Showing posts with label trade. Show all posts
Showing posts with label trade. Show all posts

Monday, January 02, 2017

Why Trump and Leave won - and how the left should respond

Summary : While Trump and the Leave campaign certainly got the support of racists and bigots, this is not enough on its own to explain getting 46% and 52% of the vote respectively.

The stereotype of Trump voters as mostly poor uneducated whites is not accurate. In fact a majority of the poorer voters who voted at all voted for Clinton. While about half the population of the US earns under $30,000 a year, only 17% of voters in 2016 were from that income group. Around 53% of those low-income voters who did vote voted Clinton. So the problem was more poorer voters thinking neither candidate would change their lives for the better, so not voting at all.

Trump voters were mostly less educated and white, but most of them earned well over the median and average income. Leave voters, like Trump voters, were more likely to be older and have less education, but unlike Trump voters, were more likely to have lower incomes – and to read the Sun, Daily Express, or Mail – newspapers which have churned out anti-EU and anti-immigrant and refugee stories for decades. But like Trump voters, some Leave voters may have thought any change – or revenge on those in charge – was better than no change.

Trump is not popular with a majority of voters. In fact he got less votes than Clinton, and in polls more voters disliked him, and more of his voters said they were voting against Clinton than for him. But he remains dangerous all the same. Hitler, another demagogue who got support by whipping up hatred of minorities and blaming foreigners and refugees, never won a majority of the popular vote either.

Clinton wasn’t popular either though. As a politician who had been in office for decades and part of the Republican – ‘New Democrat’ concensus on free trade, deregulation and “welfare reform, was the ultimate establishment candidate. So the worst choice to stand against a candidate selling themselves as anti-establishment. Deregulation was one of the main causes of the banking crisis and subsequent recession which saw a swing back to the right.

Clinton’s campaign spent too much time criticising Trump’s racism, sexism and bigotry instead of promising jobs or better wages or holding the banks to account.

Trump’s condemnation of NAFTA (and the Clintons’ backing for it), his promises to provide more and better paying jobs, and to punish the big banks and politicians who had caused the banking crisis, were effective in the ‘rust belt’ states. Especially as they continue to lose jobs as firms move production to Mexico.

(Of course Trump won’t punish the big banks – he’s already chosen several former Goldman Sachs executives for his administration. Another similarity to Hitler – denouncing big banks and companies in opposition, then making deals with them in government).

The focus of the Remain and Clinton campaigns on prejudice and racism among some of their opponents backfired at some points by not appealing to voters self-interest enough. Claims about creating jobs or funding public services better (whether true or false) may have been more effective than talking about ideals.

Nationalism was a strong factor in both Trump and Leave’s campaigns – though with Leave voters it was as much English as British nationalism.

Some members of Black Lives Matter and some anti-racism/sexism/bigotry campaigners have also scored own goals by making their own prejudiced statements. Talking as if all white people or all men were responsible for the prejudice of some alienated some voters.

Identity politics has also been an own goal. Obama did not say “vote for me because I’m black’ but Clinton and some of her female supporters
repeatedly said “vote Clinton because she’s a woman”. Trump certainly pandered to racists and got the votes of racists and sexists, but making the election about race, citizenship status, or gender was never a good idea – especially in a country with a majority of white voters.

Too many Democrats had convinced themselves that the growing proportion of non-white and Latin/Hispanic voters now determined election results. Not this one.

The Electoral College, which was designed to prevent demagogues being elected, failed spectacularly in this election. Since the EU referendum was one person one vote, the voting system can’t be blamed for the Leave result though. Nor can any voting system prevent demagogues or prejudiced people winning elections if enough voters agree with them.

The lessons for the left are to focus on opposing free trade deals that are designed more with the interests of big firms that donate to party funds than the average voter, on controlling the big banks that caused the crisis, and on reducing inequality. While racism and other prejudice have to be opposed and condemned, condemning opponents as racist or prejudiced in other ways is not enough on its own to win elections or referenda. So campaigns should not focus too much on these issues at the expense of economic and trade policy, job creation and reducing inequality. Nor immediately label anyone who opposes current immigration levels racist (even if some of them are).

Pointing out the broken promises, hypocrisy and lies of Trump , the Conservative brexiteers and UKIP on their main campaign pledges is vital too. They must not get off with claiming to be “anti-establishment” while appointing Goldman Sachs executives.

The lesson for the Labour party is less clear. Corbyn is certainly an anti-establishment candidate, but unlike Sanders in the US, he is behind rather than ahead of his party’s political opponents in the polls. And Clinton lost partly because she was supported by a majority of Democrats, but not a majority of voters (due to ‘closed’ primaries in most states in which only voters registered as Democrats could vote on selecting a candidate). Corbyn similarly seems to be popular with a majority of Labour party members, but not a majority of voters. The Trump vs Clinton polls were out by several per cent, but the polls here being out by the 17% that the Conservatives now lead Labour by seems less likely.

And those who say Labour must become a crusade for the EU are selling a doubtful proposition when a third of Labour voters voted Leave and losing votes to UKIP is now Labour’s biggest threat.

Just racism and prejudice?

There are a lot of opinion pieces putting the victories of Donald Trump and the Leave campaign in the UK’s referendum on EU membership down simply to racism, sexism, bigotry against Muslims, and prejudice against immigrants and refugees, combined with ignorance among voters and propaganda by politicians and some of the media.

There is some truth in this, but it is not the whole truth.

Yes all the racists and bigots in the US voted for Trump, and all the racists and bigots and neo-Nazis in the UK voted Leave.

But Trump would never have got 46% of the vote – 63 million votes – if all his voters were ignorant racists and bigots. And ditto for the Leave campaign’s 52% of the vote (1).

They included votes against the status quo, against the establishment, against the effects of globalisation policies – especially lost jobs in manufacturing in the UK and US. Also votes for instance by left wingers against the extreme austerity policies imposed on Greece by the EU.

Clinton was the worst possible candidate to put up in the current climate, because she is not only associated in voters’ minds with the establishment, as Bill Clinton’s wife, a senator and then Obama’s Secretary of State. She is also one of the most prominent supporters of the NAFTA (North American Free Trade Area) trade deal that is still resulting in factories in the US closing down and moving to Mexico today (2) – (3).

This was brought up over and over again by Trump in campaign speeches – and one of the reasons he won the “rust belt” states that have suffered most.

Clinton’s conversion to opposing TTIP and the Trans-Pacific Partnership (both of which would let multinational banks and firms sue governments merely for regulating them) came only when she feared Sanders might win the nomination from her, and was unconvincing (4).

Many senior Republicans were voting for Clinton on the calculation that her opposition was purely tactical and would end once she was elected.

David Cameron and George Osborne were also establishment figures who oversaw austerity and were 100% for every free trade deal.

The Clintons are the ultimate representatives of the concensus between the Republicans from Reagan on and the ‘New Democrats’ of the 1990s on free trade, deregulation and “welfare reform”.

It was Bill Clinton who in 1994 successfully concluded negotiations with Mexico and Canada on NAFTA which had been begun by President Bush Senior.

NAFTA established the Maquiladora zone on the Mexican border with the US. In theory it also included comprehensive workers’ rights and environmental protection, but in practice neither has ever been enforced, with the Maquiladora’s barely regulated at all (5).

Clinton also deregulated the banks as much as any other President from Nixon on, repealing the Glass-Steagall Act which had been the cornerstone of banking regulations brought in by Franklin D. Roosevelt after the 1929 banking crisis. It had prevented high street savings banks from also being ‘investment’ banks (those involved in high risk trading in financial derivatives).

On top of this Clinton, albeit reluctantly, approved Republican states’ governments’ ‘Workfare’ welfare “reforms”, which forced unemployed people to work unpaid for private companies or else lose any welfare payments (6).

At the same time changes were brought in to reduce the maximum period anyone could receive welfare payments for to 60 days, (except where congress and the President approved emergency packages).

The long term result was jobs moving by the hundred thousand from the US to Mexico, but no reduction in the overall poverty rate in Mexico either.

Deregulation of the banks, combined with Clinton’s administration demanding banks and other lending institutions give mortgages to people who couldn’t afford them (instead of public housing, which was seen as too socialist), led to the banks being able to create Collateralised Debt Obligations – packages of thousands of largely worthless debts, so many together that no one could check individual credit worthiness, which in many cases was none. They then counted these as assets and sold them to other banks as if they had value .

When this was discovered, the banking crisis resulted and recession followed. The people with mortgages they couldn’t afford lost their homes. So did lots of other people who could afford their mortgages until the recession hit.

With “welfare reform” having cut the safety net for those made unemployed by NAFTA or the banking crisis recession, was America left with a lot of people who feel neither main party could care less about them and wanted to give the establishment concensus a slap in the face? For people who feel the status quo gives them nothing any kind of change, or some revenge, may seem better than no change.

NAFTA certainly provided cheaper imported goods for many Americans, but it also put many of them out of a job. It provided more Mexicans with jobs but without improving terrible working conditions or reducing poverty (7).

Some of those jobs may well have moved to other countries anyway as multinational companies sought the cheapest production costs, but NAFTA certainly accelerated this process.

Are these votes evidence of a swing to the right?

There is no evidence of American or British voters having moved to the right, with the possible exception of immigration, which they were already pretty right wing on.

Opposing free trade deals like NAFTA or the EU Single Market is not right wing. The left and trade union wings of the Democrats and Labour party were always opposed to these deals.

Opposing the Transatlantic Trade and Investment Partnership (TTIP) and Trans-Pacific Partnership (TPP) is even less “right wing”, as both these deals include clauses that would let big banks and companies sue governments for any regulation that might reduce their profits. Which effectively could mean any regulation at all. That goes far beyond even free trade.

Opposing big banks, big firms and the super rich being able to buy too much influence over government policies is not right or left wing either.

Trump is not that popular

Trump actually got less votes than Clinton – 46% to Clinton’s 48% , only winning due to the Electoral College (8).

Turnout was only 60% , about the same as in 2012. That means only about 27% of registered voters voted for Trump. And many Americans aren’t registered to vote at all (9) – (10).

And the unpopularity of both Trump and Clinton is the likely reason for the mediocre turnout, with 56% of those polled viewing Clinton unfavourably and 63% viewing Trump unfavourably (11).

In 2008, 68% of Democrats said they were voting more for their candidate than against the other main candidate. In 2012, 72% did. This year only 48% did, 50% saying they were voting for Clinton mostly just to stop Trump (12).

The same was true for Trump though, only more so ; 55% of his voters said their vote would be more against Clinton than for him (13).

Trump certainly got people who didn’t usually bother to vote to turn out for him – and this let him replace all the Republicans who voted for Clinton, or didn’t vote at all, out of distaste for him or for his protectionist policies.

Trump did not win because he was popular. He’s even more unpopular than Clinton. He narrowly scraped a win because he was seen as anti-establishment and got more votes in the ‘Rust belt’ states – and because Clinton was seen as so establishment and such a “no change” candidate by many voters that she could not motivate enough of them to turn out to vote for her.

Race

Race was certainly a big factor. Trump won a majority of votes among white voters and a heavy majority among non-college educated (but not poor) ones, while Clinton got a majority of Hispanic/Latino votes and the vast majority of black voters.

The many Republican voters who wouldn’t vote for Trump were replaced by a mixture of racists, bigots, neo-nazis and sexists.

Trump pandered to them by demonising and dismissing Black Lives Matter, and by mocking one of his rivals with the line “I, I, I can’t breathe” - the last words of Eric Garner, an asthmatic black man choked to death by police for the crime of selling cigarettes without a licence. Not one of the police were ever charged. A passer by who shot a video of the killing on his phone was (14).

But there were also people who had lost their own jobs or seen their family and friends lose jobs when factories moved from the US to Mexico. And people who were sick of the establishment consensus and voted for Trump as a protest vote.

The rust belt states where he mostly won all have a large majority of white and non-Hispanic / non-Latino voters. The states where Clinton won most heavily – like California – are some of those with the most Hispanic and Asian voters.

It wasn’t mostly poor white people voting for Trump

He didn’t get all the working classes voting for him – Clinton got 53% of votes among people earning $30,000 dollars or less (15).

Only 17% of voters were people earning less than $30,000 annually. Yet 50% of Americans earn less than that amount. The median US income is just over $30k, and the average is $44k (16) – (17).

But Trump did get a majority of votes from white people without a college education or better – though most of them were on incomes of $50,000 a year or more (18).

So the result of the election is not down to poor white voters voting for Trump. In fact it’s down to most poor voters – including most of the victims of the banking crisis and “welfare reform” not voting at all.

And the likely reason is the same one most voters in the UK give – the big political parties don’t care about us, so why should we vote for them? Which is a self-reinforcing cycle, as if most poorer voters don’t vote, why would politicians have policies aimed at appealing to them?

Candidates now need to be seen as outside the establishment – i.e not have held elected office at senior levels for a long time, nor be close to those who have. Being seen as trustworthy is also vital.

While for 2012 we only have figures for what percentage of voters earned under $50k a year, 41% of voters in 2012 earned less than that amount. Only 36% of voters in 2016 earned under $50k (19) – (20)

 

This Doesn’t Mean We’re In No Danger Though

Hitler and the Nazis never managed to get a majority of the vote either. That doesn’t mean they weren’t dangerous. Trump is an unpredictable narcissistic demagogue with the support of an “alt-right” (alternative right) who include racists, white supremacists and neo-nazis.

And alliance of convenience between some of Germany’s wealthiest industrialists, the Nazis and conservatives in the 1920s and 30s in Germany led to the rise of Hitler.

We can’t afford to start accusing anyone who voted for or supports Trump of being a Nazi, fascist, or racist though. We need to convert some of his supporters to an alternative anti-establishment movement, not alienate them. Remember, 55% of Trump voters said they were voting more against Clinton than for Trump.

While Trump may be an opponent of free trade deals, he has shown by his proposed appointments to his cabinet that he is very willing to do deals with big banks and big firms. Four of his choices are former executives from Goldman Sachs bank, including his campaign manager Steve Bannon. His chosen Secretary of State is currently the Chief Executive of Exxon-Mobil. Hitler similarly denounced big banks and firms and “the establishment” when in opposition, but was happy to do deals with them. (21) – (23).

And Trump’s support being highest in rural areas, while his opponents’ was highest in cities is also a similarity with German elections of the 1930s. As is both Trump and the Nazis getting most of their votes from people middling or higher in income and class.

How the Leave Vote was Similar – and how it was different

The Leave vote in the UK had some similarities to Trump’s vote in the US. But there were also big differences (for sources see sources (24) and (25) and (26) and (27)) .

Leave voters, like Trump voters, were more likely to be less educated (possibly because they were also likely to be older, from before the majority went to college or university, with younger voters far more likely to vote Remain or Clinton).

Multicultural London, like multicultural California voting for Clinton, mostly voted Remain (though some poorer areas had a majority for Leave). And in other big cities there was mostly a majority for Remain – but in many cases only a narrow majority. And the small towns and villages were more likely to vote Leave.

Leave voters , like Trump voters, were opposed to current levels of immigration and to jobs being moved abroad.

However the Leave vote was higher among lower income voters and the Remain vote higher among higher income ones – the opposite to Clinton vs Trump. This was similar to the pattern in the Scottish independence referendum where poorer voters were more likely to vote Yes (i.e to back leaving the UK).

The similarity is that both Leave and Trump voters were voting for a change to the status quo – 82% of voters who thought their candidate was most likely to bring about a change voted Trump (28).

The turnout was much higher, likely because this was a referendum – a rare event on a single big issue, rather than a regular election.

Leave voters, like Trump voters, were more likely to be nationalists – though with Leave voters they were more likely to see themselves as English first.

While some have argued the Leave vote was a vote against the government’s austerity policies, there hasn’t been any real evidence provided to back this claim up.

The media – and social media

While the media in the US was mostly hostile to Trump (with only 6 newspapers – most of them small and local – endorsing him for President) he got a lot of support from many Fox News anchors.

The tabloid press in the UK has been churning out anti-immigration, anti-refugee and anti-EU stories for decades, some exaggerated or presenting unusual cases as if they were typical, others outright lies. (For instance British tabloids have run stories that Euro coins will give you cancer, that the EU wants to ban curved bananas).

So it’s no surprise that 70% of voters who read The Sun newspaper or The Express voted Leave, and 61% of Daily Mail readers (29).

 The Sun has the highest circulation in the UK, partly due to its low price of 50p, subsidised by Rupert Murdoch’s profits from his satellite TV channels to give him influence with politicians.

This is probably the biggest factor in explaining the majority vote for Leave, just as in the Scottish independence referendum the majority of newspapers were for a No vote and that was the end result.

But the importance of facebook, twitter and new “news” websites with a very strong bias has been increasing relative to the traditional media. Completely false memes (photos or graphs with a list of supposed facts on them) and fake news stories are widely shared.

Whether these changed many peoples’ minds is open to question. Maybe the majority who believed them were already going to vote the same way anyway. But it may have changed the minds of some poorly informed voters, or people who aren’t interested in politics.

The dubious claim that “everything in the mainstream media is a lie” is becoming increasingly widely believed.

Identity Politics Is Not Enough – And can backfire

It’s pretty clear that saying “vote for me because I’m a woman” was not enough to win. Nor is slating your opponent as a racist or bigot (even if he is).

As some American women have pointed out, Trump’s boasting about groping women was disapproved of by just about everyone, but for a lot of women who had lost their jobs – or whose husbands, fathers or brothers had lost theirs due to NAFTA – it was minor stuff compared to the bigger issues.

Obama did not campaign in 2008 or 2012 by saying “vote for me because I’m black and a man”. He won because he convinced enough voters he would bring about change for the better. That he was not just another establishment politician who would maintain the status quo.

Clinton and supporters such as Madeleine Albright continually talked as though Clinton being a woman and Trump a man was a good enough reason to vote for her (30).

What’s more an excessive focus on gender, race or sexuality can make those who don’t share it feel they are being criticised just for being born white, male or straight.

Black Lives Matter are not, as some Trump supporters claim, all racist against white people. But some Black Lives Matter campaigners do say things that are racist against all white people – some even saying “kill all white people” – and this has the predictable result of outraging some white people (31).

Some of the people pointing to racism by some BLM campaigners are themselves racist against all black people, and looking for a way to try and justify the unjustifiable, as if two wrongs could make a right. But not all of them are. Some people who are not racist will be alienated by this kind of black vs white racism.

Of course that doesn’t mean that anyone should stop criticising outright racism or prejudice, or some of the shocking killings of black people by police and failure to charge, try and jail those responsible. But for instance refusing to discuss immigration or Islamic extremism at all could alienate people needlessly.

Campaign slogans and speeches matter – and so does appealing to self-interest

Most voters have no idea what most of a candidate or party’s policy positions are. But more of them have heard some of their campaign slogans or bits out of their speeches.

Trump’s message over and over included the jobs lost due to NAFTA and the Clintons’ support for it ; that he would bring back “good paying jobs” and stop jobs going overseas – and that he would punish the big banks and the corrupt politicians who had allowed this and the banking crisis and all the suffering since it.

Clinton’s message was mostly that Trump was “divisive”, “racist”, “sexist” and so on. Clinton’s message seems to have worked with the majority of black and Latino voters. But it failed with the majority of white voters, particularly those with little or no education.

Now Trump’s claims included a lot of hypocrisy and lies given his appointments already including so many former big bank executives, but it’s pretty clear that his lines were more effective with white, non-Hispanic voters and that this won him many states.

Clinton should have spent more time saying she would create more jobs and less time slating Trump’s prejudices.

Of course that wouldn’t have worked with every voter. There are plenty of resentful and poorly educated voters who have a chip on their shoulder about others having more education than them and “them thinking they know better than me”. But it would have helped with some.

 

Our Voting Systems are Out of Date –
but no voting system guarantees a particular result

The Electoral College has now let a candidate with less votes win the Presidency in the US twice. And with Trump’s election the theory that this helps prevent demagogues and extremists get elected is looking pretty ludicrous.

In the UK the Conservatives won the last General Election with just 37% of votes cast due to First Past the Post

However electoral reform, while more democratic, is no guarantee that the left or liberals will win elections. Under Proportional Representation the 2015 General Election would likely have led to a Conservative/UKIP/Unionist coalition with just under 50% of the vote between them. A Labour/SNP/Plaid Cymru/Lib Dem/Green coalition would have been theoretically possible with 48% of the vote between them.

A change to a PR voting system would probably have meant many more votes for smaller parties than larger ones, but likely no big change on the totals for the whole left and right.

The EU referendum on a simple one person one vote, majority wins, led to a marginal win for Brexit, but then staying in or leaving the EU has never been a straightforward left/right issue, with both divided on it.

Lessons for the left in the UK

The trouble is that there is more than one way to read most of the results.

Does Clinton’s defeat show that the party elites choosing establishment candidates is a good idea? And so Corbyn should stay on as an anti-establishment candidate? Or does it show that the candidate chosen by party members may not be the candidate who can win an election?

Clinton won due to closed primaries in most states – where only Democratic party members could vote. Sanders won in states with ‘open primaries’ where Independents (voters not registered as supporters of either main party) could vote.

Sanders outperformed Clinton in polls of the whole electorate , up to leading Trump by 20% or more in some polls. Labour under Corbyn is 20% behind the Conservatives in many polls. But is this down to the party being divided with voters not knowing if they’ll get Corbyn or ‘New Labour’ if they vote Labour? Or just disliking division? Or do not enough voters think Corbyn is up to the job to vote for him?

It may be that Corbyn is simply the wrong candidate, not because he is left wing, but because he is neither capable of making an inspiring speech, nor of doing well in debates. The problem being that most of his rivals are ‘New Labour’ politicians who want to go back to just adopting most of the Conservatives’ policies.

One of the few exceptions is Clive Lewis, whose main policy differences with Corbyn are on Trident (which he wants to renew) and NATO (which he wants the UK to remain in). On other policy issues though he is on the left. And given his positions on defence on his military service in Afghanistan, it would be difficult for the Conservatives to paint him as unpatriotic or soft on defence.

One clearer lesson is that economic interests, a desire for more economic equality, and opposition to some of the unintended effects of free trade ‘trump’ (or ‘Sanders’) identity politics.

But does it mean the left should be for leaving the Single Market due to opposition to globalisation? Or will that result in even more jobs being moved out of the UK , higher unemployment and more support for demagogues backed by the far right?

It’s not certain. What we do know is that arguing that free trade deals are always good in themselves, and benefit everyone, is blind ideology. It does nothing to address the people who suffer as a result of them (and there are always losers as well as winners). So if we are to support free trade deals details of them matter – and they require plans to help those who lose their jobs as a result retrain for new ones and/or create new ones. Or else we’ll need to move towards a Universal Basic Income.

This is complicated by Single Market membership also requiring Freedom of Movement for people between all members.

We also know that arguing that all immigration is beneficial is not going to win elections. This is an issue which helps the right, not least due to decades of tabloid propaganda against all immigrants and refugees.

Left wingers should be campaigning on equality, on ending unfairness, increasing wages and benefits for the poorest and capping them for the richest, on regulation, on closing down tax havens and loopholes for big firms and banks. Not getting drawn into focusing the debate on immigration during elections.

That doesn’t mean we shouldn’t keep supporting taking in genuine refugees, nor that we should be closing the borders to other immigrants entirely, nor that we shouldn’t challenge actual racism or prejudice. But it does mean discussing immigration calmly when we discuss it at all ; not shouting down anyone who argues for reduced immigration as racist or prejudiced, but arguing our case and hearing voters’ views.

The left also need to motivate the unemployed and people working on low incomes to vote – and to show that it’s going to do something to help them. Too many have got the false impression from the right wing press that Labour and other left wing or liberal parties are only concerned with refugees, immigrants and people who don’t want to work.

(1) = CNN politics Presidential Results , http://edition.cnn.com/election/results/president ; (Click on ‘popular vote’)

(2) = Industry Week 32 Feb 2016 ‘Who is Killing American Manufacturing?’, http://www.industryweek.com/who-is-killing-manufacturing

(3) = Los Angeles Times 19 Dec 2016 ‘These three U.S. companies moved jobs to Mexico. Here's why’, http://www.latimes.com/business/la-fi-mexico-jobs-20161212-story.html

(4) = www.independent.co.uk 02 May 2016 ‘After the leaks showed what it stands for, could this be the end for TTIP?’, http://www.independent.co.uk/voices/ttip-leaks-shocking-what-are-they-eu-us-deal-a7010121.html

(5) = Mcclatchydc.com 12 Jul 2012 ‘Mexico's 'maquiladora' labor system keeps workers in poverty’, http://www.mcclatchydc.com/news/nation-world/world/article24730981.html

(6) = Department of Work and Pensions (UK) Research Report No 533 (2008) ‘A comparative review of workfare programmes in the United States, Canada and Australia’ by Richard Crisp and Del Roy Fletcher, http://www.splunderousnoog.com/rrep533.pdf

(7) = Texas Observer 13 Dec 2013 ‘Thanks to NAFTA, Conditions for Mexican Factory Workers Like Rosa Moreno Are Getting Worse’, http://www.alternet.org/labor/after-20-years-nafta-thanks-nafta-what-happened-mexican-factory-workers-rosa-moreno

(8) = CNN politics Presidential Results 2016, http://edition.cnn.com/election/results/president

(9) = uk.businessinsider.com 21 Dec 2016 ‘Americans beat one voter turnout record — here's how 2016 compares with past elections’, http://uk.businessinsider.com/trump-voter-turnout-records-history-obama-clinton-2016-11?r=US&IR=T

(10) = CNN 12 Nov 2016 ‘Voter turnout at 20-year low in 2016’, http://edition.cnn.com/2016/11/11/politics/popular-vote-turnout-2016/ ; (the headline is inaccurate as it’s taken from before all votes were counted – it was 60% , but graphs of past election turnouts are accurate)

(11) = USA Today 31 Aug 2016 ‘Poll: Clinton, Trump most unfavorable candidates ever’ http://www.usatoday.com/story/news/politics/onpolitics/2016/08/31/poll-clinton-trump-most-unfavorable-candidates-ever/89644296/

(12) = Pew Research Center 07 Jul 2016 ‘2016 Campaign: Strong Interest, Widespread Dissatisfaction - 2. Voter general election preferences’, http://www.people-press.org/2016/07/07/2-voter-general-election-preferences/

(13) = See (12) above

(14) = www.guardian.co.uk 04 Dec 2014 ‘'I can't breathe': Eric Garner put in chokehold by NYPD officer – video’, https://www.theguardian.com/us-news/video/2014/dec/04/i-cant-breathe-eric-garner-chokehold-death-video

(15) = CNN politics Presidential Results – Exit Polls , http://edition.cnn.com/election/results/exit-polls/national/president

(16) = See (15) above

(17) = US Social Security Administration online 30 Dec 2016 ‘Wage Statistics for 2015’,
https://www.ssa.gov/cgi-bin/netcomp.cgi?year=2015

(18) = See (15) above

(19) = CNN 10 Dec 2012 Presidential results ‘’, http://edition.cnn.com/election/2012/results/race/president/ (once on page click on exit polls)

(20) = See (15) above

(21) = Bloomberg 22 Dec 2016 ‘Goldman Is Back on Top in the Trump Administration’, https://www.bloomberg.com/news/articles/2016-12-22/goldman-is-back-on-top-in-the-trump-administration

(22) = CNN 13 Dec 2016 ‘Trump Picks Exxon Mobil’s Tillerson as Secretary of State’,
https://www.bloomberg.com/politics/articles/2016-12-13/trump-said-to-pick-exxon-mobil-s-tillerson-as-secretary-of-state

(23) = Stephen J. Lee (1996) ‘Weimar and Nazi Germany’, Heinemann books, section 2.4, https://books.google.co.uk/books?id=eRDg5_Ay_PcC&pg=PA35&lpg=PA35&dq=nazis+hugenburg+thyssen&source=bl&ots=T1afeyX2c-&sig=CPIKL07gra9yeSs6bJ74b7USLR8&hl=en&sa=X&ved=0ahUKEwi99PHeop3RAhXXeVAKHRwFAdwQ6AEIUTAJ#v=onepage&q=nazis%20hugenburg%20thyssen&f=false

(24) = Lord Ashcroft Polls 24 Jun 2016 ‘How the United Kingdom voted on Thursday… and why’,
http://lordashcroftpolls.com/2016/06/how-the-united-kingdom-voted-and-why/

(25) = Lord Ashcroft Polls - EU Referendum ‘How Did You Vote’ PollONLINE Fieldwork : 21st-23rd June 2016, http://lordashcroftpolls.com/wp-content/uploads/2016/06/How-the-UK-voted-Full-tables-1.pdf (see especially pages 8 to 10)

(26) = National Centre For Social Research / Kirby Swales (2016) ‘Understanding the Leave vote’,
http://natcen.ac.uk/media/1319222/natcen_brexplanations-report-final-web2.pdf

(27) = CNN politics Presidential Results – Exit Polls , http://edition.cnn.com/election/results/exit-polls/national/president

(28) = See (27) above

(29) = National Centre For Social Research / Kirby Swales (2016) ‘Understanding the Leave vote’,
http://natcen.ac.uk/media/1319222/natcen_brexplanations-report-final-web2.pdf

(30) = www.guardian.co.uk 06 Feb 2016 ‘Albright: 'special place in hell' for women who don't support Clinton’, https://www.theguardian.com/us-news/2016/feb/06/madeleine-albright-campaigns-for-hillary-clinton

(31) = IBTimes 09/03/2015 ‘Black Lives Matter Maryland Twitter Threat: 'Kill All The White People' Tweet Results In Arrest’, http://www.ibtimes.com/black-lives-matter-maryland-twitter-threat-kill-all-white-people-tweet-results-arrest-2082257

Saturday, May 19, 2012

Why Greece will be forced to leave the Euro unless it's offered a better deal ; the other problems with the EU and the Euro ; and the mass starvation they are distracting us from

(If this article is too long for you to read as a blog post see my website version with contents links between different sections)

Greece's keep the Euro, reject austerity option?

Greece has the option of rejecting the austerity bail-out package and disowning it's debts, while keeping the Euro as a currency, with or without remaining Euro-zone governments' permission. First Minister Alec Salmond similarly plans to keep the pound as a currency if Scotland becomes independent, based on many countries using the US dollar as their currency (1).

Despite the myth that defaulting on large debts leads to instant bankruptcy for debtor countries, South Korean economist Ha Joon Chang's book '23 Things they don't tell you about capitalism' notes numerous examples of indebted countries defaulting on their debts and immediately finding new creditors willing to lend to them (2).

This option might result in even worse austerity problems than the bail-out package in the short term though and might lead to the same end result of Greece leaving the Euro unless the bail-out package is renegotiated to reduce the austerity element, increase the stimulus element and crack down on tax havens to increase tax revenues for Greece and all other governments.

The remaining Euro zone countries could try to force Greece to drop the Euro by blanket trade sanctions, but that might lead to currency crises in Portugal, Spain and even Ireland and Italy, with the Euro zone ending up restricted to Northern and central Europe.

There is the possibility that some politicians and voters in Northern European countries might prefer this, but it would hurt their exports. Germany's exports have increased massively as a result of the Euro. This is because while the Deutsch mark was very high in value due to Germany's strong economy, making German exports expensive (as international trade involves currency exchanges), the Euro's value is based on the average strength of the economies of the entire EU and so is lower in value than the Deutsch mark. This made German exports cheaper to buy in other countries and so more competitive against their rivals exports (and against goods produced in the countries Germany exports too.) (3)

A Northern and central Europe only euro-zone, composed of stronger economies, would mean the value of the Euro would rise, making exports from Euro-zone countries more expensive for consumers outside the Eurozone (in countries using currencies other than the Euro), so reducing orders for and sales of those exports.

The problem with Greece keeping the Euro without a Eurozone agreement

More likely, Greece might run out of money if it tried to remain in the Euro without the agreement of Eurozone governments, as it's government can't print Euros - only the European Central Bank (ECB) can - and the ECB is mostly under the control of the German and French governments as the two largest economies in the Eurozone.

That could force Greece to return to the drachma as a currency.

A return to the drachma?

The drachma, based on the weak Greek economy, might well fall further in value at least in the short term due to the crisis.

This would have the effect of increasing the cost of all Greece's imports - most importantly fuel (especially oil, gas, coal and refined petrol), with Greece relying on imports for two-thirds of it's energy requirements (4).

That would certainly hurt the Greek economy, but would it hurt it any worse than EU (or Eurozone) governments' austerity measures and enforced sell-off of it's remaining assets at the bottom of the market (including state owned utilities which could bring in revenue if the economy recovered)?

A Greek government after the second elections in June might decide it wouldn't.

However it would also allow Greece to print it's own money and would make it's exports more competitive (it's problem being that it doesn't export enough at the moment and would need to export far more).

This could also (in the longer term, once it re-stabilised) allow Greece to invest more in e.g solar power to reduce its dependence on energy imports.

The need for Germany to allow Greece to re-negotiate the bail-out deal

German Chancellor Angela Merkel says agreements made must be honoured, but those agreements were made without any democratic consultation of the Greek people, with the elected Greek Prime Minister ( George Papandreou ) forced to resign when he suggested a referendum on the bail-out deal (5). He was replaced with an unelected bureaucrat Lukas Papademos, who had previously been vice President of the European Central Bank (which issues the Euro).

If there had to be referenda for countries to join the Euro, why wasn't there one an agreement to impose austerity for the majority in Greece, especially when austerity has shown itself to be counter-productive?

So why shouldn't 17% of Greeks have voted for Syriza, the Green-socialist anti-austerity coalition? And why shouldn't over 20% of them be saying they'll vote for it in the emergency repeat elections in June? (6) (Though the centre-right pro-bail-out deal New Democracy was ahead of Syriza in one poll it's apparent poll lead was within the margin of error of the poll ) (7).

Syriza may be unrealistic in demanding no austerity measures whatsoever - some cuts may be necesary - but it is right that there is no democratic legitimacy to the bail-out deal imposed by Euro-zone and EU governments so far; and right that the level of austerity demanded is counter-productive and unfair (as well as letting the richest Greeks off with tax avoidance through tax havens while the rest suffer.

Syriza has every right to use it's existing electoral mandate and any votes it gets in the new elections to demand a renegotiation of the terms of the bail-out deal. Stimulus measures such as public works and government funded infrastructure building and training programmes may well be necessary.

Austerity taken to the current extremes chokes off any chance of the economic growth that Greece requires to be able to pay off it's remaining debts. This only benefits Greece's creditors, primarily Eurozone governments and big US, British, German and French banks, who can continue to farm the Greek population for interest payments as long as they remain in debt (8). Is it a co-incidence that allowing tax havens also benefits them? Or that forcing the sell off of state utilities on the cheap benefits them and investors from Northern Europe and the US?

Given a fair deal Greeks might well be able to stay in the Euro - polls show most would prefer to.

Merkel's statements have already begun shifting towards suggesting there could be a bigger stimulus element to the bail-out package, which is encouraging (9).

(Merkel also suggested to the current caretaker Greek Prime Minister that the new Greek elections should be accompanied by a referendum on whether to stay in the Euro - which the PM said he could not as a caretaker government did not have the authority.) (10)

Why Greeks feel oppressed by larger countries :
the history

The reason that many Greeks feel oppressed by larger countries is that for centuries to present, they have been. Since gaining their independence from the collapsing Ottoman Empire in the 19th century they were invaded and occupied by German forces in World War Two.

After Greek Communist partisans kept several German divisions occupied for most of the war, the 'liberating' British forces' and regular Greek military's reward to them was to shell thousands of Communist demonstrators and partisans with artillery with Churchill's approval in 1944.

This was followed by a civil war from 1946-1949 in which the US and British governments backed the Greek military against Communist groups. Communists and suspected communists were hunted down and persecuted for decades.

Under the US backed military government of the 'Colonel's regime' from 1967 to 1974, the assassination, jailing, torture or disappearance of anyone critical of the ruling military was commonplace, with CIA assistance.

President Lyndon B Johnson responded to the complaints of the Greek ambassador to the UN about US operations in Greece and Cyprus in 1967 by saying "Listen to me, Mr. Ambassador! Fuck your parliament and your constitution! America is an elephant. Cyprus is a flea. Greece is a flea. If those two fleas continue itching the elephant, they may just get whacked by the elephant’s trunk, whacked good.… We pay a lot of good American dollars to the Greeks, Mr. Ambassador. If your prime minister gives me talk about democracy, parliaments, and constitutions, he, his parliament, and his constitution may not last long."

So many Greeks see the current crisis as more of the same - few people have been killed (some demonstrators by police), but so far they have had larger countries governments imposing 'agreements' on them without any democracy.

The myth of laziness and corruption as the causes of under-development

German, British and French politicians have found it convenient to allow the myth that Greece's debt is mainly due to Greeks being lazy or corrupt. South Korean economist Ha Joon Chang points out that in the early 19th century, when Germany and Japan were less industrialised than France or England, Japanese and Germans were seen as lazy and backward. Chang comes to the conclusion that rather than changed culture resulting in development, cultural changes come about as a result of development, which is why people in poor, undeveloped countries are stereotyped as lazy. A society riddled with bribery is similarly usually the result of poverty and lack of economic and governmental development, rather than a cause of it (11).

James Steadway, chief economist at the New Economics Foundation, found figures suggesting Greeks on average retire older than Germans - and work 50% longer hours (12).

Tax avoidance and Evasion which increases government deficits and debts is facilitated by tax havens - why no EU or member state action on this?

While there was too much tax evasion in Greece, EU member governments have not closed down the tax havens which continue to facilitate tax avoidance and evasion by big banks, firms and the wealthiest across the EU and the world. Switzerland is a favourite tax haven for wealthy Greeks and Greek companies, while Greece's creditors include banks like the US based Goldman Sachs and the British based Royal Bank of Scotland, both of which, like most of the UK's FTSE 100 companies, are heavily involved in tax avoidance through tax havens (13) - (15).

This is surely a form of corruption on a grand scale - especially when parties in government are receiving large donations to party funds for election campaigns from the billionaires, banks and firms using the tax havens - and former government ministers involved in regulating (or more often de-regulating) industries end up on the boards of companies their department or government regulated.

The need to recycle the trade surpluses of stronger economies into developing weaker ones

Many economists (e.g Will Hutton and former World Bank economist Joseph Stiglitz) say the Eurozone's major weakness is the lack of any sufficient regional development fund to even out the inevitable trade imbalances between strong economies like Germany's and weaker ones like Greece, Portugal and Spain. A sufficient fund would act to recycle a large part of the trade surplus money of countries like Germany into investment in the weaker economies like Greece (16) - (17).

The insufficiency was exacerbated by the redirection of regional development funds from Portugal, Greece, Spain and Ireland to new member states as the EU expanded eastwards, arguably too fast, without referenda in the existing member states and without any EU minimum wage.

This is just as true of the EU as a free trade area as it is of the Euro-zone as a single currency area.

The US is a huge country made up of many states with significant differences in the strength or weakness of their economies, but this is moderated by large infrastructure and investment projects in poorer states by the US Federal Government.

Why complete free trade plus a single currency across countries at hugely different levels of development can't work

South Korean economist Ha Joon Chang's book 'Bad Samaritans' has something relevant to say here too. His book takes numerous historical examples to show that the British, US and other developed economies built up key industries over centuries by subsidising them and protecting them from the imports of foreign rivals. Only once they were strong enough to defeat any competition internationally did their governments become advocates of free trade - and even now advocate it for developing countries (and make it a condition of aid and trade deals) while often subsidising and protecting their own industries. Similarly foreign investment does not create growth first, but is attracted by building up a strong economy by publicly funded infrastructure and investment (18).

So is the EU free market and Eurozone project one that makes it impossible for weaker economies to ever develop their own industries when forced to open their markets to imports from stronger economies built up over centuries of protectionism? Does the Euro make things even harder for them by making the more developed economies' exports even cheaper? Should exceptions be made on the bans on protectionism and state subsidies for some of the industries of the weaker economies in the EU (just as poorer developing countries outside it desperately need to be allowed to protect and subsidise their agriculture and industries to develop them without being penalised by losing aid or trade deals as a result)?

Without these kind of exceptions being allowed for weaker economies, their electorates may end up concluding that they will be less badly off out of both the euro currency zone and the EU itself.

Contrary to Germany's image of itself as paying to bail out irresponsible Greeks, the current system gives all the benefits to the wealthier countries in the EU and the euro-zone with the costs largely paid by the poorer ones.

While this is true of trade between relatively developed nations of different economic strengths and levels of development within the EU and the developed world, it all holds even more true for trade between the developed countries and the almost entirely undeveloped former colonies in Africa and much of Latin America and Asia.

The need to resolve the developed world crises in order to deal with much bigger ones -
the starvation, hunger and lack of clean drinking water crisis in the developing world and the energy, resource and climate change one worldwide

Germany and the other strong economies in the EU should offer these kind of concessions in order to end the crisis quickly and move on to dealing with far more serious crises - such as the hundreds of millions of people in other parts of the world who are going without enough food to eat and without clean water to drink - and the coming catastrophic energy, resource and food crisis if we don't reduce our wasteful over-use of energy and resources.

Oxfam estimate that a billion people or one in seven of the world's population can't afford enough to eat each day for themselves or their children - a problem made worse by the rising price of food partly due to the rising price of fuel for transporting it, while the UN and other experts estimate between 800 million and 4 billion (probably more like 4 billion) have no access to clean drinking water, resulting in them suffering illness and often death from water borne diseases (19).

You can sign an avaaz petition which will be handed to G8 and other government's leaders at the G8 summit demanding they act to provide food security for the growing numbers of hungry people here.

The focus on developed world debt and currency crises is distracting from the need for the upcoming G8 summit to deal with those two major problems that result in millions dying each year from starvation, under-nutrition and lack of clean water.

The developed world crisis are relatively minor by comparison and only affect the majority here due to huge inequality, plus tax havens letting the wealthiest and big banks and firms avoid paying massive amounts of tax with the collusion of governments and politicans, plus rampant deregulation and the failure to re-regulate. Even with all that few people are starving or going without clean water here, though some are going hungry or dying of cold.

Sources

(1) = Scotsman 27 Jan 2012 'Alex Salmond: ‘Chancellor would bite our hands off to keep the pound’',
http://www.scotsman.com/the-scotsman/politics/alex-salmond-chancellor-would-bite-our-hands-off-to-keep-the-pound-1-2081286
; 'However, Mr Salmond said there were 67 countries in the world that were using another nation’s currency, “either in formal or informal monetary unions at the present moment”, while remaining independent.'

(2) = Ha Joon Chang (2010) ‘23 Things they don’t tell you about capitalism’, Allen Lane, 2010

(3) = Business Insider 20 Nov 2011 'Why German Taxpayers Should Be Forced To Bail Out Italians And Greeks',
http://articles.businessinsider.com/2011-11-20/markets/30421346_1_german-banks-german-state-eurozone

(4) = Trading Economics 'Energy imports; net (% of energy use) in Greece', http://www.tradingeconomics.com/greece/energy-imports-net-percent-of-energy-use-wb-data.html

(5) = guardian.co.uk 06 Nov 2011 'Eurozone crisis: Greek PM George Papandreou to resign', http://www.guardian.co.uk/world/2011/nov/06/greece-george-papandreou ; 'The socialist prime minister has faced growing calls to step down at home and abroad since shocking markets and world leaders with an ill-timed decision, announced last Monday, to put the 27 October bailout agreement to popular vote. After being publicly dressed down by French President Nicholas Sarkozy and German Chancellor Angela Merkel, the 59-year-old politician was forced to back down and shelve the referendum plan...'

(6) = Wall Street Journal Online 16 May 2012 'Greece's Radical Leftist Syriza Secures First Place- Poll', http://online.wsj.com/article/BT-CO-20120516-711097.html

(7) = Bloomberg 17 May 2012 'New Democracy Moves Ahead of Syriza, Greek Poll Shows', http://www.bloomberg.com/news/2012-05-17/new-democracy-moves-ahead-of-syriza-greek-poll-shows-1-.html

(8) = Bloomberg 23 Feb 2012 'European Banks Take Greek Hit After Deal', http://www.bloomberg.com/news/2012-02-23/rbs-reflects-greek-debt-damage-with-credit-agricole-days-after-aid-accord.html ; On US banks see (12) below

(9) = guardian.co.uk 17 May 2012 'German stance on Greek crisis softens as eurozone fears mount', http://www.guardian.co.uk/world/2012/may/17/germany-greek-crisis-eurozone

(10) = Guardian Business Blog 18 May 2012 'Eurozone crisis live: Row after Angela Merkel 'suggests Greece holds euro referendum'', entries for 6.15pm BST and 6.23pm BST, http://www.guardian.co.uk/business/2012/may/18/eurozone-crisis-stock-markets-greece-spain#block-31 and http://www.guardian.co.uk/business/2012/may/18/eurozone-crisis-stock-markets-greece-spain#block-32

(11) = Ha Joon Chang (2007) ‘Bad Samaritans’, Random House, London, 2008 , Chapter 9 'Lazy Japanese and Thieving Germans'

(12) = New Economics Foundation (NEF) 16 Feb 2012 'Greece should reject the Troika and default on its own terms', http://neweconomics.org/blog/2012/02/16/greece-should-reject-the-troika-and-default-on-its-own-terms by James Meadway, Senior Economist, NEF

(13) = Bloomberg 06 Mar 2012 'Goldman Secret Greece Loan Shows Two Sinners as Client Unravels', http://www.bloomberg.com/news/2012-03-06/goldman-secret-greece-loan-shows-two-sinners-as-client-unravels.html

(14) = Scotsman 18 May 2012 'Greek debt deal set to cost RBS £825 million' http://www.scotsman.com/news/international/greek-debt-deal-set-to-cost-rbs-825-million-1-2154674

(15) = Guardian 11 Oct 2011 'Tax havens and the FTSE 100: the full list', http://www.guardian.co.uk/news/datablog/2011/oct/11/ftse100-subsidiaries-tax-data

(16) = Observer 13 May 2012 'This crushing debt trap threatens to bring down the whole of Europe', by Will Hutton , http://www.guardian.co.uk/commentisfree/2012/may/13/will-hutton-euro-in-danger

(17) = guardian.co.uk 05 May 2010 'Reform the euro or bin it', by Joseph Stiglitz (former World Bank economist, also quoting nobel prize winning economist Robert Mundell) , http://www.guardian.co.uk/commentisfree/2010/may/05/reform-euro-or-bin-it-greece-germany

(18) = Ha Joon Chang (2007) ‘Bad Samaritans’, Random House, London, 2008 , Chapter 2 'The Double life of Daniel Defoe - How did the rich countries get rich'? ; also Chapters 3 & 4

(19) = BBC News 13 May 2012 'Harrabin's Notes: Safe assumptions' , http://m.bbc.co.uk/news/science-environment-18020432