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The Reckoning Begins

Published on January 7, 2012 in News. 0 Comments

Michael Moran, Slate.com

America’s insularity knows no bounds. This is a paradoxical statement, of course, but it’s an apt way to describe America’s current debate about “our future,” and not a bad way to view Washington’s strained efforts to grapple with an economy wounded by two decades of economic Puritanism. As grand as the rhetoric may be, politicians in the United States remain incapable of looking beyond the next election—this goes for the haughty Democrat in the White House and goes double for the Republican opposition. The fact is, airy-fairy optimism still sells on the campaign trail, particularly when the day-to-day reality of the average American is so difficult. Christian, agnostic, Jew, Muslim, or otherwise, we’re a country of people constantly seeking redemption, and we’re suckers for a smooth-talking messiah.

Not this time. At the risk of breaking the hearts that throb for Rick Perry, Mitt Romney or Barack Obama, they cannot deliver us from the future. Thanks to a catastrophic series of decisions by presidents of both parties that radically deregulated our financial system and arrogantly dismissed the “lessons of Vietnam” as dusty, irrelevant history, the United States has shortened the period during which it will remain the dominant power in the 21^st century. I know, I know, all the presidential candidates say we’re still the best! And so we are, in almost every economic and military measure. But measurements of power are like the altimeter of an aircraft: It’s not the altitude that matters, it’s the trajectory, and by now most Americans finally understand that Captain America is trending downward.

Destiny is a big, pretentious concept. Yet today, most Americans understand what their politicians refuse to concede—at least publicly: We’ve lost control of our destiny. Globalization, the fairy dust proffered by everyone from Ronald Reagan to Bill Clinton to Thomas Friedman, turns out to have some significant downside risks. Many Americans have heard of globalization at this point, and many have very particular opinions of it—normally associated with negatives like offshoring, immigration or, perhaps, the complex risks of modern markets. But few really understand its implications. Thus the continued use by vacuous news networks of the term “nationally televised address,” or the absurd assumption that our economic fate rests in our own hands. The world today—a world largely forged by American economic and foreign policy prejudices during the 20^th century—now has profound influence on our future. Every word a president says in those Oval Office broadcasts these days resonates not just in the cozy “focus groups” in Iowa but also in the offices of the China Investment Corporation and sovereign wealth funds from Qatar to Japan to Russia who hold giant slices of our national debt. Like it or not, they have real leverage now, and evidence and history suggests they will eventually use it.

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Image via Slate.com

Twilight of the Fossils

Published on January 3, 2012 in News. 0 Comments

Benjamin Kunkel, N+1 Magazine

This piece first appeared in Occupy!, an OWS-Inspired Gazette, now available for free in print and online.

Unable to imagine the past except in the form of costume dramas or to think of the future except in terms of far-off collapse, our era has suffered from a blocked political imagination. For twenty years we flattered or rued our condition as the end of history. But present-day civilization reflects arrangements exceptional in human history—and perhaps equally fragile. It is characterized in particular by an unprecedented dominance of fossilized labor (or capital) over living labor, and of fossil energy—oil, coal, and natural gas—over living energy. This reign of the fossils must and will end. Two special conditions that we’ve taken for granted are not long for this world: an ever-growing supply of fossil fuel and other non-renewable resources, and endless economic growth.

The words ecology and economy share a root in oikos, Greek for household. This suggests the concerns they name must ultimately coincide: the establishment and maintenance of the human residence on earth. Yet economics and ecology are rarely taken seriously at the same time, and official opinion usually denies that a crisis exists in either sphere. Few professional economists and no prominent politicians will concede what was obvious to the classical economists: namely, that economic growth would eventually terminate in what John Stuart Mill called a “stationary state.” Mill and Adam Smith focused on limits to the division of labor: subdividing economic activity could only bring about productivity gains up to a point. More recent analysts have worried about the exhaustion of natural resources (as in the Club of Rome’s famous 1972 report, The Limits to Growth and much literature since), or about the preponderance of services, such as health and education, over industry and agriculture in contemporary capitalism. As an IMF working paper from 1997 argued, industry and agriculture are, for technical reasons, susceptible to productivity improvements that the service sector can never enjoy to the same extent: manufacturing or farming can become more efficient in a way that nursing or teaching, for example, cannot.

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Image: www.thesolarvillage.com via N+1 Magazine

Seeking to avoid a mid-life crisis

Published on December 28, 2011 in News. 0 Comments

From The Economist

INDIA’S technology firms are no longer spring chickens. Infosys had its 30th birthday this year and its lead founder retired, hailed as a visionary by his colleagues and celebrated as the man who kick-started the country’s first world-class industry. Yet judged by their share prices of late, the three big firms, TCS, Infosys and Wipro, are still giddy, uncertain things. Last month TCS’s shares, which had swaggered earlier in the year, slumped as it posted disappointing quarterly figures. Wipro’s shares are well down on the year and this week’s news of quarterly profits little changed from a year ago sent them a bit lower still.

The volatility partly reflects investors’ fears of a depression in the rich world, where the three make the bulk of their money. But it is also a symptom of mild paranoia about whether these firms can in their dotage still deliver perky growth. The worry is that they might go the way of Nokia: for years the Finnish handset firm maintained high margins, in defiance of its many doubters. Then, suddenly, the naysayers were proved right.

Regarding the slump in rich economies, the recent past does offer a chilly precedent. During the Wall Street crisis in mid-2009 the IT firms’ revenue growth slowed almost to zero as customers, especially financial ones, slashed spending. But activity bounced back smartly (see chart) as clients recovered their nerve and redoubled efforts to cut costs through outsourcing and reorganising their back offices.

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Photo via The Economist

How We Were All Misled

Published on December 20, 2011 in News. 0 Comments

John Lanchester, The New York Review of Books

Boomerang: Travels in the New Third World
by Michael Lewis
Norton, 213 pp., $25.95

Most people with a special interest in the events of the credit crunch and the Great Recession that followed it have a private benchmark for the excesses that led up to the crash. These benchmarks are a rule of thumb, a rough measure of how far out of control things got; they are phenomena that at the time seemed normal but that in retrospect were a brightly flashing warning light. I came across mine in Iceland, talking to a waitress in a café in the summer of 2009, about eight months after the króna collapsed and the whole country effectively went bankrupt under the debts incurred by its overextended banks. I asked her what had changed about her life since the crash.

“Well,” she said, “if I’m going to spend some time with friends at the weekend we go camping in the countryside.”

“How is that different from what you did before?” I asked.

“We used to take a plane to Milan and go shopping on the via Linate.”

Since that conversation, I’ve privately graded transparently absurd pre-crunch phenomena on a scale from 0 to 10, with 0 being complete financial prudence, and 10 being a Reykjavik waitress thinking it normal to be able to afford weekend shopping trips to Milan.

Many people all over the world went nuts on cheap credit in the years of the boom—a boom that was in large part built on an unsustainable spike in personal and governmental debt. Michael Lewis has already written a very good book, The Big Short, about the mechanics of the crash, by casting around for people who didn’t just foresee it, but who made huge bets that it would happen, and profited vastly when it did.¹

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Why Only Germany Can Fix the Euro

Published on December 12, 2011 in News. 0 Comments

Matthias Matthijs and Mark Blyth, Foreign Affairs

“Never did a ship founder with a captain and a crew more ignorant of the reasons for its misfortune or more impotent to do anything about it.” This was Eric Hobsbawm’s damning judgment of the policy elite’s response to the Great Depression. As these leaders reached for the old truisms of balancing budgets, lowering tariffs, and restoring the gold standard, they merely worsened the crisis. The same judgment may soon be passed on Germany for its role in the ongoing European sovereign debt saga.

After watching the economies of Greece, Ireland, and Portugal founder, the world has now turned its attention to Italy, home to the world’s eighth-largest national economy and third-largest sovereign bond market. The diagnosis is sadly redolent: Europe should deflate its way to growth by sticking with a gold standard of sorts: the hard-money German-dominated euro. Meanwhile, under enormous international pressure, the Greeks replaced socialist Prime Minister George Papandreou with Lucas Papademos, a former official of the European Central Bank, and the Italians placed economist and former European Commissioner Mario Monti, hailed “super Mario,” in the stead of Silvio Berlusconi. Yet despite the EU’s coup d’état, the yield on ten year Italian debt went back above seven percent within twenty-four hours of Monti showing up for work.

It is more than ironic that those two foundational Western civilizations — the Greeks and the Romans — who were among the very first to experiment with democracy, now have to let unelected Eurocrats run their economic affairs. There is even a whiff of the 1930s here, too, as weak democrats are pushed aside in favor of strong leaders at the behest of international creditors. As Hobsbawm noted, this did not end well last time.

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Image via ForeignAffairs.com

The Agony and Ecstasy—and ‘Disgrace’—of Steve Jobs

Published on December 4, 2011 in News. 0 Comments

Eric Alterman, The Nation

We live in a media world simultaneously obsessed with technology and personality, and so it was hardly surprising that when Steve Jobs succumbed to cancer, the coverage of his life would focus, alternately, on his incredible accomplishments in the former category together with his apparent shortcomings in the latter. Yes, Jobs was a genius and also an SOB. This is hardly unusual when it comes to geniuses. In Jobs’s case, his boorish behavior makes for an interesting biography, courtesy of Walter Isaacson, but it’s not really an issue for the rest of us.

Far more significant are the societal roles Jobs played. And here, despite the myriad ways his companies improved our lives, Jobs was a hero only in the Ayn Randian sense. A living, breathing character out of Atlas Shrugged, he treated the people who actually manufacture Apple products like serfs and hoarded his $8.3 billion fortune to no apparent purpose.

Apple is a wonderful company for its customers and investors. So, too, Pixar. (NeXT, not so much…) But Apple is also an engine of misery for its subcontracted Chinese workers. That this story went largely unreported during Jobs’s life is a testament to how enthralled our media are by the myth of the man’s talismanic qualities, and how easily manipulated most reporters are by wealthy, successful entrepreneurs. But it is also a testament to how little the lives of laborers appear to count anymore. It fell to the monologist Mike Daisey, who created and stars in the brilliant one-man show The Agony and the Ecstasy of Steve Jobs, now at the Public Theater in New York City, to force this issue into public consciousness. Daisey traveled to the Foxconn plant in Shenzhen, China, which employs 420,000 people to manufacture products for Apple and other electronics and computer companies, to talk with the workers (unlike the Wired magazine reporter who, Daisey scathingly notes, penned a 3,300-word cover story on the plant without speaking to a single worker). Daisey’s mission was risky—a photographer was recently beaten up by the company’s guards—but he was determined, having heard about abuses at Foxconn. There, thirty-four-hour shifts, beatings, child labor, an epidemic of suicides and a general prison-camp atmosphere prevailed, and even yawning could get your (meager) pay docked. He met one worker whose hand had been “permanently curled into a claw from being smashed in a metal press at Foxconn, where he worked assembling Apple laptops and iPads.” When Daisey showed the man his iPad, it was the first time he had ever seen one turned on. He thought it was “magic.”

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Putin’s Rasputin

Published on November 28, 2011 in News. 0 Comments

By Peter Pomerantsev, London Review of Books

The next act of Russian history is about to begin: Putin and Medvedev will pop off-stage into the Moscow green room, switch costumes, and re-emerge to play each other’s roles. Putin as president, again, Medvedev as PM. It’s the apotheosis of what has become known as ‘managed democracy’, and the ultimate triumph of the show’s writer-director, Putin’s chief ideologue and grey cardinal, Vladislav Surkov, the ‘Kremlin demiurge’. Known also as the ‘puppetmaster who privatised the Russian political system’, Surkov is the real genius of the Putin era. Understand him and you understand not only contemporary Russia but a new type of power politics, a breed of authoritarianism far subtler than the 20th-century strains.

There is something cherubic in Surkov’s soft, smooth face, something demonic in his stare. He trained as a theatre director then became a PR man; now his official role is ‘vice-head of the presidential administration’, but his influence over Russian politics is unsurpassed. He is the man behind the concept of ‘sovereign democracy’, in which democratic institutions are maintained without any democratic freedoms, the man who has turned television into a kitsch Putin-worshipping propaganda machine and launched pro-Kremlin youth groups happy to compare themselves to the Hitler Youth, to beat up foreigners and opposition journalists, and burn ‘unpatriotic’ books on Red Square. But this is only half the story.

In his spare time Surkov writes essays on conceptual art and lyrics for rock groups. He’s an aficionado of gangsta rap: there’s a picture of Tupac on his desk, next to the picture of Putin. And he is the alleged author of a bestselling novel, Almost Zero. ‘Alleged’ because the novel was published (in 2009) under the pseudonym Natan Dubovitsky – Surkov’s wife is called Natalya Dubovitskaya. Officially Surkov is the author of the preface, where he denies being the author of the novel, then makes a point of contradicting himself: ‘The author of this novel is an unoriginal Hamlet-obsessed hack’; later, ‘this is the best book I have ever read.’ In interviews he has come close to admitting to being the author while always pulling back from a complete confession. Whether or not he actually wrote every word of it he has gone out of his way to associate himself with it.

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Image: www.kremlin.ru

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