What makes us free

In these happy days when one can almost believe that the Murdoch empire is finally in retreat, I come across a splendid quotation, almost two centuries old, that tells us a lot about the way we liberate ourselves from his ilk - and from other over-weaning corporate egos and the under-achieving politicians who play at representing us. It's from the radical journal Black Dwarf in 1817:

States must either proceed, or retrograde. While we contented ourselves with boasting of our advance, we have been silently, but rapidly falling back... The people ought to remember that they are the guardians of the constitution. Instead of that the simpletons expect protection from the constitution; which is in fact nothing but the recorded merits of our ancestors. The country that boasted of being free, because Magna Carta was enacted; when the least share of penetration would have taught us, that Magna Carta was enacted only because our ancestors were determined to be free. Our ancestors, with swords in their hands, and the tyrant John on his knees before them, would have been just as free, whether they had insisted on the signature of Magna Carta, or not. Their freedom was in their power, and in their will.

The author was Thomas Wooler (1786-1853). His words are quoted by Edward Vallance at the very conclusion of his Radical History of Britain.

Electoral reform after AV - What next?

I don’t know who will win the referendum next week - I hope it’s the Yes campaign - but whoever it is, we will still be a long way from a credibly democratic electoral system. To take only a few of the more grotesque blots on the face of our ‘democracy’, we cannot recall our representatives once they are elected. As the current government is constantly proving, there is no recourse against a regime that introduces major policies for which they have no mandate.

And of course we still have that running sore on the face of democracy, the House of Lords. No, it makes no sense to claim that they have some sort of proven wisdom or experience we cannot do without: any government that really wanted Melvyn Bragg’s opinion of culture or the arts can always just ask him, without conceding him the right to make law in perpetuity.

A slightly more obscure issue, but one that really bothers me, is the fact that our elections permit us to elect constituency representatives, even though it has been perfectly clear for a couple of centuries that most of the really important decisions are made by central government. Hence the persistent conflict between voting for a good MP and voting for the national government we actually want. They are not at all the same thing, and persisting with a constituency-based electoral system means that we half our local MPs are parachuted in by national parties even though they know nothing about the constituency and their primary allegiance is to the national party. Conversely, to the extent that we do vote on local issues, this precludes voting for the national government, which is by far the predominant force in most aspect of all our lives.

It is an absurd state of affairs that could be remedied with a very simple solution: divide general elections into two votes (held simultaneously), with the first remaining a vote for local constituency MP, and the second a vote for a national party. The second vote would then populate a senate (to replace the ridiculous and offensive House of Lords) by allowing national parties to assign senators based on their percentage of the national vote.

The new Commons and Senate could also be allocated different spheres, with foreign policy and defence going to the Senate and all local issues being the preserve of the Commons. Others areas could be shared.

Finally, I would suggest a different approach to how often elections are held. For both houses I would suggest a fixed period of six years, with the provision that a third of each house, chosen at random not more than a month before the election, would be subject to re-election every two years. This is important, as it permits a randomly chosen sample of the electorate to provide a running commentary on their representatives, but also, by being random, prevents the parties from buttering up local constituencies as the election approaches.

Our heroic bankers take on the evil dictators

According to the March 2011 edition of Private Banker International, 'at least $235 billion of illegal assets are held in offshore accounts opened by the wealthy, including those taking advantage of their government positions in the Middle East and North Africa. That is equivalent to 15 percent of the total $1.5 trillion held offshore by individuals from Arab and African states…', as 'over past decades these regimes have grown an entire ruling class consisting of family, friends, businesses, security forces and secret service that have transferred significant wealth out of their home countries.'

Bizarrely, the same article (aptly entitled 'Private banking’s ticking bomb'), having noted that 'The family of deposed Egyptian president Hosni Mubarak is estimated to have as much as $70 billion of assets. Tunisia’s ex-president Ben Ali is said to have up to $10 billion and Libyan leader Muammar Gadaffi and his family have an estimated $20 billion offshore', suggests that 'One big problem comes from trying to assess which assets originating from the region are legitimate and which are suspect'.

Really? How could any of these groups conceivably have acquired such staggering sums by legal means?

Equally bizarrely, a leading baker is quoted as saying that 'Your private bankers should be close enough to their clients to have alarm bells start to ring if what they are being offered, say £5 million, looks unusual in size and timing”. Well, they scored well on that one too: what 'timing' could possibly explain away wealth on such a gargantuan scale? Gadaffi has been in power for 42 years so, with $20 billion between them, his family must have deposited an average of $500,000,000 each year for decades on end. That’s the £5 million deposit our eager banker suggests might be a tell-tale sign of corrupt dealing every 5 days. But only when the people of Libya say that enough is enough do the Gadaffis' bankers wonder whether there might be something doubtful about this.

So when the previous article in the same journal celebrates how heroically Swiss bankers shut down the tyrants' assets in record time, we are entitled to ask, how did you manage not to notice the staggering scale of looting while it was happening?

Incidentally, the reported figures surely understate the problem. As reported, the amounts stolen by Ben Ali, Mubarak and the Gadaffis come to $100 billion. If the total of illegal assets is only $235 billion, then these three groups account for 40% of the total. Surely that cannot be correct - not with all the other dictators, their families and their cronies, all the corrupt generals and arms dealers, and all the rest. What if this little groups represents only 5% of the whole - which I find quite believable, given the nature of these regimes - then the offshore stolen money comes to $2 trillion - that’s $2,000,000,000,000, or a little under $6,000 for every single Arab man, woman and child.

Perhaps our upright bankers can redeem themselves a little and tell us how much Mugabe and his grubby pals have stashed away? Or exactly how many of the 400,000 millionaires in the Middle East and North Africa did not acquire their riches by raping their countries? Given that 'Banks in Europe, the US, Switzerland and most other developed countries have to do background checks on so-called PEPs (politically exposed persons)', they surely know more than they are telling.

Conversely, what do they plan doing about it? Or do they just smugly assume that the new regimes will be as corrupt as their predecessors and be happy to let bygones be bygones? Perhaps the millions of poor in Arab countries can help them make up their minds, or at the very least make sure they not only get the money back but also demand that these shabby crooks (and no, I don't mean the dictators this time) are made to pay for the part they played in robbing some of the poorest people on earth.

National budgets and global economies

George Osborne delivers his first budget and insists that it is fair. I’m not sure what he means by this, but it is hard to see how it can be. Regardless of what Mr Osborne wants, he simply lacks the political levers needed to control the economy or to decide who bears the burden of the recovery. Of the three key controls, he has access to (and by no means full control over) just one: the UK public sector, including the livelihoods of millions who not only did not cause this recession but also are the main victims.

As for the other two areas - the private sector and the global economy - what can he say? But, being a mainstream politician who therefore cannot confess that the social system he works in is profoundly dysfunctional, he has no power over the UK private sector, especially the banks. I know from my one personal experience that the banks are doing very well at the moment, thank you, and despite a piffling bank tax, will do even better in future. But George cannot do anything about them, because they are his mates in the City – not exactly the Tories’ targets of choice - and because faith in the beneficence of untrammeled markets and big business is in the very the bedrock of Tory thought. Indeed, I suspect that most Tories cannot imagine what taking the City to task would even mean (and I doubt that many Labour or Liberal politicians would do any better).

But even that is a relatively small problem. The real reason why the private sector is free from political action is not that it is sacrosanct but that it invulnerable. Capital will simply go somewhere else. The reason it is free to do this is not that this is some sort of natural phenomenon – the mysterious workings of the market – but because we lack a political system with the span of control, the competence and the willingness to take action on a global scale. There are no true global or inter-governmental political institutions, and such economic institutions as do exist at that level – the WTO, IMF, etc. – have effective power only over the weak (and therefore, like the poor in this country, the very people who require support, not budget cuts), and remain committed to the market ideology that got us into this mess in the first place.

At the moment this gap can be filled only when the politicians of all the major economies can agree on a common policy. But that is extremely unlikely, because the very mobility of capital that allows banks and others to flout local economic controls also creates a bidding war between struggling national economies that forces national politicians to make their own economies as attractive as possible to global capital.

Tough luck, George. But you can do something about it. You can start to admit that the global economy requires direction, not only to escape from the present recession but also avoid future problems with the environment, with global development, and so on. Secondly, you can agree that that direction must be active - not just ‘market forces’ and more than regulation but positive organisation (or at least active alignment) of its basic forces with the world’s basic needs. And finally, you can start to campaign for the truly global political system, without which any aspirations to a coherent economic system are completely forlorn.

You won’t, of course, and neither will your Liberal or Labour counterparts. Because you are, after all, a mainstream politician for whom the present system is so all-encompassing that you cannot even imagine what it is. Asking you to grasp the nature of global society is like asking a fish to point at the sea it is swimming in – obviously everywhere, but so pervasive that it cannot be conceived by any run-of-the-mill fish like you. So we all limp along, with little hope for anything but the weasel words of a well-intentioned bloke who is unable to solve the problem he is confronted with, but too immodest to concede that there is nothing he can - or will - do.

Margaret Thatcher – a re-evaluation

Driving home this morning I catch Woman’s Hour, the excellent Radio 4 programme, where they are conducting a balloon debate. The question is, ‘Who has done the most to put women on the political map in the UK?’, and the four individuals in the balloon are Mary Wollstonecraft (author in 1792 of the Vindication of the Rights of Women), Emmeline Pankhurst (the great heroine of suffragette activism), Barbara Castle (who gave British women the Equal Pay Act and ensured that the contraceptive pill would be readily available for all – perhaps the two most important changes to women’s position in a century), and finally Margaret Thatcher, Britain’s only woman prime minister.

By an overwhelming majority and to the audience’s obvious delight, Margret Thatcher is the first to be tossed out. And I think, a good thing too – it is just a pity we did not have such simple, practical solutions to her presence when she was PM. She had the unique knack of correctly identifying every important political problem the country faced, and then choosing a solution that actually made things worse. Her period in office began with her quickly becoming the most unpopular PM in British history, and ended with the British middle classes rioting in the streets of London about her wretched poll tax. By the time she was finally ejected from office (by her own party), I could no longer listen to her voice without feeling something between enraged and physically sick. Had it not been for the Falklands War, she would have been out on her ear in one of the shortest premierships ever recorded.

I must admit that the Falklands was the one subject on which I actually agreed with Thatcher. Only the worst charlatan or the greatest fool could imagine that handing over 1400 innocent people to the truly vicious Argentine military dictatorship could possibly be justified by either an 18th-century treaty with Spain or the desire to harm her government by any means possible.

Nowadays, however, I find myself increasingly agreeing with another of her ideas – and in this case, perhaps as central an idea to Thatcherism as there ever was. Am I undergoing a conversion?

The idea in question is Thatcher’s notorious dictum that there is no such thing as society. Or, more fully:

there is no such thing as society. There are individual men and women, and there are families. [Interview 23 September 1987]

At the time I had quite grand ideas about the reality of society, and regarded Thatcher as simply another Tory fool with absolutely no understanding about how society really works – definitely a candidate for a GCSE Sociology course.

Now I am less confident. And again I have Margaret Thatcher (and her associates) to thank for this. For there really is very little left of society - now that, for three decades, the other great social force Thatcher was willing to acknowledge – the market – has had its way. What really is left of society? So well done Margaret, I’m finally persuaded: there is no such thing as society. There’s just the desert you and your kind left behind. Thanks.

A proper education

As all too many parents will be all too aware, it’s exam time again. All around the world, offspring are swotting up obscure facts about Tudor history how a dialysis machine works and the generic formula for making a salt from acid and metal, all ready to regurgitate it all again in sweaty halls all around the planet. And parents recall their own traumas, dredging an unwilling memory for the distribution of opal deposits in Australia and the difference between gerunds and gerundives.

I had it relatively easy: unlike most of my contemporaries (or indeed most reasonable beings) I used to do a lot better at exams than at course work, so the extra stress translated into extra marks I really didn’t deserve. But still, definitely not the best days of my life.

More to the (present) point, not the most useful either. But there the problem lies not so much in examinations as such as in the knowledge I was being examined on. Did I really need to know where opals are mined in Australia? No, more forcefully: under what possible circumstances would I ever want to know where opals are mined in Australia? I suspect that no one but an Australian mining engineer could possibly need that information.

Standard bitching about the education system, of course. And I have to admit that, it’s a little disingenuous. As a typical teenage geek, I rather liked knowing that sort of thing. I loved that sort of obscure information. Indeed, I positively cherished it. But can I really claim that it added to my education? I suspect not. Nor looking at so much of what my children have been examined on over the last few years, can I arouse any greater enthusiasm for the current curriculum.

The fact is – and I emphasise that this is a fact – is that, in far too many cases, what my children are learning is contributing nothing to their education. My daughter spent two years studying Tudor history. Why? Because it was the syllabus. But what did that teach her? Does she have a better understanding of life – her own life and the life of the society she lives in? Especially compared with what she might have been taught?

My impression is that schools teach based on the assumption that they are preparing the student for long-term specialisation in that topic. On that basis it makes sense for the curriculum to consist of so many apparent fragments – because if they study this topic long enough, it will all fall into place. By the time they graduate, they will indeed have a very good knowledge of their specialist subject.

But of course this is completely irrational. We can’t specialise in everything on the curriculum. Andin any case, it is far from obvious that even specialisation is best achieved by specialising from the very start.

So here is an alternative proposition: that at every stage in the education process – every break point at which students are winnowed out by a change of level - departing students finish their studies with is a fully rounded understanding appropriate to that level.

Take biology. What could a child who learns biology up to – but no further than – the age of 16 be taught that would pass this test? Well, what are the relevant topics? Diet, perhaps, or drugs or reproduction or basic environmental processes perhaps? Any of these, and perhaps a few others.

And what exactly would they be taught? I don’t know, but not, I suspect, the technical details of how the body or an ecosystem works so much as the ‘functional’ connections they need to know about – what different lifestyles entail, the real nature of the foods and (legal and illegal) drugs around them, and so on. Only later – at the point at which such things have a greater significance to the student because they can do something about them – would the technical details be taught.

This would plainly be much more of an education. It just wouldn’t involve anything like much modern schooling. On the other hand, precisely because it isn’t abstract technical knowledge, I suspect that this sort of education would be a lot more politically sensitive. What food company is not going to lobby against straightforward teaching of the facts of modern diet – the disastrous health consequences of how industrial food is made, transported around the world, and so on? What pharmaceutical company is not going to lobby against straightforward teaching of the facts of prescription drugs and the modern drug industry?

But that, of course, is very largely the point. A population that was no longer ignorant – not even its least educated member – about the world it inhabits would be better equipped to deal with the modern world – including changing it to suit their needs. Indeed, if I were looking for a recipe for eliminating political apathy, this would certainly be high on my list of innovations.

Likewise for every other topic. Personally I would replace the current obsession history teachers have with the Tudors and the origins of the First World War with a general course on world history – not the Euro-centric nonsense that condemns the vast majority of humanity to the void and ignores the real history of the modern world – and a more detailed political history of post-War Britain. And then between 16 and 18 I would teach the same things again, by with a greater focus on the mechanisms of globalisation and how Britain got to be like it is.

And so on. Even English would be taught quite differently – by looking at the use of language around us, in advertising, in politics, in the media, and so on. Conversely, would 16-year old biology students study dialysis? No, of course not. Nor would anyone else, perhaps, except a specialist in renal medicine. It’s not hard to think of a hundred alternative curricula, sharing only the fact that they lead to education rather than exam certificates.

Lovelock speaks. But I wish he wouldn't

A singularly unhelpful intervention from James Lovelock of Gaia fame (or notoriety). The Guardian reports –

‘I don't think we're yet evolved to the point where we're clever enough to handle a complex a situation as climate change,’ said Lovelock in his first in-depth interview since the theft of the UEA emails last November. ‘The inertia of humans is so huge that you can't really do anything meaningful.’

One of the main obstructions to meaningful action is ‘modern democracy’, he added. ‘Even the best democracies agree that when a major war approaches, democracy must be put on hold for the time being. I have a feeling that climate change may be an issue as severe as a war. It may be necessary to put democracy on hold for a while.’

Oh really. I don’t seem to recall Lovelock’s previous analysis of the larger-scale but little-understood and even less acknowledged structures of human activity – economic systems, global technologies, ideologies – that actually provide the basis for human ‘intelligence’ as it is conventionally understood. In that rather conspicuous absence, what exactly are Lovelock’s qualifications for having such a lovingly quoted opinion? The Gaia theory, which until the environment came back to the forefront of our collective consciousness, was treated by most scientists as a somewhat quaint, if not downright silly, model of planetary processes. And even now that planetary processes are under discussion, it’s still striking how seldom Lovelock’s theories make it into scientific discourse.

Of course, given that almost all other scientists are equally lacking in any convincing understanding of how human social and economic systems work, they are no more qualified than Lovelock to pronounce on either human ‘intelligence’ or the processes and systems that driven environmental change. But at least national newspapers aren’t asking them their opinions.

More that all that, it is about time we stopped treating people as authoritative just because they have the job ‘scientist’. It’s a job that is typically highly specialised, and having read a fair number of our most prominent scientists’ accounts of our present predicament, it does not strike me that their opinions about the situation as a whole are particularly scientific. No matter how brilliant the physicist or biologist, they are no better qualified than me to pronounce on economic systems, the power of ideologies, and especially not any but the most technical aspects of solutions to our problems.

Meanwhile, putting democracy 'on hold' is not only a very bad idea but precisely the opposite of what is needed. If there are any forces that will actively resist takintg the necessary steps to deal with our environmental problems it is the entrenched corporate forces of the economy and politicl system. Closing down democracy would only strengthen, indeed perpetuate their stranglehold over economic, political and so environmental policy.

Repo 105 - Symptoms or disease?

As I asked in the previous entry about the swelling scandal surrounding Lehman's use of the so-called repo 105 accounting dodge, 'Coming to a bank near you soon? Already arrived but no one has told you? Never forget Enron and Arthur Andersen.'

So yesterday the Securities and Exchange Commission, who regulate US markets, initiated their investigation into this scandal by asking 'more than 20 financial groups' whether they used repos for the same purpose. I shall be a bit surprised if they don't use repos in general, given that repos are a perfectly respectable hedging device, but it will be interesting to see how they are used.

The SEC are not planning to get to the real bottom, though. According to the FT, their investigation will only ask 'whether companies booked repos as asset sales for accounting purposes over the past three years, and whether these deals were concentrated with certain counterparties or certain countries'.

The latter part suggests that they are looking for whether other companies or governments were parties to this dubious process, which is essential to understanding how widespread it is. But the former - the limit to three years - suggests a residual timidity about looking at real roots of the crisis - the consistent misleading of the markets and regulators over much longer periods, to build up extremely profitable but highly risky positions that cumulatively led to our collective fall. We know that Lehman's use of repo 105 went back far longer than three years; it is preposterous to believe that this only because a useful accounting tool for staving off crisis immediately before the crisis itself.

Understanding the scale and exact nature of the crisis means looking at much more than the shifting tectonic plates; it is also important to know why - and when - the decision was made to undermine the building' foundations, which made the quake so disastrous.

It will be equally interesting to see how this investigation is report by the SEC. What if it turns out that a significant number of these financial groups not only used this misleading technique in the past but are using it now? Will we hear? And exactly what will we hear. After all, what would be the repercussions of discovering that, yet again, the books are being massively cooked?

I look forward to future reports.

Herbert Marcuse speaks from the grave!

Having recently quoted Huxley's Brave New World on consumerism, here's an equally compelling statement of the situation, from the German philosopher Herbert Marcuse:

Tolerance toward that which is radically evil now appears as good because it serves the cohesion of the whole on the road to affluence or more affluence. The toleration of the systematic moronization of children and adults alike by publicity and propaganda, the release of destructiveness in aggressive driving, the recruitment for and training of special forces, the impotent and benevolent tolerance toward outright deception in merchandizing, waste, and planned obsolescence are not distortions and aberrations, they are the essence of a system which fosters tolerance as a means for perpetuating the struggle for existence and suppressing the alternatives.

From Marcuse's Repressive Tolerance.

Well, for people of my generation it's an interesting quote. Marcuse was one of the intellectual stars of the Left during the Sixties, so for old times' sake...

Was it caused by fractional reserve banking? Not really.

Almost a year ago, I wrote an entry in my parallel environmental blog entitled Why capitalism must expand - whatever the environmental consequences. Rather surprisingly, yesterday I received a comment, from Jerry Fox, an American engineer and blogger. His comment ran as follows:

Capitalism supported by fractional reserve banking and the artificial support of governmental bailouts does require constant expansion both to pay off the inherent interest and to delay the inflationary effects of the money supply. I hope that you are not trying to lump the great system of free enterprise which has helped to make America the envy of the world, being linked to a Constitutionally maintained money supply, to this travesty that has come to be called "Capitalism". Under the former, there is no need for constant expansion to support a healthy thriving economy along with proper concern for any environmental issues.

I repeat Jerry’s comment here because it is equally relevant to a point I have recently been considering. There is a striking difference between the diagnoses and remedies offered by American and non-American bloggers and other commentators, which, quite by chance, Jerry’s comments expresses very well.

Here is my reply, which is equally relevant to this blog:

Thanks for your comment, Jerry. I sympathise strongly with the view that fractional reserve banking has played a terrible role in the current crisis, and my impression from tracking a number of American blogs is that this is widely held to blame for the crisis as a whole. However, I remain sceptical of the idea that this is a distinct phenomenon from capitalism proper, for two reasons.

Firstly, fractional reserve banking has been a feature of financial capitalism ever since the first capitalist banks came into existence – far earlier than the fist Europeans arrived in the Americas, let alone anything specific to the US economy or constitution. It is simply a matter of risk management: although I don’t have enough reserves to cover all my commitments, I take a chance that all the chickens won’t come home to roost at the same time. And by and large this has proved a good and familiar bet – to the point where one of Shakespeare’s best known tragedies, The Merchant of Venice, which was first performed around 1596-1597, depends entirely on a situation in which this bet on fractional reserves fails.

And it was essentially the recurring failure of this bet that led to regulations specifying exactly how much reserves were required for various kinds of transaction. In other words, there was no pure capitalist system with non-fractional reserves, which was then polluted by the creation of fractional reserve banking. Rather, capitalism was always a system of fractional reserve banking, which governments, sick the regular crises, eventually normalised with formal requirements for banking licenses, specified capital requirements, the 1933 Glass-Steagal Act, and so on.

As I understand it, the issue with the recent collapses was two-fold. When markets have been massively aligned (as they were, for many reasons, over the last few years), a boom that had looked fantastic turned into a bust proved that it was all just a fantasy, because everything went up and down at once. But even more importantly, the problem with many speculations (it’s hard to describe credit default swaps as investments) was that they were not required to be backed by any reserves at all. I have seen of what would have been a large enough reserve to cover most defaults and so forestall this crisis, and none of them were very different from the standard fractional reserve requirements for more conventional loans and obligations.

You can blame a number of technical features for this – the rise of ‘mark to market’ accounting, for example. In my own view, a more profound explanation lies in the process of systematic deregulation. This seems to have been a pretty universal phenomenon – certainly rife in London, where the absence of effective capital requirements made it the most popular financial centre in the world. Other centres tended to be more reserved (as it were) than London and the various US exchanges, but unfortunately they are collectively large enough to push the planet into a financial nosedive.

So fractional reserve banking played a role in the current crisis, but primarily because it did not extend to the specific types of transaction that actually brought the system down. Not much to do with the corruption of free enterprise or Constitutionally-protected monetary system.

Warren Buffett on financial CEOs

From Buffett's characteristically frank Chairman's letter in the 2009 Berskshire Hathaway annual report (p.18):

In my view a board of directors of a huge financial institution is derelict if it does not insist that its CEO bear full responsibility for risk control. If he’s incapable of handling that job, he should look for other employment. And if he fails at it – with the government thereupon required to step in with funds or guarantees – the financial consequences for him and his board should be severe.

It has not been shareholders who have botched the operations of some of our country’s largest financial institutions. Yet they have borne the burden, with 90% or more of the value of their holdings wiped out in most cases of failure. Collectively, they have lost more than $500 billion in just the four largest financial fiascoes of the last two years. To say these owners have been “bailed-out” is to make a mockery of the term.

The CEOs and directors of the failed companies, however, have largely gone unscathed. Their fortunes may have been diminished by the disasters they oversaw, but they still live in grand style. It is the behavior of these CEOs and directors that needs to be changed: If their institutions and the country are harmed by their recklessness, they should pay a heavy price – one not reimbursable by the companies they’ve damaged nor by insurance. CEOs and, in many cases, directors have long benefitted from oversized financial carrots; some meaningful sticks now need to be part of their employment picture as well.

Pity he was so effusive about what a great manager Lloyd Blankfein is last week.

But of course the powers that be will do very little about this. They are too implicated in this mess, they have too little understanding of what has happened over the last couple of years (other than in the technical sense), and they know that if they just wait it will start to look better.

More generally, we are all implicated in this mess. As I have observed elsewhere, the financial villains and incompetents were not the real cause of the collapse. far from being the enemies of our current economic system, they and their bubble-generating, monopoly-creating strategies, methods and objectives are its apotheosis. This kind of crisis is a perfectly natural conclusion of its routine self-development over a decade or so. And that, of course, places the real solutions even further beyond our present politicians' grasp: not only do they not understand how profound the problems really are, but they are neither willing nor able to exercise the kind of political control that needed to fix the problem for good.

Wall Street looting US Social Security

Interesting article entitled 'Wall Street Targets the Elderly: Looting Social Security'.

It's by Paul Craig Roberts, once editor of the Wall Street Journal, not to mention Assistant Secretary of the U.S. Treasury. For an ex-WSJ editor, he has a refreshingly robust attitude to the bad guys:

Hank Paulson, the Gold Sacks bankster/US Treasury Secretary, who deregulated the financial system, caused a world crisis that wrecked the prospects of foreign banks and governments, caused millions of Americans to lose retirement savings, homes, and jobs, and left taxpayers burdened with multi-trillions of dollars of new US debt, is still not in jail.

Surely there is some application of the negligence or conspiracy laws that would allow us to put Hank and one or two (thousand) of his pals in the slammer?

James Hansen and the inexorable slide toward nuclear power.

On his Storms of My Grandchildren site, James Hansen talks about how intolerable coal-powered power stations are in any realistic future, and claims that:

in most countries, phase-out of coal emissions requires also a carbon-free source of baseload electric power that is competitive in price with coal. Until we have another way to meet 21st century energy needs while eliminating coal and carbon emissions, nuclear power appears to be the only option.

From this he infers that even nuclear power would be the lesser of these two evils, concluding that

The (“3rd generation”) nuclear technology ready to replace the aging 2nd generation reactors in the United States and other counties is inherently safer than existing nuclear power, which already has an exemplary safety record – however, it still burns less than one percent of the nuclear fuel and leaves a long-lived nuclear waste pile. Hansen recommends initiating urgent development of a fourth-generation nuclear power plant. These “fast” nuclear reactors utilize more than 99 percent of the fuel and can “burn” nuclear waste, thus solving the nuclear waste problem that concerns so many.

This doesn't seem to me to follow. Why is he so confident that these fourth-generation nuclear power plants are any less pie-in-the-sky than carbon capture? It's the first time I have heard anyone suggest that the problems of safety and spent nuclear fuel could be a thing of the past. I would very much like to hear Hansen's reasoning. Not that I would like CCS any more than him, but it doesn't make much sense to be asked to choose between two mirages.

But there's a more important assumption in Hansen's commentary. He argues that, if we are to avoid both fossil fuels and nuclear power, then we need 'a carbon-free source of baseload electric power that is competitive in price with coal'. It is certainly a most attractive option. However, my reading of the technical literature leads me to two conclusions. One, such an option will not exist for many years to come. And two, we can't afford to wait that long.

So how is it Professor Hansen can claim that the solution needs to be 'competitive in price with coal'? Given the magnitude of the potential problem - a series of disasters and creeping destruction that will dwarf any previous human experience short of, perhaps, a re-run of the global plague in the 14th century, surely this is like saying that we should have decided our strategy for the Second World War on the basis of whether it would have been as painless as peace.

Plainly this would be nonsense, and as in the case of WW2, there is little doubt what the consequences of continuing prevarication will be. Add to this the impact of ever-expanding resource depletion, ecosystems collapse and 40% more people by 2050, and waiting for another cheap energy source to come along sounds like madness. It would be nice if we were in a position to choose between cheap, friendly, familiar options, but we aren't. Meanwhile, our social, political and economic system is awash with people and interests for which an effective solution would be anathema, if not fatal.

Of course, we are not at war, and such metaphors are as likely to be misleading as helpful. But to pretend that we can reach Professor Hansen's own goals without paying a price and making preparations comparable to a war strikes me as unwarranted optimism, if not self-deception.

Danny Chivers - Poet Laureate for the Environment

If you haven't already heard of him, take a listen to Danny Chivers. His poems on the environment and on business are brilliant, enthralling, funny and biting. He also knows his stuff, being (according to azclimatechange.com) a professional carbon footprinting consultant based in Oxford with two environmental Masters degrees.

For more on Danny, go to his blog, at A Daisy Through Concrete or his MySpace page. Or watch him on YouTube. And buy his new CD. We did, and it's excellent.

Get him to your children's school, to your local climate change event, to your front room. And pay him lots - we need more people like him.

Will the Volcker Rule work? No.

When the last crisis kicked off, organisations such as Goldman Sachs were not banks, and therefore would not have able to request support from the US government had the proposed Volcker Rule been in force then. In fact they weren't able to ask for government help then either.

So how did the US Government respond to the crises at Goldman, Morgan Stanley and the rest? By making them banks, even though they plainly were not. It was a fig leaf, to bend the rules so that they would not fail.

So if, in order to avoid the Volcker Rule, these same organisations ceased to be banks, and if there were a new crises that threatened them, what would the US Government do? Going by the evidence of 2008, they would allow them to be banks again.

What possible good will the Volcker Rule have done then, other than to create an illusion of safety for the government and allowing the investment banks to engage in dangerous activities until things get too hot, at which point they will be rescued just like they were last time?

A DIY manifesto

Less than 90 days to the General Election, and everything seems a good deal less certain. A year back, a Tory landslide seemed a foregone conclusion and Gordon was indisputably headed for backbench ignominy. How different – and how uncertain – everything seems now.

Well, not quite everything. Mulling over the goods on offer, it’s hard to feel uncertain about one thing: whoever wins, the electorate will be hard pressed to have high expectations of the winner. And in a time of war, economic crisis and unearned wealth for the few and undeserved hardship for millions, that is surely the one thing we cannot afford.

Who should we take to task for this? Our uninspired, uninspiring political masters? The army of unelected, manipulating ‘special advisers’? The abything-but objective and balanced media? No. Democracy is rule of the people, by the people, for the people, so if what We the People are getting isn’t what we want, then We the People have only ourselves to blame.

But there’s the rub. Just how do we change things? The only mechanism on offer is the ballot box, through which ‘we’ supposedly send ‘them’ a ‘signal’ telling them what we think. Only it plainly doesn’t work that way. Maybe they will get the message – and maybe not. And even if they get the signal, they are all too free to interpret it to suit themselves. And while we are limited to the ballot box, it can hardly be otherwise.

So let’s not make the mistake of trying to use the system to fix the system. No, let’s turn the tables completely. Let’s decide that, here in the age of the internet, we can tell them what we want, and decide that the job of politicians is to tell us not what we can have but only how they plan carrying out our orders.

It’s a slightly bonkers idea, of course. To start with, there are plenty of things voters would never agree about in a million years, which leaves plenty of scope for the usual manifesto verbiage. It’s also pretty hard to believe that our media would make it easy for public opinion to be untainted by corporate propaganda and sectional interests.

But that still leaves all those things that plenty of voters agree on – regardless of what the lobbyists persuade politicians to think – but which stay off the political agenda for years and decades together because our political parties can’t – or won’t - fit them in?

So what do voters actually want? I’ve no idea, and it would defeat the whole point to try to decide for them. On the other hand, if anyone would like to set up the website, database and voting system, here is my personal Top 10 (oh, all right, 11) for starters:

Politics

1. Government ministers and senior civil servants should be forbidden to personally use private health or education. Yes, I know, quite a few ministers sincerely believe in the right to go private, but it’s the public system we pay them to run, and I can’t help feeling that they’d be a little less inclined to treat public services as political footballs if, as their business pals like to say, they had a little more skin in the game. Politicians need to know that, when they cut health budgets, this means them.
2. The children of all MPs who vote for war are immediately conscripted to the front line. And if, in this age of political babes-in-arms, the MPs themselves if they are 45 or under, off they go too. If a cause is worth having someone else’s kids die for, sacrifice closer to home is surely warranted - and required.
3. Replace the voting system with one that tells our representatives what we think of them –scores for each candidate – positive or negative - and if the ‘winner’ is the one we think least badly of, so be it. And instant recall if we just don’t think they’re up to it. Enough of ‘respect’ for the ‘authority’ of Parliament: MPs are our employees, and should expect to be fired if they’re not good enough.
4. And on the voters’ side? Mandatory voting. I haven’t voted in years (who was there to vote for?), but if I were voting for what the people really wanted, what right would I have to keep silent?

The media

1. Prevent any single individual or company from owning more than one television station or one national newspaper, or both a television station and a national newspaper. Enough of corporate bias and propaganda. (I’d probably extend this to state funding for Private Eye, just to make sure that the mass media also got their fair share of attention, but Ian Hislop would probably rather die than accept.)
2. Replace the Press Complaints Commission with a truly independent body with real teeth. (And an independent Independent Police Complaints Commission too, while we’re at it.)

Business

1. Stop business turning schools, hospitals and society’s other key institutions into ‘business opportunities’. There’s little that annoys me more than the commercial prostitution of everything in sight, but when it comes to my children’s education and health, advertising is straightforward pornography. (Banksy has the right idea – if an advertisement is shouting in my face, I have the right of reply – including scribbling all over it if I want. They started it.)
2. Get serious about corporate crime. Any director of a tobacco company should be tried for manslaughter. Anyone who was still a director after the tobacco companies’ own research showed that tobacco was addictive and poisonous should be tried for murder. As for the advertising agencies, the lobbyists and all the rest who prostituted their talents to help tobacco companies sell their poison, perhaps a little tar and a few feathers? (Could be worse – what I really meant to write there was ‘public stoning’.)
3. Place much firmer controls on business influence over politics. Business people are people but businesses are not, and are entitled to precisely zero representation in our political system. Put an end to lobbying of political bodies, corporate funding of political parties and all the rest of the sleaze. And if trades unions and other corporate bodies are busy doing this too, include them in the same controls.

The environment
I could go on and on about global warming and climate change, but really, after Copenhagen, does anyone really think any government has any intention of doing what is needed, no matter what the public pressure? Puh-lease…

All the same, how about:

1. Real public education on climate change. That’s what governments signed up to at Kyoto, but I haven’t seen it yet. Maybe they forgot to read the small print, but meanwhile the nutters and the lobbyists are getting the upper hand.
2. A serious plan to cut our national carbon footprint. No, we don’t have to wait for the Americans or the Chinese – even if Beijing and Washington won’t help make things right, we can at least minimise just how bad things become.

Perhaps it can’t work – a political nirvana, in which the government of people can be replaced by the administration of things, because, to quote the famous Zapatero slogan, ‘Here the people give the orders and the government obeys’. Well, perhaps it’s all a bit too un-British. But surely we can give them a few polite hints?

Those who cannot remember the past...

Three decades ago, the Carter Administration tried to pass legislation to establish an energy policy for the USA. Writing in Wednesday's FT Energy Source, Philip K. Verleger - then Carter's Director of the Office of Energy Policy at the U.S. Treasury - claims that the current Obama administration hasn't a hope of getting his global warming legislation through. The reasons: arrogance, ignorance of the substantive issues, and failure to recognise the power of pork.

For Verleger the implications are clear, and in the light of recent events in Congress (and Copenhagen, because, whatever the scorn within which Europeans treat US politics, this is by no means a uniquely American problem) I find it hard to disagree. Here are Verleger's closing words:

"Many of the veterans of the Carter battle have quietly exchanged emails and
phone calls as the Obama legislation awaits its fate. The consensus opinions are
these:

1. None of the people putting the Obama energy policy forward understood the
   problems they would face in Congress.
2. The bill’s supporters (”greens”) are less aware of history than we were in
   the 1970s, if that is possible.
3. The legislation’s passage is unlikely absent an outside precipitating
   event.

It will be difficult to take effective action on emissions even when every
American accepts global warming as fact. Concerns regarding economic security
are far greater than those over climate impacts 10 or 20 years in the future.
Tragically, individuals pushing such actions - the representatives of various
NGOs covered in this blog, for example - do not understand history, the concerns
of voters, or the workings of Congress.

The battle is lost."

For those of us for whom the problem of global warming is, as energy was for Carter, the Moral Equivalent of War (MEOW!), it's a depressing insight.

Tax breaks for accelerating Peak Oil

Yesterday's Financial Times includes an article by their Energy Editor, Ed Crooks entitled 'Tax breaks to lure oil and gas sector'. It reported that tax allowances of up to £160m per field will be made for developing an area west of the Shetland Islands that probably includes more than 2 billion barrels of oil.

Tax breaks on oil wells? What sense does this make? Oil companies are some of the richest on the planet, and subsidising them to drill is doubly stupid - in a world fast approaching (passing?) Peak Oil, this is foolish short-termism, and in a world that cannot afford to burn more than a small fraction of its remaining fossil fuels before it trips us into irreversible global warming, paying them extra to make sure it happens is simply bonkers.

So why are they doing it? It's a hard region to develop, so if the UK government wants oil money to continue flowing into the economy, they have to bribe oil companies to bring it here. Hence the tax breaks.

It's a characteristic environmental/resource problem that follows from a) the mass nature of many decision-marking processes (e.g., multiple nations and companies making related decisions in parallel) and b) the absence of effective overarching (e.g., global political or regulatory) systems capable of ensuring that the whole - the net impact of a mass of individually intelligible decisions - does not undermine the interests of us all.

And in this case, that is exactly what is happening: a hundred countries trying to attract investment for the sake of the employment, the tax revenues and the boost to GDP are collectively abandoning the responsibility for handing over a sustainable resource base to future generations and accelerating global warming. A thousand companies, all hungry for investment and struggling to maximise their returns, ravish the planet and resist even the most superficial controls.

But there's nothing unique about the oil industry: we subsidise a huge range of damaging and short-term practices (e.g., airline flights through tax breaks and indifference to 'externalities'). In fact governments and business have been 'managing' the economy between themselves for perhaps as long as there has been an 'economy' to manage. Monopolies, politically inspired subsidies, corruption are the normal practices of all major economies - all delivering short-term gains for state and business that destroy the long term interests of society. All that is new today is that these mechanisms are so powerful and so far of the leash that we are simultaneously creating an unprecedented threat to society's very survival and abandoning every tool we once had to manage such a problem.

Economy versus environment (Part 94)

Q: What would actually happen if any significant proportion of the population suddenly took it into their head to reduce their environmental impact? A: The economy would collapse.

If you look at the recent recession, it is striking how much damage was done by relatively small changes in GDP. Of the highly developed nations, the UK (among the OECD countries, a middling performer) was so badly hit that it has experienced a loss of a little over 2.5% since the end of 2007. What? 2.5% in two years? A bit over 1% a year? What’s the big deal? Yes, I know, losing 1/80th of my income would not be a good thing in a year, but how can this be enough to do so much damage to an economy?

So what would happen if, say, 20% of the population managed to knock 50% off their environmental impact? Surely that would be an excellent start. Well, from an environmental point of view, perhaps. But if that translated into a 10% fall in consumer spending, where would that leave the economy? Consumer spending represents about 56% of German GDP, 58% of Japan’s GDP, 64% of the UK’s and 72% of the US’s (here). So a 50% fall in spending by 20% of all individuals would cut these economies by somewhere between 5.6% and 7.2% of GDP. In other words, even such a small change by a small minority would reek more economic havoc than the current recession!

So, we all get the environmental bug, and the economy folds. And with it go (as the current recession has also shown) investment in green technology and solutions of all kinds. Not everything, but far too much to support the real greening of industry. On the contrary, investors would be heading for the safe, short-term returns. And governments everywhere would be trying to compensate for the shortfall with new spending – and so shoring up the very economic activity those who had cut their impact had hoped to eliminate.

This isn’t a criticism of taking action, of course. But it is the old revision-versus-revolution problem. If you want only that the system work a bit more benignly, you need only revise the system so that it loses its more unpleasant foibles. But if the problem you are worried about is inherent in the system itself, revision isn’t the answer. The only way to fix systematic problems is to change the system in systematic ways.

That in turn is a political issue. Our politicians are of course firmly committed to growth, but that is not an irreversible condition. But two things are fundamental.

1. We must develop a credible explanation of this most fatal link between economy and environment, and make it as central a plank of future political discourse and policy-making as growth and consumerism have been since the 1970s.
2. We must define a programme for migrating our existing economy to a sustainable form. This cannot wait for 'the market' or the actions of private corporations, whose interests will never be to change themselves while there is still money to be made. Governments and local organisations must start to plan the elimination of environmentally destructive economic activity, undo the vicious circle of capital expansion that drives consumerism, obsession economic growth and the disregard of the poor and weak.

A momentary lapse into defeatism

I have always felt very ambivalent about the 10/10 campaign. It seems so very unambitious. Most people can reduce their carbon footprint and general environmental impact by 10% by little more than scrutinising their current lifestyle and cutting out the worst excesses. Turn the thermostat down a couple of degrees too high, stop wearing flimsy clothes on cold days, fix poor insulation for a small outlay, stop buying gadgets, fashion, trinkets, food from the other side of the planet, drive more thoughtfully (and if possible stop driving altogether), turn off unused lights (and stop squandering electricity for pointless lighting in the first place), remember to turn the PC off, and so on. 10%? A piece of cake.

What is more, I have probably managed 10% with disproportionately little sacrifice. It took me seconds to reset the thermostat and turn off the radiators in areas I barely use. It took about a week to get used to rooms a couple of degrees cooler. It took not time at all to remember to turn off lights and shut doors. It will take a lot longer to step back from impulse buying and toys, but it’s not impossible – I’m not so addicted to consumerism that I have to go along with the entire glitzy, grubby farrago. Nothing too it, if you really want to make a difference. 10%? Why so little?

But that isn’t the problem I have with 10/10, or any of the many other exhortations to us (as individuals) to use less. 10% is a nice idea, but the correct answer is something like 85%. So if we achieve 10% in 2010, will we achieve another 10% in 2011, and then another in 2012? It’s not inconceivable, given a truly impressive level of sign-up (which has not, as far as I can see, happened so far).

But even 30% is long way from 50%, let alone 85%. Read George Monbiot’s Heat or David McKay’s Sustainable Energy – Without the Hot Air for a sense of just how far we really have to go. At that level, the only sensible answer is to look seriously at our core social, political and economic systems to see how they need to be changed to deliver the goods. Or rather, stop delivering them.

But especially since Copenhagen I feel like we not only still have a very long way to go but that we have taken completely the wrong road. Down this road, no matter what a few individuals do, things do not get better – no, they get only worse.

I’m not too worried by the flagging public confidence in the reality of global warming or the tiny holes knocked in the credibility of individual environmental researchers - not even the IPCC. Such upsets will be transient and have a marginal impact. Much more serious is the decision by so many national governments to do what can only be summarised as - nothing. For how else can we understand Copenhagen (which left the world’s environmental strategy even weaker than after Kyoto), or the news that the UK government plans to take its expenditure on environmental projects in the developing world from existing budgets, or Obama’s evident fear of doing anything whatsoever about his environmental promises for the foreseeable future, or the Chinese government’s unwillingness to make any significant contribution to climate change (other than to make it much worse, of course)?

But why is this so much more important than persuading individuals to make a start on their personal environmental impact? Because the number of individuals who were ever likely to take that road was never more than a small – perhaps tiny – minority whose collective actions would have no significant effect on our fate. To have a wider impact, they had to serve as a catalyst, as a demonstration to governments that the environment was a vote-winner. Only when they had learned that would governments start to take the action needed to transform not just the footprint of individual households or even a Transition Town but the collective footprint of (in the UK’s case) 60 million people or more.

And not just 60 million individuals. Unlike you and me, governments can directly transform the country’s physical infrastructure on a national scale, coordinate similar actions on an international scale, force big business to mend its ways, and all in all make the systematic changes that no assembly of individual persons can ever bring about. Even 60 millions individuals could not change the public transport system without government action, nor how we generate electricity, nor how developing countries go about achieving a civilised level of development, nor any of the rest.

But after Copenhagen? Nothing can expected from governments any more. Or at least, far too little even to deflect the crisis by more than a smidgen. Even worse, not only have they decided against going beyond Kyoto but they have plainly decided that the only solution to the world’s economic woes is to restore the economic system that got us into our current mess – economic and environmental alike. The only adjustments they plan to make are trivial, serving only to make the economic system a little less dangerous in narrowly economic terms, without any thought for the environmental consequences of a capitalist ‘business as usual’.

In such a situation, what is the point of an individual making a personal commitment to reducing their environmental impact? Does it make sense for individuals to take action off their own bat if the great majority are not only not doing practically nothing (a situation I can live with for a decade or two) but major organisations (political and economic) are never going to be moved in an environmental direction, and have in fact decided to head straight back down the road we all know leads only to global warming, ecosystems collapse and resource wars? What can we claim that individual environmental self-control can achieve after that – that we will succeed in putting off the evil day by 10 minutes?

So even if I do manage a 10% - or 25% or 100% - reduction, exactly what have I accomplished? On a personal level, perhaps it is still a lot. At the very least, if I can get my footprint down to a sustainable level (not a very meaningful proposition while I remain a member of such a destructive society), I can say that at least it wasn’t me, guv. But on a higher level? What have ‘we’ accomplished? In the absence of a broader, systematic impact on the whole way we (at worst) conceive of the environment and (at best) the way we manage our economy, a lot less than we might imagine.