This was class war ordered from the top down. Instead of creating a level playing field, government would become the agent of the powerful and privileged.”
Ah, I see,it was the RBNZ that did the ordering?
The irony of the position of many of those in the protests in the US is that they are simultaneously complaining about corporate corruption of government and for the role of government to be larger! At least the Tea Partiers have a coherent message; Government has been corrupted, reduce the size of Government to reduce the corruption.
Just say it JE, stop dancing around the issue. Say you would prefer Indians be unemployed and their job moved back to NZ if that job was once done by a Kiwi. Admit that you think those are OUR jobs and that the Chinese lifted out of poverty through employment brought about by liberalised international trade are not as deserving as the Kiwi worker who has to give up his evenings and maybe even half his weekend to retraining to find another job.
“I think MN is likely to agree with you. Inflation targetting is a goal in and of itself and not a tool to manage a whole economy. I dont think you will get much traction for your idea that interest rates should not have been put up to avoid pain on debtors.”
So you don’t think that the Federal Reserve Bank of the U.S. hiking interest rates six and our own Reserve Bank hiking the OCR in late 2007, already internationally high levels are at all related to the Global Financial Crisis? I’m not attacking the decision in principle just because it caused pain to debtors, but because it adversely affected affordability. Debtors in late 2007 were confronted with historically high fuel and food prices, and in the United States, skyrocketing healthcare and education costs. To some extent Kiwi debtors were sheltered to some extent from most of the cost push pressures, by our generous social security system, but I still argue it wasn’t an appropriate time to hike interest rates putting an extra burden on a large proportion of the public, especially when they soon had to backtrack and cut interest rates severely as the Global Financial Crisis unfolded. Which is something I am on public record for warning people about in August 2007.
“Yes, that is not racist. It may be wrong, but it is definitely not racist.”
Personally I believe the presumption that our own measures of wealth and our own approaches to development are universal is racist, let alone the West’s past, destructive attempts to impose them on the benighted “inferior” societies of the “Third World”, however their good intentions. And the typical thrust for recent efforts of development are transparently selfserving. Take international Third World Finance for example. Noreema Hertz, former economist at the World Bank, revealed that much of the funding intended for Third World Development is funnelled through Western Export Agencies, which insure debt offered by their respective financial institutions. These banks have lent vast sums of money to often corrupt government regimes, with the sure knowledge that whatever success or failure of these development ventures, they will still profit from the transaction, because the loans are underwritten by government agencies.
“However, the role of commercial banks in Africa’s debt story cannot be ignored. Commercial banks also lent money, actively encouraged by the World Bank and IMF and often hand in hand with the ECAs, for what Hertz describes as a “ghostly parade of white elephants”. She points to the Inga-Shaba hydroelectric project, estimated to cost some $450m–a loan for which the US’s ECA, the Import-Export Bank, guaranteed the initial bill while commercial banks covered cost overruns. It ended up costing $1bn, equivalent to 20% of Zaire’s debt.”
http://findarticles.com/p/articles/mi_qa5327/is_304/ai_n29142226/
And furthermore, corporate representatives even go to the extent of begrudge the few, negligible international aid programmes that are actually aimed at genuine poverty alleviation, because they threaten corporate profits.
James Henry, the Chairman of the USA Maritime coalition, recently expressed concern that poor farmers in less developed countries could threaten revenues of companies like ADM or Liberty Maritime Corp because of a program called Purchase for Progress (P4), initiated by the World Food Programme (WFP).
http://www.huffingtonpost.com/howard-buffett/poor-farmers-no-threat-to_b_920671.html
“The irony of the position of many of those in the protests in the US is that they are simultaneously complaining about corporate corruption of government and for the role of government to be larger! At least the Tea Partiers have a coherent message; Government has been corrupted, reduce the size of Government to reduce the corruption.”
Well who else but the strong national state can be expected to have the power to protect the people from the rapacity of the limited liability corporation and its insulated minions? How often do the courts seek to pierce the corporate veil to hold individuals within corporations accountable for their actions? Not very. You think the Tea Party has a coherent message? Its nothing more than political theatre and therapy for the repressed psyche of America’s right-wing. I personally find it hilarious to witness raving elderly Tea Partiers challenged by the media and asked if they advocate the end of the governments social security pension programme. haha. Not to mention that the Government Departments which the Tea Party won’t ensure an end to corporate/government corruption, rather more of it.
“EPA’s funding would be slashed by 34% over the next two years, but America’s oil and gas companies would be given an extra $55m on top of the $36bn in federal subsidies they already get.”
http://www.guardian.co.uk/commentisfree/cifamerica/2011/aug/03/epa-republicans-tea-party
“Just say it JE, stop dancing around the issue. Say you would prefer Indians be unemployed and their job moved back to NZ if that job was once done by a Kiwi.”
As someone who isn’t employed and doesn’t really have any desire to be, I’m hardly one to begrudge people in India having jobs. But I’ve assumed a personal philosophy that values social harmony and it behooves me to highlight what I see as trends which I believe will undermine it. And no, I don’t collect an unempoyment benefit, nor a student allowance or any other government support.
“So you don’t think that the Federal Reserve Bank of the U.S. hiking interest rates six and our own Reserve Bank hiking the OCR in late 2007, already internationally high levels are at all related to the Global Financial Crisis?”
I think not raising them previously caused a big chunk of the problems, if not all of them.
“I’ve assumed a personal philosophy that values social harmony and it behooves me to highlight what I see as trends which I believe will undermine it. ”
OK then, so what have said is that NZ social harmony is worth the cost of Indian poverty. Nice.
Kimble, I’m not going to fall for your bait. I really don’t care what you think about me or about my values.
Its not an either or proposition. Tradeoffs don’t necessarily have to be as painful as you economists would like us to think.
The Kerala experiment, demonstrates that Western prescriptions for Third World development (whether Marxist or capitalist) are not the last word. They are not universal. Just a product of unique social, political, and cultural forces in response to the conditions of the time.
http://www.utne.com/archives/TheEnigmaofKerala.aspx
So the guy who accuses economists of intellectual dishonesty, and thinks that local rich people are more deserving than foreign poor people also doesnt vare what anyone thinks.
Story checks out.
No Kimble. I just don’t care what you, think. You’ve demonstrated consistently since I began posting that you’re going to rigidly cling to your own preconceptions and insist on projecting your prejuidices about the values you think I hold as someone you call a “hippie”. Why should I care what you think?
Please point out where I accused anyone of intellectual dishonesty. Personally I think the well-intentioned charity of wealthy Westerners does more harm than good in mot foreign countries. History is replete with scathes of examples.
“Please point out where I accused anyone of intellectual dishonesty.”
“Tradeoffs don’t necessarily have to be as painful as you economists would like us to think.”
I was being generous and assuming you werent calling economists stupid. Though given your reaction, I guess you might be.
So which is it? Are economists dishonest for claiming painful trade-offs exist, or are they stupid for thinking that all trade-offs have to be painful?
“I was being generous and assuming you werent calling economists stupid. Though given your reaction, I guess you might be.”
Kimble, no I think “economics” hamstrung itself when it transitioned from political-economy to just economics. And its hobbled into merely engaging in commentary and analysis which is constrained in the straightjacked of assumptions with their basis in the prevailing social realities. An economist can’t step out of their narrow academic silo into the territory of “political science” without being heckled for opining on an area that they’re not qualified to. Though ironically a political scientist (Elinor Ostrom) won a Nobel Prize in Economics.
If you take the view that the world economy is a subset of it’s ecosystem and that we may be at the end of growth and if you believe Mexico and China are over populated, then the result of taking your production to the lowest cost country will be a loss to the country which looses the employment and a drop in the bucket to the benefactor country? Nevertheless it will have a feel good factor as when we take a few refugees from Sudan or Afganistan.
The economist is like the surfer waiting for the wave to arrive; the worker is a poor swimmer worried he/she may drown.
“An economist can’t step out of their narrow academic silo into the territory of “political science” without being heckled for opining on an area that they’re not qualified to.”
What does that have to do with economists lying about or not being competent to conduct proper analysis of trade-offs?
Because it is the current social arrangements that determine how severe the tradeoffs are and how fairly they are bourne. Modern economists just take them as a given, but this was not always so.
“In the long run the earnings of each agent (of production) are, as a rule, sufficient only to recompense the sum total of the efforts and sacrifices required to produce them . . . with a partial exception in the case of land . . . especially much land in old countries, if we could trace its record back to their earliest origins. But the attempt would raise controversial questions in history and ethics as well as in economics; and the aims of our present inquiry are prospective rather than retrospective.” [Alfred Marshall, Principles of Economics, p. 832]
The insistence of economics to put such a high value on capital intensive, rather than labour intensive processes is an outgrowth of peverse corporate accounting measures. At the cost of dire social outcomes of those deemed “unskilled”. Whats worse such counterproductive valuation techniques are applied inappropriately in the Third World.
One of these is to define “efficiency” as output per worker. Only very recently, with the birth of the concept of total factor productivity, and the new emphasis on energy-efficiency, are most economists beginning to escapethis perverse concept with its built-in bias against use of labor.
Substituting capital and land for labor raises “efficiency,” so conceived, only by wasting capital and land, and is only efficient in unrealistic models in which land and capital are underpriced or ignored. High labor-efficiency then means low land-efficiency and low capital-efficiency, either directly or at one remove in the form of low energy-efficiency, low waterefficiency,low feed-grain efficiency, etc.”
http://www.masongaffney.org/publications/I1Full_Employment_Limited_Land_&_Capital.CV.pdf
In any event, manufacturing engineering was reduced to the exclusive pursuit of labor savings perceived to be attainable only through faster machines. Never mind that faster machines build inventory faster, as well.
http://www.superfactory.com/articles/featured/2006/0605-waddell-blind-opportunities.html
So… we have: a sidebar by Alfred Marshall relating to a particular problem he was discussing, applied as a blanket statement about all economists; a lauding of the “very recent” concept of total factor productivity, which can be traced back to Knut Wicksell; a link to an article from sometime in the 1970s correctly arguing that the Phillips Curve is rubbish; and another link to an article about labour productivity in the US auto industry that somehow fails to mention the unions even once.
What in God’s name are we supposed to make of all of this? I’m starting to get the feeling that this guy is just running some elaborate and very nerdy prank.