Monthly Archives: July 2012

The faux moral superiority of austerity

By now, it should be obvious to anybody paying attention that the austerity policies of various European governments are destroying their economies and driving millions of people into poverty. But if you listen to the bloviations of the European elite, you’ll hear that these destructive measures are morally imperative. Their mindset seems to be that before the financial crisis Europeans were living beyond their means, so now great swathes of them must suffer for a prolonged period. They have sinned (not the Eurozone wannabe “technocrat” elites who created the mess, but the laboring classes), so they must be punished. If this seems absurd to you, you’re right. If this seems surprising to you, then you haven’t been paying attention to what European “leaders” have been saying.

At Yves Smith’s excellent Naked Capitalism blog, Bill Black writes of the schadenfreude that Europe’s right wingers are feeling as they decimate the continents social safety nets. His window into their mentality is a column by the Washington Post’s Anne Applebaum:

The pro-austerity framing that Applebaum described also means that austerity must represent superior morality and that the greater the austerity we champion the greater our moral superiority. This explains the competition in calling for “savage” cuts and the delight in gore. The more programs that aid the poor that we “amputate”; the greater moral superiority we demonstrate. It reverses the Gospels, but it certainly is an attractive framing for the wealthy.

According to Applebaum, the British welcomed austerity in 2010 because “Austerity is what made Britain great. Austerity is what won the war.” This reading of history is totally false. While regular Britons embraced austerity to win the war, going above and beyond government rationing to voluntarily raise extra funds and materials for the troops, the government racked up enormous fiscal deficits. Can you imagine Winston Churchill saying, “We shall go on to the end. We shall fight in France, we shall fight on the seas and oceans, we shall fight with growing confidence and growing strength in the air, we shall defend our island, whatever the cost may be. Er, unless the financial cost exceeds government revenues, which would really hurt the market’s confidence in our economy.”

Bill Black illustrates the insanity of fiscal austerity during a recession with a great analogy:

Fiscal austerity by a nation with a sovereign currency is not a moral issue. In the context of a Great Recession it is simply a self-destructive fiscal policy. A potlatch, (rivals compete in destroying valuable household possessions in order to gain status) involves self-sacrifice but it is simply self-destructive as an economic policy. Britain’s austerity was a massive potlatch in which the parties competed in claiming moral superiority based on their zeal in competing to destroy working class families.

With all due respect to the First Nations who conducted potlatch ceremonies, I think this is spot on. The potlatch was never meant to be economically productive, though — unlike the bizarre human sacrifices of the acolytes of austerity. Like ancient, pre-scientific cultures that sacrificed virgins to the weather gods, today’s priest-technocrat class demands human suffering as an offering to an unseen god of the market. In their religion, the spirit they hope to conjure is “confidence”, confidence that will somehow materialize when governments reduce their sinful spending. If you ask them where the confidence will come from when unemployment is over 20% and nobody has any money but the priests themselves, they’ll tell you not to trouble yourself with metaphysical questions.

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Tax avoidance

Exhibit A: Wealthy hiding $21 trillion in tax havens, report says

The “super-rich elite” are hiding more than $21 trillion US in tax havens around the world, an amount roughly equal to the combined GDP of the United States and Japan, according to a new report.

Exhibit B: Paying a plumber cash in hand morally wrong, says Tory minister

“Getting a discount with your plumber by paying cash in hand is something that is a big cost to the Revenue and means others must pay more in tax,” Gauke said.

(hat tip to Duncan Black)

If you’re feeling cognitive dissonance, remember that people who hire plumbers aren’t the sort of “job creators” whose taxes we’re supposed to cut.


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Bravo, TD.

For years, TD Canada Trust has tried to distance itself from the other Canadian megabanks through its customer service, and I’ve certainly appreciated its long hours (open until 8pm) if nothing else. Last week I walked into the new local branch of TD Canada Trust and their prioritization of the customer experience was obvious. I was happy to have a branch closer to home and even happier to discover the frills inside: free juice, a coffee machine, and one of those made-for-the-office putting greens (?!!). I was informed by the ridiculously helpful customer service  representative that I was inside a new kind of TD branch, a “Bravo” location. I told her with a wink that even though I “hated banks as a general rule”, I couldn’t complain about how I had been treated by TD.

But then the very next day I read that TD Canada Trust had closed the accounts of many Iranian-Canadians with little explanation or warning. Apparently, because these Canadian citizens had vague financial connections to Iran, their bank decided it had to shut down their accounts and lines of credit lest it run afoul of the new economic sanctions against that country. So sleep peacefully tonight, dear reader, knowing that Iran’s relentless push for nuclear weapons has been thwarted by TD Canada Trust’s latest initiative. Bravo, TD.

TD Canada Trust is the only Canadian bank to have carried out these measures, and they seem to have done so on their own initiative, without banking regulators getting involved. Apparently the financial industry can regulate itself, after all. Except TD appears to have ignored provisions in the Iran sanctions that should exempt some of its account holders from punitive action.

Section 5 part D of the regulation lists a series of exemptions for the sanctions between Iran and Canada. The exemptions for financial exchanges include financial services provided or acquired before November 11, 2011, pension payments to or from Iran, and non-commercial financial services under $40,000 (with record of transaction).

For Montreal lawyer Vincent Valaï, former president of the Association des Juristes Persans du Québec (an organization that has criticized TD’s actions), the absence of consideration for these sanction exemptions is the most puzzling part of TD’s closure of the accounts of some of its Iranian-Canadian clients.

Why did TD feel the need to be so aggressive in its interpretation of the sanctions, when no other bank had yet acted against its Iranian-Canadian clients? What was the downside of taking a more cautious approach, and putting its customers first? A bank director would have to set a kitten on fire on national TV before law enforcement thought seriously about fining his company.

TD’s public relations debacle notwithstanding, there are serious questions to ask about the morality of economic sanctions aimed at bringing about regime change. Sanctions like those against Iran don’t hurt the regime in power. Instead, they turn the population of the targeted country against the outside world and draw them closer to the demagogues who rule over them. Sanctions haven’t removed the communist regime from Cuba and didn’t do anything to weaken Saddam Hussein’s grip over Iraq in the 1990s. They end up hurting the ordinary people that they’re supposed to be helping. That’s not to say that restricting the sales of weapons or nuclear material to repressive regimes is a bad idea. But shutting down all the small-scale trade between citizens of a “bad guy of the week” country and their expatriate business partners isn’t a recipe for their democratic empowerment.

Most important, broad economic sanctions cause human misery on a massive scale. The catastrophic effects of sanctions on Iraq’s civilian population during the 1990s are well documented. It is conservatively estimated that hundreds of thousands of children died as a result of the sanctions. This was warfare by starvation (a war crime), but American policymakers asserted that the grotesque human toll was “worth it”. Even worse, the sanctions were expressly aimed at causing regime change, meaning that the Iraqi government was given no demands to meet except “dissolve yourself”. From the link above:

U.S. officials have stated that sanctions would remain even if Iraq complied with United Nations inspectors, giving the Iraqi regime virtually no incentive to comply. For sanctions to work, there needs to be a promise of relief to counterbalance the suffering; that is, a carrot as well as a stick. Indeed, it was the failure of both the United States and the United Nations to explicitly spell out what was needed in order for sanctions to be lifted that led to Iraq suspending its cooperation with UN inspectors in December 1998.

— Stephen Zunes, Continuing Storm: The U.S. Role in the Middle East, Foreign Policy In Focus, December 2000

Is the situation any different with Iran today? What is the Iranian regime supposed to do to relieve the sanctions that are ruining its economy? Nothing short of dismantling its entire civilian nuclear program would be enough to dissuade the U.S. government that it is not pursuing nuclear weapons. That still probably wouldn’t be enough — remember that the U.S. pulled out weapons inspectors from Iraq when they inconveniently found no evidence of WMDs. If the U.S. wants to lob cruise missiles into Iran, it can find a pretext, nuclear program or no nuclear program. Iran would have no guarantee of its own safety, because the Islamic regime would still be an attractive target for the war industry. Today media, government and military elites in the U.S. and Israel threaten to bomb it on a weekly basis. The United States is already waging cyberwarfare against Iran (google the stuxnet virus), and Israel is assassinating its scientists with car bombs. High profile Americans, along with the Israeli Mossad, support a terrorist group within Iran, the MEK. As for the effects of the sanctions themselves on Iran’s people, consider these statistics from Asia Times:

According to reports, the annual inflation rate in Iran is 22.2%, although many economists estimate it at double that. In the last week of June, the price of chicken rose 30%, grains were up 55.8%, fruits up 66.6%, and vegetables up 99.5%. Iran’s Central Bank estimates unemployment among the young is 22.5%, although the Financial Times says “the official figures are vastly underestimated”. The production sector is working at half its capacity. The value of the Iranian rial has fallen 40% since last year, and there is a wave of business closings and bankruptcies due to rising energy costs and imports made expensive by the sanctions.

This is the context of TD Canada Trust’s zealous — and voluntary — enforcement of the Iran sanctions. Do we really want to destroy an entire society? Because that is what will happen, long before the ayatollahs are ever dislodged from power.

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Romney’s secret African American supporters

After getting soundly booed during his NAACP speech for vowing to repeal “Obamacare”, Mitt Romney told Fox News that black leaders support him, but are afraid to voice their support in public. Ah, I wonder why that is? Probably because any “black leader” that supports Romney is not representative of the community he or she purportedly “leads”? Romney is polling single digits among African Americans, and for good reason. African Americans have always voted solidly Democratic, and when there’s an incumbent black president, they’re not likely to switch allegiances to the whitest man on the planet. But African Americans are not just blindly voting along party lines or for a man that shares their skin color. As disappointed as I’ve been with Barack Obama, it’s pretty hard to argue that African Americans would not do better with him in office than his opponent. The fact that Republicans can’t deceive blacks into voting for their candidate against their own economic interests, as the Bible-thumping white underclass does, must really gall them. Hence they complain, obliquely, about African American bloc-voting and imply that free-thinking blacks can’t come out in favor of an elitist corporate tool because the black-Democrat cabal will excommunicate them (or something).

But Republicans consciously made the choice to sacrifice the black vote when they adopted the Southern Strategy. They decided, in their infinite wisdom, that picking up southern Dixiecrat voters was more valuable than conceding the African American vote almost entirely. They surely didn’t realize that this overtly racial strategy would be difficult to reverse when Latin Americans became electorally significant. And now that political correctness requires the Republican candidate for president to actually speak in front of black folks, Republicans have to deal with the awkward reality of their institutionalized racism. If only blacks could forget about decades of hostility from Republicans and think about school vouchers!

Romney claims that blacks are unlikely to tell pollsters that they are willing to vote for him. This would be the reverse of the Bradley effect. The Bradley effect is named after LA mayor Tom Bradley, an African American who lost a race for governor despite being ahead in the polls. Political scientists attributed this discrepancy to social desirability bias – in other words, people told public opinion pollsters what they thought would sound politically correct, not necessarily what they thought. In Romney’s universe, African Americans are telling pollsters that they’ll vote for Obama because they think that’s what they’re supposed to say. I think it’s a lot more likely that blacks are saying they’ll vote for Obama because they’ll vote for Obama.

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Heat wave, pt. 2

I wrote earlier that even a heat wave as pronounced as the one most of North America is now experiencing should not be taken on its own as evidence of global warming. I meant that this record breaking heat “proves” global warming no more than snow in Washington D.C. “refutes” global warming. Basically, I was making the “weather is not climate” argument, stressing the importance of the reams of weather data that climate scientists are using to predict global warming. But in an excellent column, Jocelyn Fong at Media Matters explains why this “weather is not climate” argument can’t be used interchangeably by climate advocates and deniers. I recommend you read the whole thing.

When climate advocates say “weather is not climate” during the winter, they are trying to communicate that weather variability doesn’t stop just because the planet is heating up on average. It’s crucial to note that they are saying this in response to those who claim a snowstorm or a cold snap refutes global warming. When you’re trying to overturn a theory that is based on long-term data, a single storm or weather event just won’t do. The burden of proof is higher. A cold snap doesn’t tell us much about climate, but a whole bunch of them would over time. The trends just aren’t going in that direction.

The record-breaking average temperatures of the past six months have followed a decade of historic average temperatures, so this current phenomenon is not a freak occurrence. But climate scientists have been extremely reluctant to tell the public that particular cases of extreme weather are evidence of the megatrend that is occurring. Instead, they try to communicate to decision makers through the very conservative reports produced by the IPCC, which rely on reams of data gathered since the 19th century and beyond.

But statistical analysis of millions of bits of data doesn’t really grip the human imagination the way a scorching hot summer can. Some research on this topic popped up in my twitter feed a few days ago.

From the paper (emphasis mine):

Studies that have examined opinion about the existence of global warming suggest that people’s values and political predispositions have a bigger impact than factual information on judgments about the nature and extent of the problem. Age, liberal ideology, pro-environment attitudes, and being nonreligious are associated with existence beliefs, while the effect of scientific knowledge about the causes and consequences of climate change is weak and inconsistent (Bord, O’Connor and Fisher 2000; Kellstedt, Zahran and Vedlitz 2008; but see Curry, Ansolabehere and Herzog 2007). People’s perceptions of the threat posed by global warming appear to be guided more by the polarized discourse of
political elites than by the scientific consensus affirming that climate change is taking place.

We hypothesize that an additional factor—the personal experience of local temperature variation—has an independent effect on attitudes about the existence of global warming.

For each 3.1° Fahrenheit that local temperatures in the past week have risen above normal, Americans become one percentage point more likely to agree that there is “solid evidence” that the earth is getting warmer… The size of the effect is substantial, comparable to the ceteris paribus differences in global warming beliefs by race, age, or education, and the effect increases in magnitude after longer periods of abnormal temperatures. The impact is short-lived, however, and therefore does not induce long-term attitude change.

So while the heat will affect attitudes about global warming in the short term, we shouldn’t bank on it to change the political environment. What we desperately need is a change in the public discourse, so that people can appreciate the changes they are seeing in their local weather within a broader context. Neither personal experience of extreme weather nor passive acknowledgement of scientific consensus is enough to get people to adjust their living patterns or expectations for the future. The talking heads on television can help the general population connect the dots between personal experience and abstract climate science. They can help us realize that as the climate changes, extremely hot summers like this one will become more likely and more common. When the media fails to point out that this hot weather is what the abstract concept of global warming actually feels like, people don’t change their attitudes or think about how prepared they are for a hotter, angrier planet.

Fung at Media Matters compares how the media contextualizes particular economic events within the broader frame of the national economy, but fails to do so when reporting on weather.

In December 2008 the Washington Post reported that AT&T and DuPont planned to lay off a combined 14,500 employees. The lead of the story said: “Need more proof that the recession is real? An onslaught of grim unemployment and layoff reports yesterday should dispel any lingering doubts.”

Was the recession the only force behind these job cuts? No. Other variables would be needed to explain why the layoffs were hitting these specific companies, at this time, and at this scale.  But the recession was the obvious background condition, the broader context that could not go unmentioned in a proper news report on the layoffs, and there was no hand-wringing about drawing the connection. The article didn’t caution that “No single bankruptcy or job cut can be definitively blamed on the recession.”

Back to the recession analogy. Imagine if, in 2009, President Obama spotlighted a company that was thriving to argue that the recession was over. Such a statement would not be taken seriously anywhere. Why? Because of the broader context — because of what we knew about the trends in employment, GDP, investment spending. By the same token, we know that by warming the climate, we’re making heat extremes more probable, and when we bring up climate change during a heat wave, it’s not to say that a specific heat wave is evidence of climate change — we have plenty of evidence in the long-term trends — it’s to say “this is what global warming looks like.” The alternative, refusing to recognize the symptoms of a disease we know we have, isn’t a smart approach, and it’s not good journalism.

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Heat wave

As Vancouver finally gets its first taste of summer, we can look to central Canada and the United States and feel fortunate that we’re not suffering from temperatures in excess of 40 degrees Celsius. Are the record-breaking temperatures evidence of global warming? I don’t think that’s really the question we should be asking. We can’t look at a single heat wave (even when it is as intense and as wide-ranging as what we’re seeing right now) and declare it proof of a global trend. No more than climate science deniers can claim that snow in Washington, D.C. disproves global warming. As convincing as this oppressive, sustained heat might seem, we can only find evidence of anthropogenic climate change in very large data sets — and by “we” I mean huge teams of climate scientists using number-crunching computers. I expect to see exactly this kind of finding in the next IPCC report.

The question we should be asking is, “If so many people have died this week from heat exhaustion and other heat-related causes, how ready for climate change are we?” The answer is “not at all”. We don’t have any reason to believe that North America’s electricity grid will be any more robust in the future. Hugely disruptive power outages are more likely in the coming decades, given that nobody seems willing to spend the money necessary to maintain existing energy infrastructure. And energy prices will rise, making it that much more difficult for the underclass to afford air conditioning, refrigerated food, fresh water, and literally every other modern amenity that keeps them alive.

Unfortunately, thinking about global warming in terms of dangerously hot days is far too narrow. It’s tragic that the old, the poor, and the infirm will die by the thousands in their poorly-insulated homes with no access to affordable medical care. But they’ll die in the middle of the winter, too, because of the general and catastrophic damage to the economy that climate change will inflict. Climate change (along with the energy crunch) will wreak havoc on world trade and food security. Mitigating the damage of sea level rise and extreme weather will suck away manpower and capital that could otherwise build sustainable housing, transportation, and medical facilities. The geographical range of tropical diseases will expand… the list of negative effects goes on. The fact is, runaway global warming is going to disrupt the economy so thoroughly that we can’t possibly anticipate all the indirect effects. But we can bank on who will suffer the most.

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Property values

In Life, Inc, Douglas Rushkoff tells us that he once had the misfortune of being mugged on Christmas Eve. As any conscientious and web-savvy person would do, he warned the members of his neighbourhood’s online message board to watch out for the suspect. Instead of feeling concerned for his safety, or even grateful for the advice, his neighbours berated him for publicly announcing the crime. Why? By making the mugging incident public knowledge, Rushkoff had  purportedly hurt the property values in his neighbourhood. Even though Rushkoff had undoubtedly contributed to the  community’s well-being, the beneficiaries of his good deed did not view their neighborhood as a “community” at all. Their houses were investments, not homes. Rushkoff ascribes this attitude to the creeping corpratization of our culture, and I find it hard to disagree.

I was reminded of this story by a post that just made the front page of reddit. Someone has been sending threatening letters to the poster, demanding that his family leave the neighborhood because the presence of his father’s taxi in the driveway is driving down property values in the neighbourhood.

“We asked you before to get your taxi out of your driveway and off the street, but we see that you’re back to your old ways. We’ve even noticed a beat up yellow cab parked across from your house. Are you too big of an asshole to realize how much these eyesores drive down your neighbors property values? You were warned. We know how to deal with assholes like you.”

Unsurprisingly, the community does allow small commercial vehicles such as taxis to be parked in driveways. But its shocking that someone could be considered an “asshole” just for being a taxi driver. Some people take any visible evidence of poverty (or in this case, an un-glamorous lifestyle) in their proximity as a personal affront. Just as the lord of the manor has the servants live in separate quarters, the besieged middle class prefer that the homeless, the janitors, the immigrants live somewhere else. Perhaps in the latter case, the presence of taxi drivers reminds white-collar neighbours of their own economic vulnerability. But really, a taxi cab in the driveway across the street not very influential on property values in a depressed economy. Maybe it’s time that people got out of the corporate mindset and started thinking like neighbors again. That would not only improve our quality of life but do much to improve the economic capacity of our cities (and property values along with it).

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