Autumn Statement was a confession of abject failure

The half-way mark came last week for the suffering, seemingly, ever stoical British. Why they are ever stoical in the face of an exploitative, class society where the rich always find ways to push the losses of their caprice and incompetence onto the poor is a cultural story I have never understood (despite living in Britain for a time in the 1980s). But the Autumn Statement (December 5, 2012) from the failed Chancellor marks the half-way point in the British government’s tenure on office. At this stage, the assessment is that it has unambiguously failed in its mandate and its now transparent attack on the poor is the only thing that is obvious. All that can be said is that the half-way mark is gone and the national election draws nearer every day. The pity is that the display by British Labour, in their response to the Autumn Statement, was worse than pathetic. They better hurry up with alternative policy development, which doesn’t include proposing deficit cuts that are more “humane” than the current Government’s approach.

The Chancellor’s – Autumn Statement 2012 – was a dismal admission of policy failure and ideological stubbornness despite what the words spoken by the Chancellor literally meant.

With all the vital indicators heading south and the financial measures upon which the Chancellor holds out as being crucial turning against him it was outrageous for him to claim that:

… British economy is healing.

It is getting sicker by the day and had a temporary visit from the good fairy (in the form of the Olympics) that is by definition a once-off impact which will dissipate before the winter is done.

The fact that the results (“debt starts to fall”) of the austerity horizon is being extended to 2016-17 (“delayed by one year”) is an admission of failure.

The fact that the Office of Budget Responsibility has seriously under-estimated the damage the fiscal position is causing does not justify the Chancellor saying:

I want to thank Robert Chote, his fellow Members of the Budget Responsibility Committee Steve Nickell and Graham Parker, and all their staff at the OBR for their rigorous approach.

One of the advantages of the creation of the OBR is that not only do we get independent forecasts, we also get an independent explanation of why the forecasts are as they are.

If, for instance, lower growth was the result of the Government’s fiscal policy, they would say so.

But they do not.

They say the economy has “performed less strongly” than they had expected.

Which is about as bad as it gets.

The OBR’s forecasts have been abysmal – plain wrong by a margin.

After the Autumn Statement 2012 was delivered by the British Chancellor, the BBC Newsnight’s Jeremy Paxton interviewed the Chairman of the UK Office for Budget Responsibility (Robert Chote) on December 6, 2012. In the interview – Chote: Economic forecasts ‘difficult’ to make – you learn quite a lot about how career economists are prepared to be compromised to their political masters and when pushed know full well that the political spin does not reflect the underlying reality.

The interview began with Paxman asking “What is the point of the OBR?”, which was in the context of the massive errors in forecasts that the agency published over the last two years and which the government used to justify its harsh austerity program.

Chote replied that OBR had to make “Difficult judgements” – but “You got them wrong” – we “Changed our mind” – but “What use are you?” – “To provide best professional judgements” – “How has it helped George Osborne to have dud forecasts” – “It has helped to know where the forecasts come from” – “But their wrong” – “Every economic forecast turns out to be wrong” – “So when George Osborne cites your figures we should conclude they are wrong?” – “Absolutely”.

Chote was then asked: “Would you give this country a AAA rating?” – “That is not our job … the key difference is that we have our own currency. The notion of the insolvency is broader” – “You mean the government could just print more money” – “Yes, the government has been doing that” – “Would it matter if Britain lost its AAA rating?” – “Other countries have lost their ratings and it hasn’t made an enormous difference”.

In other words, the credit rating agencies are largely irrelevant, which is counter the entire political narrative coming from the British government.

The interview finished with this Q and A:

Q: So as a highly trained economist you have no views on this topic?

A: I have very interesting views and you will have to wait for my memoirs

No principle. Pure political functionary.

Why were the forecasts so wrong and they are now forecasting an extended recession? According to the Chancellor the OBR:

… forecast growth this year of -0.1%, but in their view “the weaker than expected growth can be more than accounted for by over-optimism regarding net trade”.

The mantra that the UK economy could fill the gap in spending left by the fiscal austerity with a boom in net exports was always wrong. It has been a centrepiece of IMF austerity programs. Don’t worry – you can export your way out of the doldrums.

Wrong – if austerity is generalised, which it now is. Spending equals income – first rule of macroeconomics. Exports require imports. Imports require spending. You cannot get spending by cutting spending and undermining private income growth.

Forecasting a strong growth in net exports in the face of almost universal austerity – exchange rate depreciation or not – was a demonstration of the incompetence of the OBR (and all the rest of them the pundits and sycophants (the two are interchangeable in this context) who bought and/or perpetuated this line).

Please read my blog – Fiscal austerity – the newest fallacy of composition – for more discussion on this point.

The Chancellor was also wrong to suggest the IMF was currently supporting the Government’s position. The Chancellor said that “the IMF” agrees that the problems besetting the UK economy are “largely driven by problems abroad”.

In July 2012, the IMF published its latest – Article IV assessment of the British economy. These papers relate to “Article IV of the IMF’s Articles of Agreement”, which requires that the “IMF holds bilateral discussions with members, usually every year” and report on the outcomes of the meetings.

In that Report, the IMF conclude that:

Recovery has stalled. Post-crisis repair and rebalancing of the UK economy is likely to be more prolonged than initially envisaged. Confidence is weak and uncertainty is high. Looking ahead, the economy is expected to grow modestly, but with current policy settings the pace will be insufficient to absorb significant slack in the economy, raising the risk of a permanent loss of productive capacity.

It emphasises (in bold) that “Demand support is needed” – “More expansionary demand policies would close the output gap faster” and “planned pace of structural fiscal tightening will need to slow” and:

The UK has the fiscal space to make such adjustments.

Now reject the IMF’s concept of “fiscal space” – see discussion below about surpluses and fiscal capacity. But what we can conclude is that the IMF doesn’t support the claims made by the Chancellor in his Autumn Statement, such as:

… some say we should abandon our deficit plan, and try to borrow more.

They think by borrowing more, they can borrow less.

That would risk higher interest rates, more debt interest payments and a complete loss of Britain’s fiscal credibility.

We are not taking that road to ruin.

Clearly, the IMF rejects that logic.

The IMF also implicated the British financial system and said that the British government needed to do more work in addressing “to big too fail issues” via legislative reform, “intensify supervision and broaden its authority over financial holding companies” etc.

Now whether one agrees with the proposed financial reforms is not the point. The point is that these are domestic issues within the control of the Government. They are not largely “problems abroad”.

I could obviously spend a lot of time analysing the Autumn Statement line items. The most alarming aspect was the decision to cut indexation for welfare recipients, which according to the Liberal Democrats coalition partners, started out as an absolute three year freeze. Whatever the truth, forcing real income cuts onto the most disadvantaged citizens in Britain is a vicious act not to mention economically irrational.

It isn’t “fair” in the sense of sharing the burdens of the austerity especially when the reductions in the corporation tax will help the high income groups and foreign owners.

It also is not very sensible from an economic perspective because it takes more spending out of the economy than the meagre cuts because the marginal propensity to spend of that group is as close to one as you will get.

The welfare cuts disclose – or adds transparency – the real agenda that is being pursued – which is a wholesale attack on the British system of welfare.

Another interesting point that the IMF Article IV made was that:

Budget neutral reallocations should be undertaken to make room to increase government spending on items with higher multipliers (e.g., public investment).

It is interesting because it introduces the concept of the level of fiscal support for demand and the different impacts that the composition of public spending can have.

First, it is true that a government can maintain the same level of stimulus or contraction by altering the composition of its spending. For example, a nation might already be at full employment but the government might conclude there is too much income inequity.

It doesn’t want to just give the low income workers cash bonuses or tax breaks because that would push nominal demand growth beyond the real capacity of the economy to absorb it by increasing production.

In that context, the government might also impose higher tax rates on other income cohorts to redistribute the aggregate spending capacity in the economy towards low income groups.

So its overall budget position – the degree of stimulus – remains unchanged – by the distributive effects of the overall government spending is changed by altering the composition of government spending and taxes.

It is also true that fiscal policy multipliers are all equal. There is really no such thing as “the” multiplier. Before I go into that it is fair to say that the IMF is generally confused about multipliers.

In the IMF Working Paper WP12/150 (June 2012) – What Determines Government Spending Multipliers? – there is an elaborate technical discussion about how multipliers are low.

But despite the 46-pages of analysis and modelling the clue to the use of this paper is to be found on Page 4:

As the number of observations in our sample is limited and fiscal shocks may be measured with error, confidence intervals are, in general, quite wide, and point estimates must be taken with a grain of salt.

Which means in English – the econometric results presented as authority are useless.

That is no surprise given the theoretical model that the paper explores, which is full of neo-liberal myths.

For example they conclude that:

A second finding with direct policy implications concerns the marked increase in fiscal multipliers during times of financial crisis. On the one hand, this may be taken as evidence in support of fiscal stimulus during times of acute financial stress. On the other hand, our empirical results also show that many countries have historically cut back government spending during financial crises, presumably out of concern over debt sustainability. In this sense, a large conditional multiplier provides a stark warning about the costs of financial turmoil and an argument in favor of building up fiscal buffers in normal times so as to avoid fiscal retrenchment when it is most painful.

The concept of building up fiscal buffers has no application when a currency-issuing government is in focus. What does it mean? The IMF would tell us that budget surpluses provide those buffers and enhance the capacity of the nation to run deficits at a later date if necessary.

The reality is that for such a government a surplus today provides no more or less financial capacity tomorrow to run a deficit. A truly sovereign (currency-issuing) government can run whatever budget outcome is required (in financial terms) irrespective of its past budget outcome. A currency-issuing government cannot meaningfully save in its own currency. It can always buy whatever is for sale in its own currency at any point in time.

In fact, all we can say, is that it is likely that running a surplus today will increase the probability that it will have to run larger deficits “tomorrow” because the surpluses will have drained aggregate demand growth. But even that statement is highly conditional on what the other sectors – private domestic and external – are deciding with respect to income and spending decisions.

This point resonates with the earlier discussion I had about “fiscal space”.

On the topic of multipliers, one economist who explored the literature (see reference below) concluded that:

One clear message emerges from (this) vast literature: estimates of multipliers are all over the map, providing empirical support for virtually any policy conclusion. The diversity of findings, often based on the same U.S. time series data, highlights the difficulties in obtaining reliable estimates of fiscal effects and points to the need for systematic analysis that confronts fiscal policy’s complexities.

[Full Reference: Leeper, E. M. (2010) 'Monetary Science, Fiscal Alchemy', NBER Working Papers 16510, National Bureau of Economic Research]

For further discussion about multipliers, please read my blog – Spending multipliers.

Remember the revelations (on Page 43) in latest IMF World Economic Outlook update (October 12, 2012) – Coping with High Debt and Sluggish Growth:

More work on how fiscal multipliers depend on time and economic conditions is warranted.

This was part of the WEO Update, where the IMF spell out how inaccurate their estimates (biased towards zero) of the fiscal multipliers have been. I covered this revelation in this blog – So who is going to answer for their culpability?

But the IMF are now not only admitting that they (like all these “agencies”) have grossly underestimated current output gaps but they also have admitted in that WEO update that they severely underestimated of the size of the fiscal multiplier.

The first error leads to imposing policies that are excessively contractionary.

The second error leads the government to underestimate the damage that the fiscal contraction causes. Both lead to disastrous outcomes accompanying fiscal austerity and explain why the world is in such a mess.

On Page 41 of the IMF WEO Update we encounter “Box 1.1. Are We Underestimating Short-term Fiscal Multipliers?” There is a lot of technical talk contained in the box, which is meant to give the impression that this is science we are dealing with and the IMF modellers are on top of their game.

But this is what the IMF are now saying:

The main finding, based on data for 28 economies, is that the multipliers used in generating growth forecasts have been systematically too low since the start of the Great Recession, by 0.4 to 1.2, depending on the forecast source and the specifics of the estimation approach. Informal evidence suggests that the multipliers implicitly used to generate these forecasts are about 0.5. So actual multipliers may be higher, in the range of 0.9 to 1.7.

Which is contradicting most of their earlier research that governments around the world used, in part, to craft and justify their austerity packages.

In English, the IMF admission means that if the government cuts spending by $1 billion that once all the adjustments are exhausted the official estimates would suggest that real GDP falls by $500 million (based on a multiplier of 0.5).

However if the multiplier was 1.7, real GDP would fall by $1.7 billion – more than 3 times the official estimate.

In other words, the estimates of the damage caused by the IMFs constant hectoring for governments to impose fiscal austerity, have been grossly understated.

The reverse holds for an expansion.

In terms of changing the composition of net spending (spending and tax policy) = there is widespread agreement that tax cuts are less expansionary than spending increases – for a given initial fiscal change. The tax multiplier, is a macroeconomic rather than a microeconomic concept, and builds on the fact that households pay some tax out of gross income and the tax rate specifies that proportion. In reality, there are a myriad of tax rates but the total effect can be summarised by a single (weighted-average!) tax rate.

Households consume out of disposable income. Assume the overall propensity to consume is 0.80 – which means that overall consumers will spend 80 cents for every extra dollar of disposable income received.

So, if the tax rate rises, then disposable income falls. If nothing else changes, then this fall in disposable income will lead to a reduction in consumption (equal to the propensity to consume times the fall in disposable income). The resulting fall in GDP is defined as the tax multiplier.

Similarly, when tax rates falls and increase disposable income, the reverse occurs. Not that some of the tax change impacts on saving – that is, not all of it goes into spending changes.

In contrast, when the government spends a $, the full $ goes into the expenditure stream.

There are also discussions about the multipliers associated with different components or types of government spending. For example, a cash transfer to a low-income earner will have a higher impact than the same transfer to a higher income earner because less will be loss in saving in the first case. That is the marginal propensity to consume varies across different income cohorts.

Further, it is argued (as the IMF is doing in the quote above), that the multiplier impact of public spending on infrastructure is higher than spending on consumption (for example, personal transfers) because it “crowds in” more private spending.

As an example, if the government builds a major piece of public infrastructure – a new road, bridge, port etc – then it would expect complementary private spending to occur because firms will have an incentive to invest in their own profit-seeking capacity to exploit the new public capital.

There is merit in exploring the composition of a stimulus package to gain the most expansion for a given nominal outlay. The focus should mostly be on gaining the best employment outcome per net spending dollar but the two – output and employment – are, of-course intrinsically linked.

However, it is highly unlikely that a fiscally neutral change in policy will make much different. The fact is that the overall fiscal stance in the United Kingdom is becoming highly contractionary at at time when non-government spending is also draining demand.

That is, fiscal policy is pro-cyclical.

Given the private domestic sector is deleveraging overall and the external sector is failing to drive growth, the fiscal stance has to be counter-cyclical rather than pro-cyclical.

So it might be of merit to reconsider the composition of the Government’s fiscal position – and I would urge they provide a vastly improved outlook for low income workers, introduce large-scale employment creation (preferably a Job Guarantee) and invest heavily in environmentally sustainable renewable energy infrastructure.

But that will not be sufficient. They have to move the fiscal stance into a highly expansionary position and trying to rely on exploiting differential multipliers will not be sufficient.

Conclusion

The Autumn Statement 2012 was a declaration of failure and exposed the underlying intent of the British government – to undermine income support to the most disadvantaged citizens and increase the state withdrawal from the economy.

There is no economic justification that they can find to suggest the British economy is “healing”.

All that can be said is that the half-way mark is gone and the national election draws nearer every day. The pity is that the display by British Labour in their response to the Autumn Statement was worse than pathetic. They better hurry up with alternative policy development, which doesn’t include proposing deficit cuts that are more “humane” than the current Government’s approach.

That is enough for today!

(c) Copyright 2012 Bill Mitchell. All Rights Reserved.

Spread the word ...
    This entry was posted in UK Economy. Bookmark the permalink.

    15 Responses to Autumn Statement was a confession of abject failure

    1. Richard1 says:

      Thanks Bill.

      You asked “Why they are ever stoical in the face of an exploitative, class society where the rich always find ways to push the losses of their caprice and incompetence onto the poor is a cultural story I have never understood (despite living in Britain for a time in the 1980s).”

      At the moment, there does not seem to be a political party that will offer a genuine alternative; they all offer variations on a neo-liberal theme. They are all deaf to other ideas and, in my personal view, seem scared of the markets and what they might do. Few in the population believe that macroeconomics for the state is any different from that of the household and they seem too lazy to ask questions and maintain any independent thought as to why outcomes undershoot predictions. Also, the media do not assist any alternate view being formed, the soundbite economics that is passed off as news rarely offers criticism. So, as a country, we flounder. Its not a good place to be. The fact that the Trussell Trust, which provides food for those who do not have the money to buy their own, is apparently opening new branches at the rate of ~ 3 a week is an interesting indicator of the true state the UK is in. In the UK, Starve a dog and you end up in court, starve a human and ……………… I’ll leave you to fill this bit in

    2. Brian says:

      Well said, Richard1. The public discussions of macro-economics in the UK media (and indeed all other countries of the world) are dominated by the austerity narrative promulgated by the 1% – very clever of them. I can’t decide between conspiracy theory reasons or just the fact that the world’s 1% have all cottoned on to a ‘good idea’ that the slightly-more-left parties haven’t got a clue how to defend against.
      About 99.99% of the people I speak to have never heard of the term ‘neo-liberal’ yet the lives of them and their children are being gradually destroyed by that economic philosophy year after year. Appalling and amazing! ‘Stop the world, I want to get off’.

    3. Ikonoclast says:

      All of this proves that the West (and not just the West) is headed for a perfect storm of trouble. Wrong politics, wrong economics and absolutely no idea in govt, official or corporate circles of how to change the heading in any way at all.

      Add to this the fact that the PTB (Powers That Be) have no idea how to cope with AGW (Anthropogenic global warming) nor with resource depletion nor with transition to renewables nor with limits to growth in general nor with the population explosion etc. etc. etc. You get an idea of just how much trouble we are in.

      Hopeless pack of idiots. If I was a religious man I would snarlingly “damn them all to hell” like the Charlton Heston character did in the Planet of the Apes.

    4. Andy says:

      It would seem our soon-to-be Governor of the bank of england agrees to an end to Inflation targeting and a move to employment targeting. Unfortunately he wants to ‘expand’ monetary policy whatever that means.
      Larry Elliot explains (or doesn’t). Take your pick.

    5. John says:

      Richard 1 – “At the moment, there does not seem to be a political party that will offer a genuine alternative; they all offer variations on a neo-liberal theme.” The Green Party is the only one that does, however they are not fashionable so do not fit in with the needs of the press and the lobbyists so never get the oxygen they need. The biggest “criminals” (apart from George and his cronies who should be put in jail) are the Labour Party who have a golden opportunity to make a difference but they haven’t got the moral fibre or the intellect to grasp the nettle. They are career politicians who will follow the opinion polls. Opinion polls that are driven by an ill-informed/ill-educated population who do not realise they are being sold a “pup”. It is very sad.

      Apart from a few shining lights like Bill’s Blog which inform and commentate and create a committed minority, there is no other waves in the political landscape because they follow the herd ( if you thing about it they are like cattle – stick together, eat anything they can and shit anywhere they can!).

      Sadly things are going to have to get a lot worse before change will occur. The fear is what change and how!!

    6. Nigel Clayden says:

      Sadly I must concur with the comments made so far. The Labour Party is a disgrace. Founded to defend the working man against capital, all it can offer is a “softer” version of the Conservative party line on the deficit. Even the Green Party accept this narrative, in their manifesto for 2010 “Like the [Labour] Government, we would aim to more than halve the deficit by 2013, and the programme of taxation and spending in this manifesto is designed to achieve that..by raising taxation” There is simply no political party describing an alternative view as set out by Bill. But why are we stoical – simply because except for those at the bottom there are still jobs and yes while underemployment is up the majority are only seeing a squeezing of their standard of living and not a catastrophic collapse.

    7. Nell says:

      Why the Labour party don’t just go all out against the banks, I don’t know. Many voters might not understand economic theory and the neoliberal agenda, but they are pretty united by hating the banks. Most people get – ‘the banks messed up big time and now we are paying for it’. They also get ‘politicians are paid for by the banks that’s why everything is going to the dogs’.

    8. John says:

      Nigel – Stoical through ignorance. If the common man understood there would be uproar. I can still remember when money supply figures, true unemployment figures plus other economic factors made up the daily news. And organisations like the BBC used to try and educate the population regarding economics. All we get now is dumbed down City sound bites. Shame on all the media!!

    9. GLH says:

      Would it be possible for the people who promote MMT to develope GDP forecast for several different countries and post them in some public forum that would compete with government forecast? If that were done, then it seems that over a period of time MMT would get the attention it deserves. As an example, could that work as a class project for students at the University of Missouri-Kansas City?
      Also, with respect to the third party idea, it is my opinion that a third party with any clout would have to be backed by private money which would make it the same as the other two parties. The only solution is to get private money out of the campaign system.

    10. Richard1 says:

      Political parties want power; that’s why they exist. There is no other motive that comes anywhere near. Some may profess that they want to change society, to right wrongs and there are politicians that do want this. But mainly its all about power.

      No party is going to go out on a limb with MMT running through the middle of it until they can see it will make them electable. In my view, it is essential to start a general public education process and also to start them asking questions. This requires the media to be heavily involved. They need to be asking why our economies are under-performing, why the predictions for the economy’s performance is so far from the out-turn etc. Pressure needs to come from individual action; talking to friends and relations, writing to MPs and not putting up with rubbish answers, joining in blogs, writing to the press and TV. We need to learn the neo-liberal position better than they know it themselves and have the arguments ready to shoot them down in flames, ridicule them. We need facts about the economic data, as well as the data itself. The arguments need to be kept simple and, wherever possible, obvious once stated.

      It is important to recognise that the vested interests are huge and even small mistakes by MMT supporters in talking/writing about the subject will probably do immense damage to the ideas and their prospects of ever being implemented and tried in practice. Thus I suggest it is vital to make sure of our facts and the potential counter-arguments. We need need educating by Bill, Randy Wray and others that write on the web. So please continue, as the light at the end of the tunnel is there, but it is a long way off.

    11. The Dork of Cork. says:

      Although its a strange world where England appears to be not the 9th circle of hell these past few years although its very extreme neo- liberal physical capital spend & welfare policies gets it close , very close.

      http://www.ecb.int/pub/pdf/mobu/mb201212en.pdf

      I found box 4 more interesting….

      “The latest data show that the annual rate
      of change in real disposable income, which has
      been negative for a protracted period, declined
      markedly, by 2.1% in the second quarter of 2012.
      In an effort to mitigate the effect of this decline
      on consumption, households dipped into their
      savings. As a result, their saving ratio fell to the
      lowest level recorded since the start of the series”

      Box 3 Labour

      “The annual growth in compensation per employee further declined to 1.6% in the second quarter of
      2012 from rates of above 2% in the second half of 2011. This moderation by and large absorbed the
      upward impact of lower productivity growth on unit labour cost growth. Year-on-year unit labour
      cost growth stood at 1.4% in the second quarter of this year, compared with 1.6% in the fi rst quarter.
      The low productivity growth – in a context of modest economic growth – is expected to continue
      exerting upward pressure on unit labour cost growth in the near term.”

      Ask yourself why must they squeeze labour value ?
      So as to increase the surplus going into non labour costs of production.
      This is then expressed in bank credit for capital stuff.

      Houses , cars and other crap stuff.

      But its not working because the machines are eating the capital base at a faster and faster rate.

      Why is the cost of real capital / oil so high ?

      See above.

      The banks wish to bypass labour with their credit machines so as to extract the surplus value of production.
      Therefore in a financialised world the BANKS MUST DESTROY REAL CAPITAL TO EXTRACT A PROFIT

      This is a mirror image of the credit inflation.
      The money deflation phase of this extraction operation is the same phenomenon.

      Ireland was destroyed by Labour arbitrage in the high energy sectors of the economy that gave a false price signal to these operations…..

      To conceal the real capital destruction they reduced wages……..

      Think of low cost airlines , ferries , construction etc…..
      They even went so far as shipping in cheap labour from Turkey to build a Cork road.

      This is how Europe operates folks.
      It will not change until it has destroyed all of the capital base.

      Its a straight up criminal operation.
      As plain to see as rudolph’s nose.

    12. Dan Kervick says:

      “The pity is that the display by British Labour, in their response to the Autumn Statement, was worse than pathetic. They better hurry up with alternative policy development, which doesn’t include proposing deficit cuts that are more “humane” than the current Government’s approach.”

      Since we have more or less the same problem with our Democratic Party here in the US, and Bill has outlined the same issues with the institutional left in Australia, it appears that the systemic failure of labor, social democratic and conventional left parties throughout much of the developed world is a comprehensive phenomenon. My sense is that there are two main reasons factors here: (i) these parties are patchworks of older and socially established coalitions that each have some particular group interest in the preservation of some particular progressive achievement of the past, but are otherwise bereft of any ideas about comprehensive social transformation, and are generally lacking even an interest in such transformation, and (ii) the main popular constituencies in these parties are generally detached from decision-making roles of the kind that would give them insight into the way their economies and financial systems function, and in whose interest, and are thus easy victims for sophomoric pitches and propaganda.

      But there is a third factor that is harder to put my finger on: the established left parties seem to have internalized a strong aversion to any kind of conflict, struggle or fighting. They seem to be made up in large part of people who have a dominant psychological tendency toward the crouch of fear and submission, and avoidance of “drama”.

    13. Ikonoclast says:

      Dan Kervick, I agree with your statements in a lot of ways. You refer to the fact that “the systemic failure of labor, social democratic and conventional left parties throughout much of the developed world is a comprehensive phenomenon.” That is correct so far as I can see. In your third “thesis” about why this might be so you say; “They seem to be made up in large part of people who have a dominant psychological tendency toward the crouch of fear and submission, and avoidance of “drama”.” Again, this accords with my observations of the supine nature of much of the modern labour movement in the developed West.

      In a nutshell it comes down to the inability of the modern left to take active and courageous direct action in the form of effective strikes and work bans. Let me give you some observations from personal experience. Over my life, I have worked as both a blue collar worker and white collar worker. I was a union rep. for many years in both environments. In the “old days” (for me the 1970s) blue collar union members in Australia had the guts to strike and strike effectively. This kind of strength persisted in some ways in blue collar arenas into the 1990s. When blue collar workers (mostly men, at least in the past) strike they know how to strike robustly. They are tough men. They know their opponents (bosses and right-wingers) will get nasty and will use police, security goon squads and even the army if they can get way with it.

      Blue collar workers are prepared for a tough fight. And they have the practical skills to fight tough. I recall a blue collar strike (not one in which I was involved) where the wharfies implemented a blockade to prevent trucks and other vehicles (security and police) entering the wharves. Basically this blockade consisted of long metal bars, heavy metal beams, reo-bars etc., a veritable tangle of steel laid all across the entrance; some steel so heavy it was laid there by commandeered cranes. This was then welded in situ at spots all over the place so it was now one integrated tangle. A tank could not have crossed over it.

      Contrast this to the insipid and supine actions of most clerical workers in work disputes. Clerical workers have a different mindset. They are usually not physically confrontational types. They are usually compliant to authority and do not fight directly. Brain workers (as opposed to muscle workers) tend to “fight” in a different, oblique, water-flowing-around-an-obstacle sort of way. However, even this type of fight is largely knocked out of them by the time they have partners, mortgages and children; ie. are indebted by the modern system and cannot afford to miss one pay check or one repayement.

      My overall observation is that clerical workers are very passive and compliant in the main. They are easily cowed by even threatened demonstrations of force (physical, financial or managerial). They are now easily fooled by the machinations of neoliberal trickery in all its forms; marketisation, privatisation, de-unionisation, individual work contracts, depression of real wages by failure to properly index wages, delays in pay rises over technicalities, erosion of conditions, being tricked into selling conditions to get pay “rises” no greater than inflation. The list goes on and on.

      When I once suggested to these workers, in this sort of work miliue, that they actually had a lot of power they shied away from the recognition of that power. I pointed out that as computer workers (including programmers, schedulers etc. etc.) they had the control over what computer jobs ran and what jobs did not run. As it was a completely computer-run environment this amounted to overall effective control. Managers had command formally yet managers only had control by proxy, that is by ordering computer workers to run (and build) systems in various ways and to run computer jobs according to various schedules.

      I sai,d if you selectively de-schedule certain jobs then you have control and leverage. I pointed out which types of jobs could be safely descheduled to avoid actual sabotage and to avoid harm to the public interest but to cause managers and the government of the day maximum inconvenience and political embarrassment. This suggestion was met by the meek with fear and horror. They dreaded being singled out individually and discipline or sacked not realising that if they all maintained solidarity as a block they could not all be sacked simulatenously. Mass replacement at short notice would have been impossible and as all computerised workplaces do not have everything properly documented (as anyone with experience will know) a lot of vital knowledge is in people’s heads. Remove these people wholesale, or force them out in a sympathy strike, and the place collapses for weeks or months if not longer.

      But of course modern clerical workers are easily fooled, deeply indebted and lacking in courage and solidarity. Hence, they get done over like a dinner by their neoliberal oligarchic masters and managerialist bosses.

    14. John Hermann says:

      It is generally true to say that when suffering is great enough, change will occur. Unfortunately that change might not be genuine reform, but rather – a lurch to the extreme left or to the extreme right.

    Leave a Reply

    Your email address will not be published. Required fields are marked *

    You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

    *
    To prove you're a person (not a spam script), type the answer to the math equation shown in the picture. Click on the picture to hear an audio file of the equation.
    Click to hear an audio file of the anti-spam equation