Home > World Events > Status quo on way out

Status quo on way out

January 8th, 2012

That’s the headline for my first Fin article for 2102, over the fold

Status quo on way out

At the peak of his power as Lord Protector of England, Oliver Cromwell marched north from London to fight the rebellious Scots. One of his lieutenants commented on the enthusiastic support they were given by the London crowd, to which Cromwell is said to have replied ‘Do not trust to the cheering, for those persons would shout as much if you and I were going to be hanged.”

That anecdote can be interpreted in many ways, but one of the most important is the fragility of seemingly solid regimes, political, economic and social. The same crowds that turn out to cheer in mass rallies when the regime is unchallenged will turn against it the moment that change seems possible.

We saw quite a few examples of this in 2011, from the Arab Spring to the Occupy Wall Street movement. Already a number of dictatorial regimes have fallen, and others are clearly on the way out. But as 2012 begins, hardly any established institution can be confident of seeing out the year.

The upsurge of 2011 began, entirely unexpectedly, in Tunisia where a street vendor, Mohamed Bouazizi who had set himself on fire in protest of the confiscation of his wares, died on 4 January. Ten days later, the seemingly solid regime of Zine Ben Ali had collapsed, and the dictator himself was forced to flee to Saudi Arabia marking an ignominious end to 23 years of power.

The subsequent turmoil has seen the overthrow of Hosni Mubarak and Muammar Gaddafi. The few remaining dictators, including Assad of Syria and Saleh of Yemen are on the way out, and the absolute monarchies of the Gulf are living on borrowed time. Arguably more important has been the death of what might Francis Fukuyama called the ‘Arab exception’. This is the claim that the concept of democracy is not really applicable in Arab countries and that foreign policy therefore amounts to a choice of which dictator to support.

This idea, in one form or another, has guided the foreign policy of Western countries ever since the fall of the Ottoman empire, implying a free rein to interfere in the pursuit of a variety of goals, notably including a secure supply of access to oil, support for the policies of successive Israeli governments and, more recently, the War on Terrorism.

The Arab Spring echoed around the world, producing popular movements that challenged entrenched powers as diverse as Vladimir Putin in Russia and Wall Street in the US. The concentration of money and political influence represented by both of these powers seemed to make any opposition quixotic. Yet the combination of poor economic performance and popular revolt has put them both on the defensive. Putin’s return to the Russian Presidency later this year, viewed as a formality until recently, is now in question. Meanwhile, the financial sector, which suffered no real consequences for the near-destruction of the global economy in 2008, is suddenly on the defensive.

Popular revolt has undermined long-established institutions in many different ways. In the US, the Republican Party should be looking forward to an easy victory in the November Presidential election. The economy is in very poor shape, and Obama has ignored the problem for most of his term in office, focusing instead on the passage of a health care reform package that has never been popular. Instead, thanks to the influence of the radical rightwingers of the Tea Party, the nomination process has been a farce. The absurdity of the process means that the seemingly inevitable, but thoroughly unappealing, candidate of the Republican Establishment, Mitt Romney, will start the year at no better than even money to beat Obama.

Meanwhile, in Europe, the European Central Bank with the support of the French and German governments is pushing misconceived austerity programs over popular opposition, while refusing to take the one step that nearly all independent economists recommend – a program of quantitative easing. Not only the euro, but the viability of the EU itself is being called into question.

Here in Australia, the economy is going well, and popular revolts on the right (the Convoy of No Confidence) and left (the Occupy movement) have not attracted much support. Nevertheless, Julia Gillard is just one bad opinion poll away from a leadership challenge. If she falls, the spotlight would immediately turn to Tony Abbott, who is almost equally unpopular.

All in all, many people and institutions that seemed firmly entrenched at the beginning of 2011 are likely to be distant memories by the end of 2012. We are in for interesting times.

John Quiggin is an ARC Federation Fellow at the University of Queensland

Categories: World Events Tags:
  1. Sam
    January 8th, 2012 at 18:41 | #1

    Quite ambitious of you John. You’re already making predictions for the 22nd century!

  2. TerjeP
    January 8th, 2012 at 20:12 | #2

    Most of the troubled European nations, such as Greece, Italy, Portugal and Spain don’t need quantitative easing to cheapen their labour force. They all have payroll taxes approaching 30%. They could price workers back into the international labour market by trimmming (or preferably abolishing) these taxes and by removing some of the regulatory constraints that make labour expensive. If they really feel like there will be significant amounts of revenue lost (given the negatives of payroll tax I think they need not worr too much) they can make it up by increasing the VAT. The net effect will also lower real incomes, however this is what quantitative easing would essentially do anyway.

    Economist Steve Hanke wrote about this way forward in 2010 but I can’t get the article to load right at the moment.

  3. TerjeP
    January 8th, 2012 at 20:21 | #3

    Whilst the Steve Hanke article won’t currently load Google throws up the following blog article which has an extract along with the none loading link:-

    http://weblogs.baltimoresun.com/business/hancock/blog/2010/07/hanke_greece_should_cut_payrol.html

    Greece should eliminate the employer contribution to payroll taxes, which is currently 28% of wages (employees pay a further 16% rate directly).

    Given JQ’s views on payroll tax I wonder if he was aware of these high rates and what he thinks of them. Of course in Greece they are refered to as social security taxes rather than payroll taxes but that is mere semantics.

  4. Mel
    January 8th, 2012 at 21:04 | #4

    John, this sentence makes no sense:

    “Arguably more important has been the death of what might Francis Fukuyama called the ‘Arab exception’.”

    I also note this:

    “Fukuyama says that these events show that there is no such thing as an Arab exception. Instead, he claims, it is a universal truth that nobody wants to live under an authoritarian government that does not respect the dignity of the individual – the Arab peoples are no different from anyone else.” http://www.au.dk/en/univers/news/artikel/true-democracy-demands-more-than-the-right-to-vote/

  5. Wooster
    January 8th, 2012 at 22:16 | #5

    We shouldn’t underestimate Western influence on the events unfolding in the Arab world. The Egyptian uprisings, for example, are a protest not only against the corruption of the ruling elite, but also against the global institutions of the World Bank and the IMF. Privatisation and “structural adjustments” implemented in cahoots with the government helped make Egypt one of the World Bank’s “top reformers” last decade, but simultaneously further impoverished the general population.

    http://anilnetto.com/corporate-led-globalisation/imfworld-bank/egypt-followed-imfworld-bank-ideas

    http://www.whistleblower.org/blog/31-2010/1083-arab-uprisings-show-the-impact-of-the-world-bank-and-the-imf

  6. Dan
    January 8th, 2012 at 22:38 | #6

    @Mel

    Pff, yes it does. To spell it out, the idea that Arabs aren’t interested in or capable of being democrats (so we shouldn’t worry too much about their human and political rights, because the poor dears wouldn’t know what to do with them if they had any) has been utterly and thoroughly debunked by a movement that looks like, for all intents and purposes, a bunch of regular people who are well sick of being dumped on by their ruling elites.

  7. Dan
    January 8th, 2012 at 22:40 | #7

    NB. Fukuyama may have got it right on this, in a way reminiscent of a broken clock.

  8. James
    January 8th, 2012 at 23:06 | #8

    JQ your statement “Meanwhile, in Europe, the European Central Bank with the support of the French and German governments is pushing misconceived austerity programs over popular opposition, while refusing to take the one step that nearly all independent economists recommend – a program of quantitative easing.”seems to allow for only two options.

    I have yet to see a coherent argument as to why the bondholders should not take a complete bath on this all. Sure, it will domino through the banking industry wiping out much of the financial wealth not only of the top 1% and but also the next 20% (or whatever). But at the end of the day there will still be the oil tankers, the steel mills, the shiny towers and the holiday houses and all the luxury toys (although possibly not with the original owners). If a government can do quantitative easing, surely it can do refinancing to keep viable businesses functioning.

    Or is that just absurdly naïve. Is this is a case where the 99% have to pay either way for the excesses of the 1% because the alternative is too difficult? Or perhaps the 1% believe it won’t all come unstuck until they see the blood in the streets. Democracy, oligarchy, tyranny. I think the drumbeat of history would put us somewhere between the last two.

  9. Mel
    January 9th, 2012 at 06:03 | #9

    @Dan

    Dan, I was referring to what appears to be a misplaced word- “might” – which makes the meaning of the sentence unclear.

  10. Dan
    January 9th, 2012 at 06:15 | #10

    Ah, quite so. My apols.

  11. Mel
    January 9th, 2012 at 06:45 | #11

    @Dan

    “To spell it out, the idea that Arabs aren’t interested in or capable of being democrats …. has been utterly and thoroughly debunked …”

    I think you’re being a little crude and ahistorical again. Only a few short decades ago postcolonial Africa elected a range of bright young democrats, Robert Mugabe for instance, and the world was truly its oyster. Then, just a few years later, it was being run by psychopaths, kleptocrats and cannibals. There are dozens of other historical examples of democracy failing to take root after some initial promising signs.

    I think democracy will eventually take root in the Middle East, but I think all we are seeing now is a very early and not terribly convincing rehearsal.

  12. Ernestine Gross
    January 9th, 2012 at 07:23 | #12

    “Meanwhile, in Europe, the European Central Bank with the support of the French and German governments is pushing misconceived austerity programs over popular opposition, while refusing to take the one step that nearly all independent economists recommend – a program of quantitative easing. Not only the euro, but the viability of the EU itself is being called into question.”

    The European Central Bank has followed a program of “quantitative easing” within the institutional framework of the EU since the fall of the NY iInvestment-Bank Bear Stearns in early 2008. That is, given the drying up of the interbank loan market, the ECB offered credit to banks at low interest rates for 3 months. For a long time, the ECB bought government securities from financially distressed EURO member countries in the secondary market, thus cushening the price of these securities and hence helping the sellers of these securities. (The ECB is prohibited by law to buy government securities directly from the issuer.) After the last ‘emergency meeting’ in December 2011, the ECB offered EURO member banks unlimited credit at 1% for 3 years fixed. By 21 December 2011, banks from the Euro zone asked for Euro 489,200,000,000. Source: Sueddeutsche Zeitung.

    This way of quantitative easing may seem to be exceedingly awkward to ‘independent’ economists who are used to different institutional environments.

    Is there any country that has monetary institutions which rest of the assumption issuers of financial securities provide false information and be bailed out?

    Lets see who among the independent economists will advocate a bit of austerity for the financial sector by recommending a Tobin type financial transactions tax and who among the politicians in various EU and non-EU governments will legislate for such a tax to get revenue to reduce the effective austerity of the working poor while reducing the risk of another ‘demand for bailouts’.

  13. Dan
    January 9th, 2012 at 07:37 | #13

    @Mel

    “I think you’re being a little crude and ahistorical again.”

    Is this a swipe stemming from the fact that I called Iraq correctly at the outset and you did not?

    I suppose there’s no crudeness to your cheerfully regarding Aftica and the Middle East as interchangeable?

    Beyond that, how does anything you say not square with anything I said?

  14. Dan
    January 9th, 2012 at 07:38 | #14

    *Africa, obviously

  15. Ikonoclast
    January 9th, 2012 at 10:17 | #15

    Causation in history is a fascinating and complex topic. Good history does not invoke trivial and unlikely causes. Journalism is not held to such a strict standard.

    “The upsurge of 2011 began, entirely unexpectedly, in Tunisia where a street vendor, Mohamed Bouazizi who had set himself on fire in protest of the confiscation of his wares, died on 4 January.” – JQ.

    The Wikipedia article on the Arab Spring says something similar.

    “It (the Arab Spring) was sparked by the first protests that occurred in Tunisia on 18 December 2010 following Mohamed Bouazizi’s self-immolation in protest of police corruption and ill treatment.”

    Why do JQ’s article and the Wikipedia writer’s article both mention this event and link it, causally or casually to the beginning of the Arab Spring? Is it thought to be a prime cause, a contributing cause or a catalyst? Is it considered good journalism to add a gruesome human interest angle to the story? Is it possible that this event is merely coincidently close to the beginning of the uprising and people have focused on it as a convenient mythic start to the event? Have other self-immolations or dramatic individual protests occurred over recent years that are unremarked because they were not followed by any uprising?

    I am sure these “Arab Spring” events have complex underlying causes. I’m sure JQ thinks so too but 750 words and a journalistic brief do not allow much of this to be explored. Each case presents an unstable equilibrium followed by a series of perturbations tending toward a new possible equilibrium or maybe just chaos and collapse.

    JQ finishes by saying; “All in all, many people and institutions that seemed firmly entrenched at the beginning of 2011 are likely to be distant memories by the end of 2012. We are in for interesting times.” I tend to agree.

    What really underlies the unrest? I suspect we would find a close correlation between food and fuel prices (and even shortages) and all civil unrest and revolution. This current unrest will likely spread across MENA (Middle East and North Africa) and maybe wider as imminent world food and fuel shortages become manifest, happening in the poorer regions first. The supposed Arab drive for democracy is much over-rated. I think it more likely they are headed for highly despotic theocracies and/or splits into sectarian camps and warlord-ism.

  16. Dan
    January 9th, 2012 at 10:37 | #16

    @Ikonoclast

    ‘I think it more likely they are headed for highly despotic theocracies and/or splits into sectarian camps and warlord-ism.’

    Possibly so but not because that’s what the man on the street wants.

  17. Ikonoclast
    January 9th, 2012 at 11:06 | #17

    @Dan

    I don’t know what the average person or the masses want in the various MENA countries. However, fundamental religion and pre-Enlightenment attitudes seem to attract majority support in most of those countries and the prospects for an Enlightenment of reason and empirical attitudes, let along genuine democracy, seem poor.

  18. Troy Prideaux
    January 9th, 2012 at 11:22 | #18

    @Ikonoclast
    I think you have to give the journalists some credit. Some have been there, on the ground and asking the man & women on the street about their opinion of what’s happening.
    I’m gathering the impression that some of these rebellions are based around religious or tribal control as per Syria, but it varies from region to region.

  19. Ikonoclast
    January 9th, 2012 at 13:56 | #19

    @TerjeP

    TerjeP, as usual, promotes austerity (low taxes and low wages) as an expansionary policy. Removing the payroll tax would be fine in Greece’s current economic dilemma provided Greece had a sovereign currency (the drachma not the euro) and could run conventional budget deficits. Low wages are not the path to prosperity. All spending is someone elses income. Low wage earners and the unemployed on benefits cannot spend much so their contribution to aggregate demand is relatively weak. Good wages, full employment and a Job Guarantee (buffer stock employment) is the way to prosperity (except for the influence of exogenous shocks like natural disasters and resource shortages).

  20. Mr. Eyesore
    January 9th, 2012 at 16:56 | #20

    @Ernestine Gross
    The French are making noises about introducing a Tobin tax in the near future:
    http://www.reuters.com/article/2012/01/08/us-france-tax-idUSTRE8050ZF20120108

    Whether they genuinely intend to do so, or if it’s just a bit of political signalling to the financial industry, we’ll find out soon enough.

  21. paul walter
    January 9th, 2012 at 17:52 | #21

    Exceptionalism.
    God bless you, John Quiggin.

  22. TerjeP
    January 9th, 2012 at 19:08 | #22

    Icono – austerity is usually considered to be tax hikes and spending cuts. I have not recommended austerity. I have suggested a supply side tax cut to fire up enterprise. A cut in the payroll tax will lower the cost of doing business and in particular lower the cost of using labour. Nowhere did I talk of spending cuts and in fact I pointed out that if there were revenue concerns other taxes could do the job (ie VAT). Your reflexive cynicism is uncalled for.

  23. TerjeP
    January 9th, 2012 at 19:10 | #23

    Do you seriously support a 30% payroll tax?

  24. Troy Prideaux
    January 9th, 2012 at 19:29 | #24

    Conceptually: Can anyone justify why any business should be penalized for employing people?

  25. Dan
    January 9th, 2012 at 19:46 | #25

    Yeah, I’m also real cold on it. How and why was it implemented at all (leaving aside the bleeding obvious)?

  26. Ikonoclast
    January 9th, 2012 at 20:41 | #26

    @TerjeP

    No, I don’t support a payroll tax. Remove it. I agree with you on that one.

    You did use the phrases “to cheapen their labour force” and “lower real wages” so my reflex was triggered and perhaps justifiably so. If real wages are lowered, spending is lowered, aggregate demand is lowered and, hey presto, you have a recession.

    TerjeP, you can also call for removal of negative gearing and fossil fuel subsidies in Australia and I will agree with you. Taxes could be lowered with the very substantial savings from these measures.

  27. TerjeP
    January 9th, 2012 at 21:46 | #27

    I don’t favour the lowering of real wages. I was just saying that if you cut payroll tax and the decide to also increase VAT the combined effect is like lowering real wages. From the employers point of view labour would cost less (due to reduced payroll tax) and from workers point of view income buys less (due to higher VAT). However this is also the result with quatitative easing. For example if Greece got it’s own currency it could lower real wages via a currency devaluation. Of course currency devaluation (quantitative easing) causes other problems.

    If it was up to me Greece would stay in the euro, default on it’s public debt, axe the ~ 30% payroll tax, loosen labour regulation and watch the economy bounce back at a million miles per hour. Real wages would not decline but the real cost of employing people would plummet.

    Other than defaulting on public debt much the same should be done in Italy, Spain and Portugal that all have appallingly high payroll taxes and ridiculously rigid labour laws. There is simply no need to refocus euro monetary policy away from the prime goal of price stability.

  28. TerjeP
    January 9th, 2012 at 21:49 | #28

    @Troy Prideaux

    It probably seemed like a good idea at the time.

  29. TerjeP
    January 9th, 2012 at 21:53 | #29

    The full Steve Hanke article seems to be working again:-

    http://online.wsj.com/article/SB10001424052748704103904575336822758493764.html

    So, with the elimination of the employer contribution to the payroll tax, Greece would enhance its competitiveness. The enhancement would be equal to roughly a 44% devaluation. Moreover, the supply-side generated competitiveness would not be accompanied by the inflation and widespread private-sector bankruptcy that a devaluation would provoke.

  30. Chris Warren
    January 10th, 2012 at 08:15 | #30

    TerjeP

    The only solution for capitalism to counter its crisis, is to cut wages. This is the essence of Keynesian economics.

    Wages must be cut unless debt or the population can increase exponentially.

    The alternative is to fix wages but then you have to expand the non-capitalist sector.

  31. TerjeP
    January 10th, 2012 at 08:22 | #31

    Here is another version of the payroll / VAT revenue swap for Greece with some more numbers:-

    http://www.voxeu.org/index.php?q=node/4666

  32. James Haughton
    January 10th, 2012 at 10:10 | #32

    Chris Warren :TerjeP
    The only solution for capitalism to counter its crisis, is to cut wages. This is the essence of Keynesian economics.

    Er, this is more like the antithesis of Keynesian economics. Keynes and subsequent Keynesians (old, new, neo, post, whatever) are pretty much in agreement that recessions, depressions and crises are caused by deficient aggregate demand. Cutting wages would reduce demand and make things worse. That’s why our host, Paul Krugman, et al, are so opposed to “expansionary austerity” – in the New Keynesian paradigm, nominal wages are downwardly rigid (and in a zero-inflation liquidity trap, nominal effectively equals real) and so restoring competitiveness by cutting wages is almost impossible; fiscal and monetary expansion are what is needed.

  33. Troy Prideaux
    January 10th, 2012 at 10:40 | #33

    @James Haughton
    I can certainly appreciate how it can be concluded that monetary expansion is what’s needed to stimulate demand in the current circumstances, but the missing link for me (and I’m only halfway through John’s Book) is how does monetary expansion restore *competitiveness* to an economy like Greece’s or any economy for that matter? What is/are the mechanism(s) involved to achieve this outcome?

  34. TerjeP
    January 10th, 2012 at 10:44 | #34

    Monetary expansion lowers real wages in so far as it is inflationary. Or in so far as it leads to currency devaluation.

    Fiscal expansion assumes capital has spare capacity and is simple in need of demand before more labour will be employed. Places like Greece are not in a position to engage in fiscal expansion because their credit rating is crap. The recession there is in large part because the government must cut spending and because the structure of the economy needs to shift away from government financed activity. In order to pick up the slack the private sector needs some improvements on the labour side. This can be achieved through a nominal (and real) decline in wages that will be long and painful, a monetary expansion which is inflationary and cuts real wages or a cut to payroll taxes which leaves real wages intact but still makes labour cheaper to employ and improves business profits and incentives.

  35. Troy Prideaux
    January 10th, 2012 at 10:57 | #35

    @TerjeP
    “Monetary expansion lowers real wages in so far as it is inflationary. Or in so far as it leads to currency devaluation. ”

    Yes, I can certainly appreciate that theory for 95% of all cases, but as I’ve been saying here in recent threads: how can we be confident that monetary expansion will produce significant inflationary pressures after trillions of dollars have disappeared off the face of the planet via the GFC bust? For Greece, can the currency devaluation be initiated by the dept sentiment which thereby can produce inflationary pressures via the devaluation?

  36. Chris Warren
    January 10th, 2012 at 12:19 | #36

    @James Haughton

    When Keynes-types say the cause is ‘deficient aggregate demand’ they omit to mention what the cause of this deficiency is.

    As usually expressed – it is a placebo proposition.

    Expansionary austerity could just mean “get bigger but move slower” – the opposite of lean and fast.

    I am not up on the New Keynesian paradigm, so I assume this is just the usual fad and they still pretend that the old story that Income = profits plus wages.

    The reason there is deficient aggregate demand is – derr – because they want Income to fund both wages and profits (which is impossible in the long run).

    If income = wages, then there can never be any structural deficiency in demand. But Keynesians usually blow-a-fuse at this point.

  37. Chris Warren
    January 10th, 2012 at 12:24 | #37

    Clarification.

    …..they want Income to fund both wages and Capitalist profits.

    It is of course possible to fund normal profits – a different type.

  38. TerjeP
    January 10th, 2012 at 13:20 | #38

    Troy – currency expansion to avoid debt deflation is all well and good. No argument from me as it is consistent with macro level price stability. However Europe is not in the grip of declining consumer prices. The ECB is doing a reasonable job of ensuring price stability.

  39. Ikonoclast
    January 10th, 2012 at 13:49 | #39

    A couple of things that TerjeP says;

    “Places like Greece are not in a position to engage in fiscal expansion because their credit rating is crap.” – TerjeP.

    This is true while Greece remains in the EMU (European Monetary Union). It is not of consequence if Greece leaves the EMU and refloats the drachma. Greece can then deafault on debt if need be and use budget deficits to fund domestic needs and increase aggregate domestic demand. This process can be pushed to the limit which just begins to cause significant inflation.

    “There is simply no need to refocus euro monetary policy away from the prime goal of price stability.” -TerjeP.

    I would have thought the prime goal of managing an economy ought to be human needs including the need for employment. Making an excessive fetish of price stability and using blunt instrument policies to keep it there (high unemployment and interest rates) when better and more humane policies would achieve much more is just ideological doctrine. The Job Guarantee of MMT, setting a price floor for wages and guaranteeing full emplyment is the right way to go.

    The hole that the EMU finds itself in, the high unemployment and unutilised capacity, are due to the lack of currency sovereignty, the falsehood that governments must borrow from private bond markets to spend and the falsehood that deficit spending must be pared right back even in a recession. The EMU mess is empirical proof that these policies (along with lax financial regulation and bailing out private banks by flooding them with liquidity and bailouts) are wrong.

  40. TerjeP
    January 10th, 2012 at 13:58 | #40

    This is true while Greece remains in the EMU (European Monetary Union). It is not of consequence if Greece leaves the EMU and refloats the drachma. Greece can then deafault on debt if need be and use budget deficits to fund domestic needs and increase aggregate domestic demand. This process can be pushed to the limit which just begins to cause significant inflation.

    Greece can default without leaving the euro. It is a simple matter. It just declares that it won’t honour existing bonds.

    Implying that there is no downside to exiting EMU is simply ludicrous. Leaving the euro would have huge contractural implications. It would be horrendously disruptive for the private sector.

  41. Julie Thomas
    January 10th, 2012 at 14:18 | #41

    Of course you are right, Ikonoclast, the goal of managing an economy ought to be human needs, including (or especially) the need for employment. The costs of the psychological problems created by a lack of social inclusion and acceptance should be well enough understood by now so that it isn’t controversial.

    I’m thinking there might be some significant changes happening on ‘the right’ with respect to the science of human behaviour; or perhaps I am wearing my rose coloured glasses. But I did read someone over on the Catty site talking about meditation and minfulness without sneering and being nasty!

  42. TerjeP
    January 10th, 2012 at 15:26 | #42

    The costs of the psychological problems created by a lack of social inclusion and acceptance should be well enough understood by now so that it isn’t controversial.

    Of course it isn’t controversial. Nobody has claimed that unemployment is desirable. Certainly not me. If loose monetary policy provided a sustainable means to lowering unemployment then I’d be all for it. However the Phillips curve is bunk. Inflationary policies impoverish the poor and disrupt and distort production. These sorts of policies do not advance human welfare, they impede it.

  43. TerjeP
    January 10th, 2012 at 15:28 | #43

    Even JQ acknowledges that payroll taxes destroy jobs. That Greece could erect a 28% payroll tax in the name of “social security” is perverse and monstrous.

  44. Mel
    January 10th, 2012 at 16:42 | #44

    @Dan

    Iraq has to be deemed a failure (at least at this stage) because the inhabitants have demonstrated a remarkable capacity for slaughtering each other and for electing politicians who are amoral brutes, fundamentalists and rabid sectarians rather than genuine democrats.

    Given the failure of the democracy experiment in a Middle East country with a sizeable educated middle class, namely Iraq, and the current state of affairs in Libya and Egypt your, “utterly and thoroughly debunked” argument is so much piss in the wind.

    Your claim that I think African and ME are interchangeable is false. My point is that 9 out of 10 experiments in democracy fail, the post-colonial Africa fiasco being just one example. The ME itself has plenty of examples of its own.

    Arab Spring, my big black horse’s ass.

  45. January 10th, 2012 at 19:06 | #45

    Pr Q said:

    Arguably more important has been the death of what might Francis Fukuyama called the ‘Arab exception’. This is the claim that the concept of democracy is not really applicable in Arab countries and that foreign policy therefore amounts to a choice of which dictator to support…We are in for interesting times.

    “Interesting times” was a curse that Chinese conservatives hurled at people who were inclined to under-estimate the costs of meddling. A Freudian slip, given the topic of this post.

    The PRC is firmly on track to be the hegemonial super power within our lifetime. So its hard to think of any more important political issue than the constitution of the Chinese state.

    The big exception to the Fukuyama-n end of “exceptions” for dictators is the PRC. The CCP is still firmly in the saddle there, despite an uptick in protests over the past few years. Which were mainly aimed at corrupt local governments trampling on the rights of citizens on behalf of property developers and industrial polluters, rather than the Party itself.

    Over these past few years I’ve lost count of the number of public commentators who have been calling the imminent end of the CCP’s rule or at least major political upheavals, Pr Q being particularly prone to crying wolf. But the Jasmine Spring has persistently failed to go through the formality of actually occurring.

    The CCP’s power comes out of a pretty powerful double-barrlled gun. Carrot-wise, most Chinese are pretty smart and appreciate the good job the Party has performed in managing the “four modernizations” set in train by Deng in 1978. Stick-wise, the PLA is a wholly owned subsidiary of the CCP, so the tanks can be relied on to roll over any public protests that get too serious.

    I will bet on that economic competence and civic potence. In early 2009 I predicted that the PRC would make a rapid recovery from the GFC. I remain confident that the CCP can ride out public protests over at least the next decade, so much so that 01 FE 2011 I threw down the predictive gauntlet to the Crooked Timbers: “I will put down $100 at 1-to-2 odds that the CCP will be in charge of the PRC in 10 years”. There was one taker.

    It would be nice if social scientists tried their hand at specific predictions of political change. For instance, will the Arab Spring be taken over by the Muslim Brotherhood? Will the ANC go the same way as Mugabe after Mandella dies? What are the odds?

  46. Dan
    January 11th, 2012 at 08:44 | #46

    @Mel

    Yes, it’s the Iraqis’ fault.

  47. Wooster
    January 11th, 2012 at 10:02 | #47

    Mel,

    “The democracy experiment”, as you term it, was always an altruistic whitewash for America’s grab for influence over resources in the region. George W. Bush (and his cronies) was no less “fundamentalist” in his fervour for the invasion agenda…apparently “God” told him to do it.

    How is it that the West assumes that it could bomb the daylights out of a country, destroy its infrastructure and traumatise its inhabitants – and then glibly shake its head that an uncomplicated and orderly transition to “democracy” is not forthcoming?

  48. Troy Prideaux
    January 11th, 2012 at 10:07 | #48

    @Wooster
    Japan?

  49. Troy Prideaux
    January 11th, 2012 at 10:11 | #49

    @Troy Prideaux
    Maybe West Germany is a better example?

  50. Dan
    January 11th, 2012 at 10:17 | #50

    @Wooster

    Don’t bother telling Mel that Iraq was a resources grab. I did and was branded a conspiracy theorist.

    In any event, I maintain that there’s a massive difference between endogenous and exogenous regime change (although I know it’s not necessary simple to distinguish the two).

  51. Wooster
    January 11th, 2012 at 10:32 | #51

    Troy Prideaux,

    Yes, I suppose that’s how the Bush regime saw it as well – all very simple – a piece of cake.

    Of course, the U.S. wasn’t always into “creating” democracy in the Middle-East. The CIA was actively involved in the overthrow during the early 50′s of Iran’s democratically elected government and the ensuing installation of the Shah. We’re still dealing with the ramifications of that today.

  52. Troy Prideaux
    January 11th, 2012 at 10:36 | #52

    @Wooster
    Yes, I’ve lost complete faith in their (the US) moral claims alas.

  53. Ikonoclast
    January 11th, 2012 at 13:18 | #53

    I lost all faith in the US’s moral claims in about 1966.

  54. Mel
    January 11th, 2012 at 14:53 | #54

    @Dan

    “Don’t bother telling Mel that Iraq was a resources grab. I did and was branded a conspiracy theorist.”

    You concocted an especially harebrained conspiracy theory to “explain” how Iraq was a resources grab. Give me a theory that isn’t cartoonish, preferably with some evidence, and I’ll reconsider the claim.

    And once again let me point out that I’m *not* saying resources were not a causal factor in the Iraq invasion. My problem is with the dopey drummer theories invented by clueless keyboard supernauts to explain the causal connection.

  55. Dan
    January 11th, 2012 at 15:44 | #55

    That’s an utter mischaracterisation and you were recognised as straw-manning by other commenters here at the time. I’ve posted the link so Wooster can make his (or her?) own mind up but it’s in moderation.

  56. rog
    January 11th, 2012 at 22:15 | #56

    The continued existence of Guantanamo tests the notions of freedom and liberty in the US ( and the concept of rational actor).

  57. rog
    January 12th, 2012 at 04:55 | #57

    Continuing on with the theme this article indicates the depths to which the press will stoop to manufacture the news and the ability of administrations to make rational decisions based on forged news items.

    http://www.bloomberg.com/news/2012-01-11/iran-nuclear-weapons-charge-is-no-slam-dunk-commentary-by-robert-kelley.html

Comments are closed.