Robert Peston on global imbalances, the banking sector, debt and a sustainable economy #pestonsperi

I wanted to do a quick blog after Sheffield Political Economy Research Institute’s Annual Lecture given by Robert Peston. It was a fantastic talk, raising some really important points about systemic global, regional and national instabilities that we have in the finance, trading and banking systems and how this relates to issues such as debt and consumption and the potential of the current crisis to go on and even get worse.

The talk was also interesting given my MA studies currently are looking at the question of global imbalances and how this relates to the United States’s power, their economy and the global economy at large. There are several important points that can be drawn from the talk that needs more recognition by those making policy decisions, who seem quite willing to let us sleep walk into further problems when nothing fundamentally that got us in this mess has been addressed or changed. However, especially in terms of global imbalances such as the US and China’s bilateral trade relationship, things are not going to be sorted over night – this will take time and also a lot of negotiation.

Key points I took from the talk, include:

• There is a massive problem with global imbalances where there are surplus countries such as China, which has amassed a huge amount of reserves (especially since the 1997 Asian Financial Crisis) and through its heavily intense export-led economy, it has faced criticism of being a currency manipulator to keep the currency undervalued to help its exports with the US demanding a rapid appreciation. The US however, despite its complaints, rely on these surplus countries as the US – once the biggest creditor – needs these countries in order to maintain its massive deficits and debt and thus extensive foreign policy and tax cuts. This relates to the creation of the Bretton Woods System after 1944, where suggestions from Keynes of having an International Clearing Union to help prevent imbalances between surplus and deficit countries was rejected by the US – and given they had the money, it was hard for others to disagree. However, after the 1971 Nixon Shock and the US’s continual ballooning deficit there are questions over how sustainable the dollar is as the ongoing reserve currency, especially given this is somewhat determined by the policies of countries such as China who could increase their diversification of reserve portfolios, for instance. As Peston also mentioned, China is seeing tensions within it domestically rise given the huge disparities of wealth because of their export led approach. That’s why there are movements towards change and this could create problems for the US.
• Peston talked about the problem with regulation and how it is so complex most people involved in the banks wouldn’t be able to explain it and those that can would need several days to do so! This is a serious problem, as Peston mentioned, given the lax regulation of the banking system, as banks had created practices where they were able to hide the real nature of their balance sheets from the regulators – this was key to the crisis – not as though they took much attention, anyway. Take the IMF, one of its main roles is with ensuring surveillance of the international economy but they actually often encourage measures such as in the Asian Crisis or in the run up to the Argentina crisis (particularly embarrassing given Argentina was seen as the IMF ‘poster boy’) that actually either sewed the seeds or made the crisis worse than it would have been. They failed to be critical about the problems the build up of global imbalances before the crisis could, and did, cause. The ideology and narrative shaping this regulation is wrong and the regulation needs to be simplified alongside reflecting a bottom-up restructuring of our economy.
• Peston discussed how the boom years were unsustainable, mentioning in the Q&A how the journalists failure during these years was not being critical enough given they were based on over-leveraged, complex banking practices. This relates to Peston’s remarks on how living standards are now currently back to 2003 levels, which echoes comments made by Ed Miliband regarding there being a real crisis of living standards.
• A very interesting point I thought Peston made was that public debt has now become a potential problem. Whilst Peston stressed how much private debt there is -  a neoliberal blind spot – the private sector, in dealing with their debt, undermines demand and related investment dries up, which relates to less productivity and also then less tax returns, creating an increase in public debt levels. So importantly, it isn’t public debt that got us in this mess, it is private, but public debt is being made to look like it was the culprit through clever spinning and manipulation of the figures. This relates to the imbalances of deficit and surplus countries. Again, it comes back to the issue of needing to rebalance the economy nationally, regionally and globally. It also relates to Peston’s comments regarding the dire state of manufacturing in the UK economy and how we need to reorient education so it becomes more governed towards increasing the supply of skills in the economy that are vocational and useful for regenerating the productivity in the UK and helping overcome such imbalances. Essentially, we have become too reliant on finance.

I found it refreshing to hear such a candid, fact based analysis of the economy. Peston was clearly torn between his BBC role and his economic belief system, even referring to the BBC chip he has to rein himself in through phrases such as “some may say”. I did get Peston on video camera saying capitalism didn’t work and was basically flawed but sadly the sound ironically cut out for that clip. More people need to listen to what Peston critically discussed and analysed, as things are set to get worse given the unstable, too big to fail banking system, weak but expensive regulatory practices, high levels of private debt, global imbalances and weak real economies with extended finance sectors that creates inequalities in living standards and wages. But as Peston mentioned, there doesn’t seem to be a sense of urgency any more – everything seems to be back to how it was, and nothing really changed which is bad for everyone in the short and long-term.

P.s. I wanted to include a video camera clip I recorded of Peston talking, but firstly I didn’t record everything properly as I am getting used to my new phone; secondly, the file isn’t compatible with the upload system on this blog and thirdly I am sniffling in the background because of my cold!

Thatcher ‘tribute’: on what she did, believed, and her effect today…

Margaret Thatcher rose to power in the context of a broken down Bretton Woods System, a system that formed after the Second World War in attempts to control the speculative financial flows and an unstable economic order that saw protectionist policies and the Great Depression occur in the inter-war period. With the US unable to withhold the convertibility of Gold and the dollar, however, the ‘Nixon shock’ (1971) saw the end of such guaranteed convertibility, alongside the fixed exchange rate coming to an end by 1973 with the rise of many floating currencies. With this renewed flexibility for the US that remained the reserve currency, able to run up ever-increasing unsustainable debts and deficits, this was accompanied by the rise of new social forces alongside an increasing attack on organised labour and welfare rights that had been won and granted after the Second World War. The rise of the right especially occurred in the UK, represented by Margaret Thatcher, and in the US with Ronald Reagan.

The 1986 Big Bang in London, one of Thatcher’s notable ‘achievements’, alongside the intensification and depth of Wall Street after the 1970s with the development of unstable dollar supply and the US’s special status as the reserve currency saw an expanding, inherently destructive finance sector. There was more and more financial shocks and increasingly bigger state bailouts of institutions that went wrong due to the risk and instability. In 1997, there was the Asian Crisis that the IMF and developed countries tried to blame upon the developing countries’ domestic policies, with the IMF imposing measures that made the crisis even worse in the long-term. However, with the recent financial crisis the developed countries have had to question their own economic ideologies more, with developing countries amassing a great amount of reserves to protect themselves against needing the IMF whilst supporting the US currency with the developing countries’ heavily reliant export model economy. How sustainable such an arrangement is, is up for debate.

It is important to stress this context and how the rise of right-wing Thatcherism and Reaganomics ideology and economic practices utilised such a context to intensify financial dominance, with profits being the thing people wanted, bonuses exploding and an individualistic logic Ayn Rand would have been proud of encouraged from the top down. People were told they were on their own. There was no such thing as a society. As unemployment ballooned, working class communities were shattered and called the ‘enemy within’, hospitals and schools were closed, VAT increased, social houses were sold through ‘right to buy’ so there was a massive shortage of council housing, alongside the Poll Tax, whilst Thatcher extended great support and friendship with a fascist dictator – Pinochet -  alongside terming Mandela as a ‘grubby little terrorist’ and supporting the apartheid regime. These were some of Thatcher’s notable ‘achievements’.

I use achievements sparingly, as people have been referring to what Thatcher did as ‘achievements’. I don’t like the word, as it makes out these were positive things. It’s like saying Hitler killing millions of Jews was an achievement. I see it as an atrocity, as I see what Thatcher did a series of atrocities. But nobody talks about this. The same thing happened with Reagan after he died. For instance, Thatcher and Reagan hated gay people. Thatcher introduced Section 28, to stop the ‘promotion’ of homosexuality in schools – it only recently was repealed. Reagan, despite AIDS being first reported in the medical and popular press in 1981, only spoke voluntarily publicly about the epidemic in 1987 by which time tens of thousands of people had died from AIDS. In 1987, the US prohibited AIDS education that ‘encouraged’ or ‘promoted’ homosexuality – similar to Thatcher’s Section 28 introduced around the same time. But like the media within the UK since Thatcher has died, there was no real mention of this in Reagan’s obituaries.

This brings me on to this false pathetic claim that if you didn’t live through something you can’t comment on it. Essentially, this means having an individualistic logic where only anything you directly experience can be commented on. So let’s stop talking about history, even things such as Nazi Germany should not be discussed by anyone who did not live directly in it. Let’s stop talking about the Syria crisis, as after all we aren’t there so how do know what it’s like? It’s such a lame pathetic argument and doesn’t hold up to scrutiny. It’s also such an ahistorical argument where there is total ignorance towards how what Thatcher – and Reagan – did has such a profound influence on who we are economically, politically and socially today. Rather, we have to understand the context to their reforms – so this refers back to the inherent destabilising mechanisms within the Bretton Woods System that relate to the US dominance and ignorance towards Keynes’ warnings regarding the US as reserve currency and also unsustainable trade deficits.

Whilst Labour tried and succeeded in addressing many of the inequalities Thatcher brought in and Major continued, her legacy still has a dramatic impact on who we are today – and even the Labour party with New Labour. We are a selfish, individualistic and apolitical culture that often cares about only themselves and doesn’t have a respect for the legacy of the great struggles that got us the rights we so often take for granted: such as voting. This relates to this individualistic notion that we can’t comment on things we didn’t live in. After all, why would the right want you to see that they have always been on the wrong side of debate throughout history? The current government are also doing things Thatcher only dreamed of and are picking up where she left off, with full-scale privatisation, slashing of state support, social services, and benefits alongside rapid cuts to departments.

It is a selective use of the right wing economic discourse, however, as shown by William Hague’s comment regarding the funeral and how we can “afford” it:

When it comes to money, the rebate she negotiated for this country from the EU has brought us so far £75bn, which is twice the size of our annual defence budget. I think that puts money in perspective … so I think we can afford to contribute to a funeral.

Ok, if we are going to play the numbers game, it was Thatcher’s policies that sowed the seeds for the recent crash and the £1.5 trillion bank bailout. Why should the public, who were not responsible for this, then have to pay for such state support of a corrupt over-leveraged finance sector with benefit cuts, privatisation, housing shortages, financial aid cuts, education cuts, higher tuition fees, cuts in wages and so on? One minute we are told by Hague that cuts are “essential to the future of the country” and then we are told we aren’t actually nearly bankrupt and can afford to pay for the funeral of someone who hated and wanted to destroy the state and all it stands for. This illustrates their selective use of anti-state ideology, as does the state’s continual support for an unsustainable unstable finance sector and their ignorance to the 450% private sector debt as they decided to focus on public sector debt which is around 70% of GDP – when after the war, public sector debt was 250% and Atlee created the welfare state and helped turn Britain around!

There are long-term effects of Thatcher’s legacy all over the world. You look at places such as Russia even, which was ransacked by the Chicago Boy mentality – something Thatcher supported in Chile – after the fall of the Soviet Union (read more on this, here). As mentioned, our culture is dominated by egos and individualistic rhetoric which relates to lack of workers’ rights and organisational labour power that only makes it easier for the finance cartel to employ race-to-the-bottom policies with their boys in Number 10 helping them given the Tories get 50% of their funding from the City.

Essentially, this relates to the right-wing media that Thatcher got on with so well, especially Murdoch, and how the media tells us what to care about. The media say that it is not in good taste to even discuss Thatcherism. We are told to ignore what she did, believed and promoted because she’s died, as though that makes someone so much nicer. The respect for all those people she screwed over doesn’t matter. For instance, the BBC are quite happy to play the pro-right-wing Thatcher song, I’m In Love with Margaret Thatcher, but will only play a 5 second clip of the Ding Dong! The Witch is Dead song, despite not being directly about Thatcher nor naming her directly, because of ‘respect’. What the hell. Firstly, not playing a clip when you usually would do is biased as you are changing what you normally would do to keep the right wing, especially those in government, happy. Then, secondly, what about the respect for all those people’s lives Thatcher destroyed? Who cares about them? Those people who died long ago, or who have had so much grief and hardship all over the world because of her policies, ideology and rhetoric. Why aren’t they the focus?

This relates to this idea that we need to respect how she was a strong-willed character. I don’t think her being strong-willed will make anyone feel better in South Yorkshire or in Chile who suffered the abuse and torture of her regime. Hitler was strong-willed, that didn’t make anyone think he was a good person or cheer and ‘respect’ his legacy and achievements. Equally, I dislike this idea that just because she is a woman that we have to respect her determination and strong will and the fact she got to the top of a male dominated party as quite an ‘achievement’. And for what? Did she help women when she was attacking feminism and women’s rights? Did she care about women when she only ever had one female cabinet minister? Just because she is a woman doesn’t mean she cares about women’s rights and was a good thing for women.

Relating to the objection to Glenda Jackson’s fantastic speech in parliament when the MPs were wrongly called back, which has only happened 14 times in the last 32 years, with over three thousand pounds travel expenses to use – you can’t complain that people refer to what Thatcher did and believed when they are giving demanded ‘tributes’. The whole point of a tribute is to reflect on what someone did in their life, what they believed and what they wanted in life. All what Glenda Jackson said reflected this, and was right but the Tories just don’t want to hear it. If when I die I have lots of right wingers outside my funeral protesting, I’d know I had done something right in my life!

People have every right to protest, celebrate and be glad that Thatcher is dead. When someone has such horrific, nasty damaging views and helps enact so much grief and travesty onto people around the world through such controversial and hateful determination I can’t see why anyone has any objection to people breathing a sigh of relief. Such relief, is nothing compared to everything she ‘achieved’. What should be happening in a decent society is a whole-hearted criticism of Thatcherism, what it meant and did and its effects upon society now and how we are going to move away from it. Rather, we live in a society where we have an even worse government than Thatcher’s, who hate anyone that aren’t rich upper class white able-bodied men. We have to question how we live in such a society, with so much resources, knowledge and wisdom. We need to use this time to help destroy Thatcherism and its legacy today, whilst giving respect to your ordinary person who is neglected, abused and misrepresented in the mainstream media and in political debates more and more.

I’m telling [my daughter] all about the Thatcher legacy through her mother’s experience, not the media’s; especially how the Thatcher government directly supported Pinochet’s murderous regime, financially, via military support, even military training (which we know now, took place in Dundee University). Thousands of my people (and members of my family) were tortured and murdered under Pinochet’s regime—the fascist beast who was one of Thatcher’s closest allies and friend. So all you apologists/those offended [by my celebration]—you can take your moral high ground & shove it. YOU are the ones who don’t understand. Those of us celebrating are the ones who suffered deeply under her dictatorship and WE are the ones who cared. We are the ones who protested. We are the humanitarians who bothered to lift a finger to help all those who suffered under her regime. I am lifting a glass of champagne to mourn, to remember and to honour all the victims of her brutal regime, here AND abroad. And to all those heroes who gave a shit enough to try to do something about it. – A Chilean who experienced the oppression of Pinochet.

Ed Miliband and the importance of the real economy…

After watching Ed Miliband’s recent talk in Bedford, on how many are worried “we’ll never have it so good” and the related crisis of living standards, it got me thinking about how what he was saying relates to an analysis of the weak state of the real economy – especially after the extensive growth of the financial sector since the 70s/80s. Miliband argues that “economic recovery shall be made by the many, not just the few at the top”; which again for me relates to criticism of our highly leveraged financial sector and the increasing instability such a system has created especially since the 70s/80s onwards with floating currencies, transnational capital insecurity and the dominance of neoliberal globalisation ideology.

Ed Miliband referred to the failure of big businesses making it without working people. Such an argument relates to the critique of the creation of asset bubbles especially since the 70s/80s where credit, debt and consumption alongside increasing unemployment and decreasing wages accompanying a falling rate of profit actually undermines the economy and makes it more systematically unstable. After the housing bubble, some theorists find it hard to know what asset bubble is going to ensure the next round of financialisation and financial sector growth of a private sector already 450% in debt.

Private sector debt is neoliberal’s blind spot. There is ideological focus upon public sector debt, debt that historically is not that unprecedented and also in terms of the UK is comparatively small. This relates to the change of economic doctrines since the 70s/80s where restricting the supply of money to control inflation has become the accepted ideal and this has undermined chance and potential for Keynesian economics. Keynesian economics however, maintained a stable system after the 1940s and if the Bretton Woods System had been constructed more in line with Keynes’ views, such as his idea of an International Clearing Union and the Bancor, we wouldn’t have experienced the problems the dollar being the reserve currency has created.

Essentially, focusing on working people and our importance for social development and economic success relates to the significance of a strong real economy, and the need to bolster such an economy in the face of a financial market that has too much power over people’s lives and money. Ed Miliband refers to the idea of working people not only making products but also being able to buy the products they make that was central to successful eras of economic and industrial development: this relates to one of the central tenants of Fordism that was again undermined through the rise of neoliberalism and free markets in the 70s/80s as the non-unionised, service sector-based, low paid insecure jobs rose.

This was an encouraging talk regarding the state of the economy, the historical context alongside moving towards a new economic narrative that borrows from Keynesian economics and social democratic ideas. As neoliberalism is in a state of crisis, this narrative needs to be championed and furthered. The idea of a strong real economy, a scaled down financial sector and the many, not the few, controlling and benefiting from our economy and being rewarded for their work instead of it being sucked out to make bigger profits is essential. The need for new modes of organisation through more communal relations, the need for small organisations to be able to get access to credit given their importance for a changing economy and the need to stop speculative credit alongside the need for a living wage are all things that Miliband emphasised and all things we should be encouraging as a new economic narrative.

Learning disabilities and access to politics and current affairs…

I was asked by Jason Tucker to share United Response’s findings that illustrate the problems people experiencing learning disabilities can have in terms of accessing and understanding information about politics and current affairs. Furthermore, United Response have released Easy News, the first accessible newspaper for people with learning disabilities!

Below is an infographic that summarises their findings and shows what a great idea Easy News is.

Highlighting misconceptions with the EU In-Out Debate…

Cameron has finally given into the demands from his backbenchers and the growth of UKIP alongside feeding Euroscepticism ignorance within the UK by promising an in-out European referendum if the Tories get re-elected.

I’m not against referendums but voting on membership to the EU is stupid on two counts:1) There is so much ignorance, lies and misconceptions regarding the European Union and the Eurozone, which would only be intensified through right-wing media monopoly 2) The benefits far outweigh the negatives, and gambling with this through a vote is like a game of Russian Roulette.

http://www.guardian.co.uk/politics/2008/mar/05/eu

Both of these points relate to the differences between the European Union politically and the Eurozone and the related Stability and Growth Pact and the recent Fiscal Compact. The UK are not in the Eurozone and so are not really effected by the Stability and Growth Pact and the recent tightening of these measures by the Fiscal Compact, given that we have opted out of the Euro and probably will never join.

The measures shaping the Eurozone include:

• The Stability and Growth Pact (1998) was key to setting a debt limit of 60% of GDP and a deficit limit of 3% of GDP: “in general, the debt must be reduced by one twentieth each year. Countries which are already in the Excessive Deficit Procedure because of not meeting the 3% criterion are expected to work towards reducing their debt as well. They have a further three years to meet the 60% criterion after they have achieved the 3% criterion. At present, 23 of the 27 member states of the EU, including Ireland, are in the Excessive Deficit Procedure. Ireland has until 2015 to meet the deficit requirement of 3% of GDP. (In 2012, the target is 8.6% of GDP.) Ireland has until 2018 to meet the debt requirement.”
• Stability and Growth Pact was reformed in 2011 through the ‘Six Pact’ extending surveillance to macroeconomic imbalances where the potential for intervention to promotion liberalisation was intensified through supposed indicators of imbalance used to justify ‘reform’. The 2011 reform also increased pressure of financial sanctions on Eurozone countries.
• The root cause of the current Eurozone austerity measures is the Stability and Growth Pact, not the Fiscal Compact.
• The Fiscal Compact extends these conditions so “they further commit to pass a national law or an amendment of the national constitution that limits the structural budget deficit to 0.5% of GDP…For countries with a debt-to-GDP ratio “significantly below 60% of GDP”, the structural budget deficit may be as high as 1% of GDP.” The European Court of Justice can fine offending countries

This is also related to the European Banking Union proposals and development to regulate Eurozone banks and again the UK is not directly effected given its formal opt out from the Euro. However, despite the differences between the European Union and the Eurozone, Cameron utilises the Eurozone crisis and associated fiscal restraints as a way to support his move towards potential European exit for the UK:

Third, there is a growing frustration that the EU is seen as something that is done to people rather than acting on their behalf. And this is being intensified by the very solutions required to resolve the economic problems. People are increasingly frustrated that decisions taken further and further away from them mean their living standards are slashed through enforced austerity or their taxes are used to bail out governments on the other side of the continent.We are starting to see this in the demonstrations on the streets of Athens, Madrid and Rome. We are seeing it in the parliaments of Berlin, Helsinki and the Hague. And yes, of course, we are seeing this frustration with the EU very dramatically here in the United Kingdom.

Other parties, including the Greens, have supported the referendum with a similar conflation of the EU and the Eurozone, as shown by the following quote from Natalie Bennett’s recent article on the matter:

So yes for change in Europe – but to a kind of Europe that isn’t a giant institution, bearing down on peoples and nations from above (as it has born down particularly oppressively on the Greeks).

It isn’t Europe as an institution, it is specifically the Eurozone with the related Stability and Growth Pact and the Fiscal Compact effecting countries such as Greece, which this referendum will have nothing to do with given we are not a part of the Eurozone or these related conditions.

The UK has only contributed relatively little to the IMF led European bailouts and has nothing to do with the European Stability Mechanism which is the new permanent rescue fund for the Eurozone countries and future Eurozone bailouts. If the UK cared so much about their money being used to promote austerity why are they committing so much of their own funds to austerity within the UK? Let’s also remember that Cameron’s problem is with legislation such as the Working Time Directive – which we already have a partial opt-out from – that “imposes employment rules such as limiting the working week and giving EU workers a minimum number of holidays each year.” Hardly caring about living standards.

Again, this is another victory for a government that is becoming an ever-increasing specialist in PR. If it isn’t turning a private debt and financial sector crisis into a public debt ‘crisis’ where the public sector, welfare claimants and social services pay for risky and speculative behaviours of the financial crooks, then it is the utilisation of the democratic deficit within the Eurozone – that the UK are not members of – to justify potential exit from the European political union.

Even if we were members of the Eurozone, given the UK’s commitment to austerity and neoliberal measures, we would hardly be able to criticise the austerity measures as Cameron has. Even the IMF have warned the UK about its austerity approach and its need to consider Plan B. The government isn’t listening though, as it harks on about the ‘global race‘. Sure, we should be very critical of it happening in countries such as Greece and Spain, but it can hardly be referred to as a justification for having a vote on European membership given how engrained austerity is within our own country because of them.

So what benefits does Europe bring for the UK?

Many. Yes, there is need for democratic reform to European structures, as there is reform needed to local democracy in the UK, parliamentary structures and electoral systems. But even contemplating leaving Europe with ever-increasing regionalisation doesn’t make logistic sense, and will see the UK become increasingly isolated.

For information regarding the benefits of EU membership have a look at the following links:

http://www.euromove.org.uk/index.php?id=15296

http://tinyurl.com/b4fzhnj

http://www.bbc.co.uk/news/world-europe-20412306

http://www.liberty-human-rights.org.uk/human-rights/human-rights/the-human-rights-act/index.php

Crucial benefits include:

• “Critically, being a member of the EU, the UK is part of the procedure for making the rules and regulations of the single market.  Britain’s seat on the Council of Ministers is essential to enable the UK to put its case on proposed regulations and to argue for reform of existing rules.  Our MEPs in the European Parliament are also important because most of the decisions of the EU require the Parliament’s involvement.  Were the UK to leave the EU but join the European Economic Area (assuming we were admitted to the EEA), we would be bound by most single market rules but have no part in the decision-making process.”
• “The EU Health Insurance Card is a free card which enables EU citizens to receive emergency healthcare on the same terms as the citizens of the EU country they are visiting (often free).”
• “In addition to being able to live where they choose in the EU, pensioners can receive their UK state pension wherever they live in the EU.”
• “The European Arrest Warrant (EAW) has been very important in bringing criminals to justice across Member State borders, preventing the long delays and sometimes politicised extradition processes seen in the recent past.”
• “One of the EU’s most popular programmes is the university mobility scheme ERASMUS, which enables students and staff to study or work at another higher education institution in the EU.  Over 7,000 British students went universities elsewhere in the EU in 2008/09 and 16,000 students from other EU countries came to the UK in the same year”
• “Research and development is a growing area of EU activity with substantial sums now spent on collaborative and cross-border research projects.  The UK has been particularly successful in winning research grants from the EU – €2.3 billion between 2002 and 2006.”
• “Only 6.8% of UK primary legislation and 14.1% of secondary legislation have anything to do with implementing EU obligations – not EU diktats – agreed to, approved of and signed off by UK officials.”
• Laws such as the European Convention on Human Rights.

If an EU referendum does present itself, we have to highlight the misconceptions, lies and myths circulated regarding the EU and the differences to the Eurozone alongside the real benefits being a member of the EU brings. There already is a sovereignty lock in place where any more transfer of ‘power’ from the UK to the EU will be voted on, taking things to a new level of whether we are even a member of the EU is ill-conceived and not based on logic of the real benefits such membership brings.

What we need to do is campaign against the increasingly neoliberal Eurozone but given we are not a member and given our own austerity measures, this isn’t easy. This is where the real work needs to take place. It is dealing with the Eurozone crisis, something we are not engaged in, that threatens the UK.

David Cameron has even boasted that a two-tier European Union will not undermine the UK after opting out of the banking union, saying:

What you’ll see is a growth of this multi-faceted Europe and I don’t think it’s something we should be frightened of at all, I think we should be very confident.

Similarly, Osborne said that it was “a good deal for Britain and a good deal for Europe.” With the expected treaty change required for increased Eurozone integration, this is where David Cameron hopes to change things. He doesn’t intend to attack the Eurozone, rather he hopes to claw back progressive environment, social and employment legislation. So even if people argue that leaving the EU helps against the creation of a two-tier system, this is something the Tories have claimed to have prevented already. Importantly, the issues have to be clear and conflation of key terms and debates have to stop whatever happens.

The links between financialization and relativism…

As one of my New Year resolutions that I actually hope to keep, I am aiming to increase the frequency and regularity of my blogging!

In the 1940s, the Bretton Woods system developed as countries attempted to regulate international finance after the problems the Great Depression and laissez-faire economics had caused the international system. However, since the 1970s after the Nixon Shock, there was the growth of high risk finance and deregulated markets that coincided with the rise of neoliberal ideology that has the strategic aim of furthering the capitalist project.

Free-flowing capital gained dominance as capital controls were reduced and removed, deregulation accelerated, and profit for the rich increased as social welfare and safety nets were removed, debt – especially private debt (including financial debt and household debt) – and credit cards grew so that capitalism and the markets could expand more and more. The system has grown increasingly more unsustainable as the bailouts of the financial sector rose in the 1980s onwards, especially, alongside getting bigger and bigger with the recent crisis resulting in a £1.5 trillion bank bailout in the UK alone!

This expansion of capitalism relates to the growth of an individualism logic that emphasises consumption, consumerism and false needs where people are told they ‘need’ things for their identity to be complete. They ‘need’ to consume things to feel ‘whole’. This is especially key for the rise of private debt to be enough to sustain the high leveraged finance sector. What develops is a culture of disposability, where part-time flexible, low-paid, long hour jobs increase – with the promotion of a ‘dog eat dog’ world where everyone is out for themselves and anyone on benefits is deemed a ‘scrounger’. This climate of fear is responsible for approximately 1.8 million not applying for benefits when they are entitled to.

The growth of individualism relates to the increasing primacy of individual ‘freedom’ over equality, something I discussed in my dissertation with reference to the work of John Rawls:

In trying to construct a morally just social order Rawls advocates a ‘justice of fairness’, where operating behind a ‘veil of ignorance’, representatives of citizens take part in an ‘original position’ (thought experiment) to construct a social contract where fairness/equality prevails as the representatives are unaware of the specific characteristics of those they represent. Two essential principles guide Rawls’s theory; firstly, the principle that everyone should have maximum liberty without impeding upon others; and secondly, social and economic goods are easily accessed and to the advantage of everyone. However, Rawls puts the first before the second.

For me, these sociopolitical and related ideational changes relate to the development of post modernist and relativist views that argue everyone is right and wrong, just with different starting points. This argument relates to this conception of letting everyone do what they want because everyone’s argument is right and wrong and so respect for absolutes are diluted. I faced this argument a lot recently in regards to my support and commitment to veganism, where absolute truths of respect for life, fairness, compassion and morality are diluted and people use the argument “live and let live” to ironically justify the murder of approximately 58 billion animals a year through meat, egg and dairy production. Jay Baker will be challenging some of these issues soon in a vlog, and Jay and I will be tackling them again in a vegan focused podcast for the Break-In Project.

For me, there are some things that are just wrong. Torturing, murdering and eating dead animals and their produce, for me, is wrong. Creating a culture of stigma where people don’t want to claim for benefits because they feel that they are a ‘scrounger’, is wrong. Promoting individual freedom over respect for equality, for me is, wrong. The finance market expanding more and more, as the system grows through indebtedness whilst people lose their jobs, have their wages cut and can’t afford to meet basic needs whilst the 1% get richer, is wrong. There is no relativist get out of jail card here. It’s wrong.

The relativist argument is a capitalist dream. There is nothing wrong with other people having different opinions, I have argued in favour of providing groups and parties such as the BNP a platform to show the real ignorance underlying their political views. But, using the relativist argument of ‘everyone is entitled to do what they want’ without defending your position is an easy way out of saying I am not prepared to let my views and values be challenged by any new information. That’s why the vegan argument gets so many people’s back up. It is a question of lifestyle, people often don’t want to think about this too much and cast any evidence to the contra as ‘biased’ or ‘unscientific’.

Whatever your opinion on veganism is, the point is relativism has no place in progressive politics that strives for real change. It’s a nice academic tool, but not one based in a political project that has fundamental truths about what is right and wrong and what needs to change.

Terrorism, State Terrorism and Political Economy…

Israel continue to attack and oppress Palestine as international superpowers stand back and watch. We see Greece being given – eventually – another tranche Troika loan with the ‘success’ of this austerity driven bailout being measured by the positive market responses, not the thousands of people who are paying for a short-term capital expansion promoted by Northern European and powerful banks that ‘helped’ Greece through measures such as currency swaps to hide the true nature of their debt so they could get access to cheap and fast credit.

The GIPS countries – Greece, Ireland, Portugal and Spain – all suffered from this mentality of short-term, private credit driven investment. But it is ordinary people paying the price, especially since the 1970s as the Bretton Woods System collapsed, exchange rates became more volatile and private credit spiraled out of control but rescued by controversial damaging IMF bailouts in places such as East Asia (1997/8) and Argentina (2001). Spain are currently restructuring their banking system after being exposed to such effects, but here we see the idea of a bail in – where private creditors take responsibility before taxpayers pay for the irresponsible investments – utilised so it is ordinary people picking up the bill again!

Given this, it is interesting to consider the idea of what terrorism is. As we discussed in a recent university seminar, terrorism refers to actions and practices that are designed to create fear, with a clear political aim often utilising violence. Judged on this basis, then, what Isreal are doing to Palestine is state terrorism – but the media focuses on Hamas as terrorists and Israel’s actions as self-defense. It’s as much self-defense as Bush utilising the Resolution 1368 after 9/11 to invade Afghanistan.

Then, we look at international organisations such as the IMF (largely controlled by the US), regional organisations such as Europe in terms of the Eurozone (dominated by Germany) and specifically the Troika (European Commission, European Central Bank and IMF) and then national states such as the UK’s slash and burn approach to ‘solving’ the economic crisis – the neoliberal shock doctrine is in place across the globe and this is by definition state terrorism as it has a clear political aim and ideology behind it, creating fear and also utilising force – both directly like the police and indirectly such as Germany or the IMF threatening to not pay loans if conditions aren’t met – to ram through the prescribed changes and hardship to ordinary people.

Robert Pape has conducted some influential research into how geographical factors and foreign interference are key to creating terrorist responses and organisations.

Some of the key points to take from the video include:

• 95% of suicide terrorist attacks around the world have strategic objectives of trying to drive a state’s combat forces out of their territory, of which the terrorist considers their homeland. Territory, not religion, is key. For instance, when Israel invaded Lebanon in June 1982 Hezbollah did not exist, but one month later Hezbollah formed.
• He studied data of 71 individuals who killed themselves carrying out attacks for Osama Bin Laden. The largest number, 34, came from Saudi Arabia and a large majority from the Arabian Peninsula where the US first began to station combat forces in 1990. 1990 was the watershed year in combat deployment in Arabian Peninsula – most before were advisors. Al-Qaeda attacks started in 1995.
• The main cause of secular and religious suicide terrorism is foreign occupation!

Essentially, it is key to question what terrorism means and how political economy is central to this definition and the consequences of this. Political economy and historical oppression is central to the creation of terrorist responses say in terms of Rwanda after years of colonial divide and rule or say in terms of our role in the Palestine-Israel affair and the continual role we have in maintaining these divisions. Most state and financial terrorism is however seen as legitimate use of power and authority. But as the old saying goes: one person’s freedom fighter is another person’s terrorist.