Monthly Archives For January 2016

So How’s the ol’ 1 Percent Getting On?

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The 1-percenters are back in the news with the Oxfam study showing that the world’s richest 1 percent owns more wealth than all the rest of the planet put together. So what about our own 1 percent? How are they doing? Let’s have a look at how that 1 percent and other top earners have been getting along in the crisis.

What follows is based on the EU’s Survey of Income and Living Conditions measurement of income (there may be trouble with the link – go to Eurostat Database/Population and Social Conditions/Living Conditions and welfare/Income and living conditions/income distribution and monetary poverty/distribution of income/the first table). It is a different concept from what Oxfam used: wealth. Wealth ownership refers to assets – real estate (buildings, land) and financial property (shares, bonds, cash, equities, pension pots, etc.). Income refers to the annual flow, whether it is employee or self-employed earnings, investment income, pensions, etc.

Income is only one measure of economic power and influence in the economy. Profits levels, the relative strength of labour and capital, degree of financialisation, place in the production process, social status, ownership of assets – it could be argued that income is the result, not the cause, of unequal power relationships in the economy. But it’s an informative measurement and can reveal something of what is happening around us or, in this case, above us.

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Prior to the crash the top 1 percent held nearly six percent of the share of national income, above the EU-15 average. This fell to 2011 – primarily due to losses in capital and self-employment income arising from property and speculative losses in the crash. However, since 2011 (and the current government), things are on the mend with the 1 percent trending upwards. Still a ways to go to pre-crash levels but with a little time and a few tax cuts, normal business should be be resumed.

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Lower Your Expectations – the Recovery is Settling In

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Remember at the beginning of the recession when we had all those letters to represent the likely course of the economy. There was the V-shape to represent severe decline followed by an immediate bounce-back; a U-shape to represent severe decline, a bit of lingering at the bottom and then a bounce-back; and the L-shape with severe decline followed by flat-lining as the economy stagnated. Between 2008 and 2013 this best fit the economy.

Now the economy is back in recovery mode but under the Government projections we are not going to bounce back to pre-recession levels of living standards. Lower your expectations, sisters and brothers, the recovery is setting in.

Let’s take a historical look at two indicators of living standards. First, consumer spending:

  • Between 1970 and 1995, a period covering two slump periods punctuated with growth, real consumer spending averaged 2.7 percent annually per capita.
  • Between 1995 and 2000 (the good phase of the Celtic Tiger, based on investment, manufacturing and exports), real consumer spending averaged 8.5 percent annually per capita. That was a strong performance, with employment rising, increasing wages and the ongoing shift to a modern enterprise base.
  • Between 2000 and 2007 (the bad speculative phase) real consumer spending averaged 3.4 percent per capita.. A little better than the pre-Celtic Tiger period but as we know, unsustainable.

Then the recession hit and consumer spending fell by over 10 percent. However, as always happens, the economy recovered. In the textbook alphabet, there would be a burst coming out of the recession, representing pent-up demand, and then things would settle back down to past trends. If the Government projections come true, this will not be the case.

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“Wants” A US-style Taxation System?

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The Taoiseach says he wants a US-style tax system. What does he think we have already? Here’s what the EU Ameco database tells us. Ireland data from 2015 comes from the Government’s own budgetary projections.

US Taxation

Ireland already has a US-style taxation system – if we use general government revenue as the benchmark. Before the crash Ireland was awash with revenue from the speculative boom; revenue that quickly evaporated. Since then, Irish government revenue has been steadily falling. By 2017:

  • The Government projects revenue will be below 32 percent of GDP. When we factor in multi-national accountancy practices, this figure rises to 34.5 percent
  • Ameco projects that US revenue will be 34 percent
  • Ameco also projects that Eurozone revenue will be over 46 percent.

A few things stand out in this. First, we are already at low US low-levels of taxation. Second, we are certainly not at European norms. We’d have to raise taxation by a mind-boggling €26 billion to reach the Eurozone average. Even with the demographic benefit of having fewer elderly (which is substantially negated by a higher level of young people) we’d have to increase taxation massively.

Third, the Government projections foresee revenue falling even further out to 2021 when it will be below 34 percent.

And here’s the kicker: this doesn’t factor in tax cuts that a future government may introduce. For instance, Fine Gael wants to abolish USC. That will drive tax revenue down further, potentially falling behind US levels.

When measured as a percentage of GDP, Ireland is at the bottom of EU tables – fighting it out with Romania and Latvia for the rock bottom prize. Nods towards quality health and education services, childcare and eldercare, public transport, pensions and incomes supports are made, but these are little more than nods; perfunctory gestures in a debate that effectively excludes the social.

What the Taoiseach really wants is for Ireland to be a basement-without-a-bargain economy where public resources are squeezed, investment is starved, and the energy bulb frequently cuts out without any window to let in the light.

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How the influence of World Bank policies damaged China’s economy

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Present negative trends in China’s financial system and economy were accurately predicted by me three years ago as occurring if there was any influence of policies of the World Bank Report on China.

While China has made major steps forward in areas such as the Asian Infrastructure Investment Bank and New Silk Road (‘One Belt One Road’) unfortunately in some areas World Bank policies did acquire influence. As predicted they led to present negative trends.

There should also be clarity. China has the world’s strongest macroeconomic structure so these trends will not lead to a China ‘hard landing’. But they are a confirmation that no country, including China, can escape the laws of economics. As long as there is any influence of World Bank type policies, which are also advocated by Western writers such as George Magnus and Patrick Chovanec, there will be problems in China’s financial system and economy.

The article I wrote in September 2012 which was published under the original title ‘Fundamental errors of the World Bank report on China’ is republished without alteration. 

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The World Bank’s report China 2030 has, unsurprisingly, provoked major criticism and protest. I have read World Bank reports on China for more than 20 years and this is undoubtedly the worst. So glaring are its factual errors, and economic non-sequiturs, that it is difficult to believe it was intended as an objective analysis of China’s economy. It appears to be driven by the political objective of supporting current US policies, embodied in proposals such as the Trans-Pacific Partnership.

Listing merely the factual errors in the report, of both commission and omission, as well as the elementary economic howlers, would take up more column inches than are available to me. So what follows is just a small selection, leaving space to consider the possible purpose of such a strange report.

The report has no serious factual analysis of the present stage of China’s economic development. On the one hand it is behind the times and “pessimistic”, saying China may become “the world’s largest economy before 2030”. This is extremely peculiar as, by the most elementary economic calculations, (the Economist magazine now even provides a ready reckoner!) China will become the world’s largest economy before 2020.

On the other hand, the report greatly exaggerates the rate at which China will enter the highest form of value added production. As such, the report calls for various changes in China, and bases its calls on the rationale of “when a developing country reaches the technology frontier’. But China’s economy, unfortunately, is not yet approaching the international technology frontier, except in specialized defence-related areas. Even when China’s GDP equals that of the US, China’s per capita GDP, a good measure of technology’s spread across its economy, will be less than one quarter of the US’s. Even making optimistic assumptions, China’s per capita GDP will not equal the US’s until around 2040, by which time China’s economy would be more than four times the size of the US’s! Put another way, China will not reach the technology frontier, in a generalized way, for around three decades, so this rationale can’t be used to justify changes now.

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January Issue of Socialist Voice Out Now

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Terrorist attacks are an excuse for war

Terrorist attacks on Western soil will inevitably spark hyperbolic responses from the European establishment, and these very human tragedies are often manipulated, for a number of reasons.
They are frequently used as a pretext for targeting and undermining our rights to privacy and personal freedom, or for justifying confused or downright aggressive plans for intervention in foreign countries.

Venezuela: The struggle continues

Robert Navan and Seán Edwards:
When Obama declared Venezuela to be a threat to the United States he wasn’t being absurd. He meant, of course, a threat to US hegemony in the region.

The Bolivarian Revolution in Venezuela was the greatest challenge to that domination since the Cuban Revolution in 1959.

Price-fixing and cartels

Paul Doran:
According to the Oxford English Dictionary, a cartel is an association of manufacturers or suppliers formed with the purpose of maintaining prices at a high level and restricting competition.
The sheer number of cartels around the world is astonishing.

When the British government banned the Orange Order

Dónall Ó Briain
Not many people today know that the British government made the Orange Order illegal—twice. How different Irish history might have been if it had remained so!
The Orange Order was founded in 1795 following a sectarian fight in Armagh.

Pivotal moments in recent Irish history

Nicola Lawlor
The left today seems to be missing some important lessons from pivotal moments in recent Irish history. This article is a brief, and simplified, overview of some of those moments. The lessons are worth keeping to the fore in considering any strategy for building socialism in Ireland, because without them such efforts will be wasted, misguided, and even damaging.

Frank Conroy Commemoration

On Saturday 12 December 2015 a very interesting Frank Conroy Commemoration

Alternative media

Tommy McKearney
The new leader of the Labour Party in Britain, Jeremy Corbyn, recently told the Morning Star that he is exploring options for breaking up Britain’s media monopolies.

That Corbyn and his supporters would consider doing so is hardly surprising in the light of the hysterical and vitriolic campaign waged against them by Britain’s press and broadcasters.

Mind your language Part 2

Robert Navan
A newly arrived Martian would find themselves very confused by much of the language used by our mainly right-wing Western media. The confusion would arise from the constant use of words generally associated with the political left.

(Part 1 was published in Socialist Voice, January 2013)

Paulo Freire: Revolutionary educational thinker

Eoghan O’Neill
Paulo Freire was one of the most revolutionary of educational thinkers. His seminal work, Pedagogy of the Oppressed, is a major contribution to the concept of learning. It delves beneath the mechanics of the methodology of learning to encompass concepts such as conscientisation

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Photography & Fiction Books of 2015

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Depth of Field, Walker Evans (Prestel)

More than anyone else, Walker Evans made the vernacular a respected field for photography, taking the documentary style of newspapers and magazines to the level of art, holding a mirror up to ordinary life. This book is a retrospective: not just his classic, dispassionate work of the Depression era but material from before and after those years. He managed to do nearly all his work as paid assignments, a remarkable achievement, and his famous New York subway project was a rare exception.

This book is packed with photographs that cannot be forgotten, like the ‘Alabama Cotton tenant Farmer’s Wife’ that captures dignity and goodness in the scrubbed face of a woman standing against a wall of her clapboard house. Her willingness to pose so unaffectedly is more understandable in the light of knowing that Evans spent three weeks in Hale County, Alabama getting to know people and win their trust. He was there with James Agee on a writing assignment for Fortune magazine and looking at the photos Evans took it comes as no surprise to learn the magazine declined to publish them.

Evans’ early work is more formalist than the photography he became famous for in later years but it is also reflective. In New York in the late 1920s and early ‘30s, he took to capturing the presence of Brooklyn Bridge, the barges moving below them and workers taking lunch on the streets and people on the sidewalks. Faces interest him but in his search for what he called ‘contemporary truth and reality’ he photographs people not just for their unique individuality – he likes them to look straight into the camera — but also for the social semiotics they embody. This shows in his Cuba photographs of 1933 and it never leaves him although he finds meaning also in buildings, gas stations, billboards, the interior of a barber’s shop. Middle-class suburban life has little interest for Evans.

The New York subway work, lasting from 1938 to 1941, came after Alabama but there are many sections in Depth of Field that bring less well-known projects to our attention. In 1941 he was photographer for a book called The Mangrove Coast: The Story of the West Coast of Florida but five years later he is back on city streets doing what he likes best, taking unposed pictures of working people going about their lives, and it continues into the 1950s. Formalist concerns return in his late work of the ‘60s and ‘70s when he sets about celebrating ordinary hand tools—‘the fine naked impression of heft and bite’ in a wrench or ‘the beautiful plumb bob’—and in more of his own words he says something about them that extends to his achievement as a whole: ‘…small tools stand, aesthetically speaking, for elegance, candor, and purity’.

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Memorable Non-Fiction of 2015

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The Poems of T.S. Eliot: The Annotated Text. Volumes 1 & 2, edited by Christopher Ricks and Jim McCue (Faber & Faber)

T.S. Eliot and Ezra Pound are linked in strange and unlikely ways. They were both anti-semitic (and Eliot was a racist to boot) but this does not prohibit or prevent the appreciation and enjoyment of their poetry except when, as in Eliot’s King Bolo pieces, the bigotry is put into words. Céline is still worth reading, Wagner worth listening to and it’s not difficult to find other examples of artists with objectionable right-wing convictions–after all, who objects to reading Yeats?

The more interesting connection between Eliot and Pound is the way one of this pair of American poets helped the other; for just as Pound was of enormous importance to the young Joyce he also decisively influenced Eliot in the writing of ‘The Waste Land’ – published in 1922, the same year as Ulysses – and that astonishing poem would not exist in the form it does were it not for Pound’s editing of the work. Until the publication of the first volume of this two-set edition the only way to see clearly what Pound achieved was by way of a facsimile and transcript of the original drafts (Faber & Faber, 1986), showing how Pound worked on the text, but now Faber & Faber have gone one better thanks to the annotations provided here by Ricks and McCue. Quantitively, Eliot’s poetic output is not great but with just ‘The Love Song of J Alfred Prufrock’, ‘The Waste Land’, ‘Four Quartets’ and a handful of other pieces his place in English literature is assured and this is reflected in the fact that the first volume has 346 pages of poems and 965 pages devoted to commenting and annotating them. This, of course, includes a detailed presentation of Pound’s work on ‘The Waste Land’.

It’s always risky to speak of a definitive edition but in this case it is difficult to imagine, unless new work by Eliot comes to light, how the present two volumes could be replaced by something better.

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