Monday, 5 September 2016

Austerity and the rise of populism



This post has been brewing for a long time. It reflects my attempt to make sense of the growing political confusion and chaos in the world today. William Butler Yeats's poem The Second Coming well expresses what I see:
Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned;
The best lack all conviction, while the worst
Are full of passionate intensity. 
But how have we come to this pass - and where are we heading?

Post-crisis panic

In the deep recession that afflicted the Western world after the 2008 financial crisis, government debt built up as financial and other corporations were bailed out, tax revenues fell and unemployment benefits rose. Government debt is usually quoted in relation to GDP: the recession knocked a huge hole in the GDP of many Western countries, inflating the debt/GDP ratio.

Suddenly, countries that had previously looked like paragons of fiscal rectitude found themselves with rising government debt/GDP and stubbornly high fiscal deficits. Others, more fragile before the crisis (though not necessarily worse managed), needed the help of the IMF. Advanced economies suddenly looked at least as risky as emerging markets. Investors took flight, forcing Western governments to support asset prices with extraordinary measures such as QE.

Into this cauldron, someone lobbed a research paper purporting to show that government debt/GDP ratio above 90% spelled disaster. The paper turned out to be fatally flawed: but that information did not come to light until some years later.

Other research papers were added to the toxic brew. Among them, the clever models of Alesina and Ardagna supposedly proved that fiscal consolidation could restore growth. The empirical evidence presented in support of this claim was later shown to be seriously inadequate, relying on inaccurate data and omitting important factors. But in the chaos and panic of the post-crisis world, any prescription was better than none. At least they had a treatment plan.

The final ingredient was the Greek debt crisis. It scared the world. Suddenly, high government deficits and debt were terrible things. We had to get them under control. That meant deep cuts to government spending, if necessary including raising taxes and cutting benefits for the most vulnerable in society. Government after government in the developed world, and especially in Europe, accepted this harsh medicine. After all, we were told, Alesina & Ardagna had promised it would restore growth.

A political paradigm shift

To be fair, Alesina himself never claimed there was strong empirical evidence for his theory, and did not push it as a solution to the post-crisis slump. The push appears to have been political. Iyanatul Islam and Anis Chowdhury wondered whether the theory unwittingly played to a small-state political ideology:
One plausible answer lies in collective and wilful ignorance driven by an ideological aversion to counter-cyclical fiscal policy because fiscal interventions are seen as an enlargement and encroachment of the state on the functioning of the private sector. As Simon Wren-Lewis (2011) points out, and as Romer (2011)concurs, one can find eminent economists objecting to counter-cyclical fiscal policy based on ideological proclivities, even though such economists support the idea of using monetary policy to stabilize business cycles. 
But the question is, why was a small-state political ideology suddenly in the ascendant? It had not been, prior to the crisis. Somehow, the crisis itself had shifted the political paradigm.

It is easy to see how this could happen. In the aftermath of a monetary crisis, people are angry with those they believe caused it and fearful of losing their money and assets. They reject the existing political regime in favour of one which promises safety. They will accept harshness in the short term if they are sufficiently convinced that this will eventually bring back prosperity. Liam Byrne's tongue-in-cheek note to incoming UK chancellor George Osborne captured the political mood: "I'm afraid there is no money", he said.

"There's no money" is the psychological framing of both Reinhart & Rogoff's flawed paper, and Alesina & Ardagna's theory. The model is one of scarcity. No money is available, so we have to manage without. Belt-tightening is in order. Together, these two papers not only supported the small-state ideology of the UK's Conservative chancellor, but justified extreme fiscal tightness in the Eurozone. Reinhart & Rogoff's paper creates the justification for cuts and tax rises: Alesina & Ardagna promise the "sunlit uplands" necessary for people to accept the harsh medicine.

But the prescription turned out to be voodoo. Seven years on, prosperity has not returned: many countries in Europe are still mired in austerity, some are deeply depressed, government debt is higher than ever and unemployment is still painfully high. Failure of austerity measures to deliver the promised prosperity is toxic: popular anger and fear fuel the rise of populist politicians. Rudi Dornbusch, in a wonderful paper about debt crises and populism in Latin America, observed that the roots of populism lie in austerity, often imposed by an external agent such as the IMF. Chancellor Brüning's austerity measures in the German Great Depression, designed to end Germany's debt crisis and restore foreign confidence, led to the rise of Hitler.

The profligacy-austerity cycle

We endlessly cycle from profligacy to austerity and back again. The shift from profligacy ("the money will never run out") to austerity ("there is no money") is triggered by a monetary crisis of some kind: austerity is imposed by technocrats. And the shift from austerity to profligacy is triggered by a political crisis fuelled by popular unrest: profligacy is reintroduced by populist politicians.

In 2008, the monetary crisis that triggered the shift to austerity was the abrupt bursting of a debt bubble, leading to unpopular bank bailouts and a deep and prolonged recession. In the early 1970s, it was the collapse of the Bretton Woods fixed exchange rate system.

After the fall of Bretton Woods, rising oil prices and a global recession fuelled rising inflation. In the UK, successive governments imposed spending cuts and interest rate rises to try to arrest the fall of sterling and get inflation under control. The response to this was popular unrest led by the big unions, with continual strikes causing further economic damage. The UK was dependent on coal for electricity generation, a fact exploited by miners' unions in their claim for large wage rises: strikes caused damaging power cuts.  For the UK population, inflation that eroded pay packets, economic stagnation and rising unemployment caused misery - and growing anger.

In 1976, Dennis Healey called in the IMF: the condition for the loan was further fiscal restraint, though the loan was never fully drawn. The fiscal consolidation contributed to the famous "Winter of Discontent", when the country was riven by strike after strike in opposition to government pay caps.

By 1979, the people of the UK had had enough. The Conservative party's famous posters with pictures of dole queues and the slogan "Labour isn't working" touched a nerve. Margaret Thatcher's brand of populist politics ensured that the Conservative party won the 1979 election - and kept Labour out of power until 1997.

Populist politics works by directing popular anger towards an "enemy" who can be blamed for people's woes. The enemy must be capable of catching the public imagination, so usually it is a defined group of people who can be cast in the role of scapegoat. Blaming the "other" is a powerful way of creating a sense of common purpose. Often, the "enemy" is external: there are numerous examples throughout history of populist politicians distracting attention from domestic troubles by starting a war. In Thatcher's case, though, the enemy was internal, at least to start with. She was elected on a mandate to break union power - and in particular, the power of the miners' unions.

Thatcher's government is widely remembered for the harsh anti-inflation measures, deep recession and very high unemployment of the early 1980s. But people will accept austerity in the short-term, if they are promised that it will bring prosperity. The trick is to deliver the prosperity - and that means profligacy, but targeted at those who support the populist regime. And to ensure that the regime is not blamed for the preceding austerity, the "other" must be broken.

So the unions were defeated by heavy-handed policing following extensive anti-union legislation. Breaking the unions also involved dismantling the UK's coal industry and much of its heavy industry: the areas most dependent on these industries have never really recovered. Thatcher is hated to this day in the former industrial areas of the Midlands, the North and South Wales. But we should not forget that in in other areas, especially the South East and London, she was immensely popular. Populist politicians are divisive.

The destructiveness of Thatcher's industrial policy was coupled with the return of profligacy. The Right to Buy scheme for council housing was extraordinarily expensive. So too was the Falklands War. As interest rates fell, the UK economy got a big fiscal boost - and the result was the "Lawson boom", which ultimately ended in the property crash of 1990. Prosperity for "us", destruction for "them"....that is the goal of populism.

Since the financial crisis, "bankers" have been the "other" in the popular mind - but so have "scroungers and shirkers", who are seen as taking much-needed money from "hard-working people". In an interview with the Guardian, the former Deputy Prime Minister Nick Clegg said that George Osborne deliberately targeted the poor and vulnerable for cuts because this would be popular with Tory voters. This is populism at its worst. And like Thatcher before him, Osborne combined harshness towards the "other" with generosity towards supporters, especially the old and the well-off. The UK's recovery in recent years has been primarily driven by profligate support of the housing market.

A new political paradigm

Greece was the archetype for the post-crisis "there is no money" paradigm. This paradigm still holds - but it is beginning to fracture. A new, darker paradigm is beginning to emerge. The new paradigm is nationalism ("take back control"). And the archetype for the new paradigm will be my own country, the UK. I never, ever thought this could happen here.....

The populist paradigm shift started with the EU referendum. This time, the enemy was external. The EU was vilified as the "other" by Leave campaigners. Leave the EU, all your troubles will be over....This is a false promise, of course. Leaving the EU is likely to cause at least as many problems as it solves. I fear for those who have been promised prosperity by the sellers of snake oil. It will be a long time before they see it - and as many are old, they may never see it at all.

But it is not the rejection of the EU that horrifies me: many people voted for Brexit for good reasons. No, it is the emergence of a small-minded, "Britain for the British" mindset, coupled with hate speech and even physical attacks on ethnic and religious minorities that are seen as "foreign". If Brexit does not deliver the closed borders and cherry-picking of immigrants that these people want, what will they do?

We have seen the darker side of nationalism before, of course, though it has been hiding under a rock for a long time. Outright racist views are not widely accepted, but there is plenty of toxic "othering" along the lines of "I'm not racist, but I hate Muslims/Poles/Lithuanians/Syrians/immigrants [choose as many as you like]". Some groups are demonised: refugees, for example, who are often described as rapists and murderers despite the lack of any convincing evidence.

Creating groups of "others" who can be demonised is the essence of toxic nationalism. To their credit, the current UK government is attempting to stamp on this unpleasant behaviour.  But they are trying to hold back the tide. I think this is the manifestation of the breaking of a long political and economic cycle - the release of pent-up anger and frustration built up over decades. And it will not be limited to the UK. Nationalist forces are rising all over the world.

The "golden age" of globalisation

Thatcher's generation of populist politicians discarded the big state, "Keynesian" model that had dominated since WWII. They replaced it initially with austerity (to break unions power and defeat inflation). But in any democracy, austerity is short-lived unless you can find a way of convincing your supporters either that they are not really suffering (so you protect people who will vote for you) or that the good times will return "any day now". Thatcher's generation - or perhaps more correctly, Reagan's generation, since this comes from economic thinking in the USA - promised that globalisation would bring prosperity for all. We could say that they replaced a "big state" model with a "big world" one. Free trade, free movement of people, free movement of capital: these were the pillars on which the new golden age would be built.

And golden it was, for many. Branko Milanovic has shown how, along with the top 1% who always benefit from everything, the rising Asian middle class benefited from globalisation. The last three decades have seen more people lifted out of poverty than ever before.

But the Western middle classes saw no benefit. For them, globalisation brought stagnation and decline, as their jobs were offshored and their wages fell to the global mean. Their prosperity turned out to be an illusion, built on an insubstantial debt bubble. The promise made to them in the Reagan years has been exposed as a lie. And they are angry. Globalisation has failed - now it is time to "take back control".

As with all long-cycle paradigm shifts, few saw this coming. We are short-lived creatures, and we see only our own small part of the web of time. And just as in the paradigm shift of the 1980s the economic theories of the past were discarded in favour of something new and untried, so now the mainstream economics of the last 30 years is under attack, not just from those who want to reform it but also from those who want to reject it entirely. "I think people of this country have had enough of "experts", said Michael Gove.

Rejecting existing "experts" is a feature of populist politicics. But unlike the 1980s, when populist politicians could claim the work of Milton Friedman and Friedrich Hayek as an alternative to Keynes, this time there is nothing much to replace them. Few economists, either mainstream or heterodox, would support return of general capital and exchange controls, tariff and non-tariff barriers to trade and significant restrictions on the movement of people, let alone the unfairly skewed versions of these that the new nationalists seem to want ("we expect to export to you tariff free but we will impose tariffs on imports from you"; "we can live and work in your country but you can't live and work in ours": "when we devalue our currency that is monetary policy, but if you do the same you are a currency manipulator"). So although, after six years of painful soul-searching, mainstream and heterodox economists now seem to be singing from the same hymn sheet in many respects, people are no longer listening. Populist politicians deride "experts", and pursue divisive policies designed to appeal to protected groups of voters.

The terrible lesson of history

Historically, resurgent nationalism has always led to war. I see no reason why this time should be different. We scared ourselves silly at the end of World War II: the memory of Hiroshima has kept the world in an uneasy peace (though with numerous local breaches) ever since. But as the memory fades, and old tribal loyalties reassert themselves, the world enters a new and dangerous phase.

There is a fine line between nationalism and imperialism, and at some point, someone will cross that line. I don't know who, or where, that will be. But when they do, there will be war.

Related reading:

When the world turns dark
What have we learned from history?
A Latin American tragedy
Currency wars and the fall of empires - Pieria

Vortex star trails image from www.sgarciarill.com with thanks. 

25 comments:

  1. Look to Asia - China's efforts at New silk routes (land & sea) to undermine US influence vs mutual military pacts with Japan and Phillipines

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  2. The war you're predicting is already muddling along in the Mideast. The entrance of Russia into the mix completes the cycle. It's kind of a slo-mo WWI runup, isn't it?

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  3. When swimming in the sea I know the times of the tides and can estimate the effect of any wind, also I can see what the surface is doing. None the less I prefer to stay within my depth because I cannot see what is going on below. Even then it is very easy to go beyond this. In the science of economics we can see, calculate and estimate many things but there can always be currents beneath that surprise us.

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  4. Liam Byrne's infamous note was left for David Laws, Byrne's direct successor as Chief Secretary to the Treasury, not George Osborne. This is significant for two reasons. First, it shows that that the Lib Dems were just as opportunistic in twisting a joke for political capital as the Tories, so the current protestations by Nick Clegg that the latter were the real bad guys should be taken with a pinch of salt.

    Second, Laws was an Orange Booker, which meant he was already ideologically committed to a smaller state. Getting the Lib Dems to take responsibility for cutting spending was not an adroit manoeuvre by the Tories but a task enthusiastically embraced by Clegg and co (Laws was one of the main negotiators of the coalition agreement).

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  5. To my mind there are these sensible (i.e. non populist, non ideological) arguments against fiscal solutions:

    (1) If the stagnation is not primarily due to financial issues (e.g. demographic stagnation, energy constraints, flattening total factor productivity), then we do not have a problem which is 'cyclical' and can be addressed by 'counter-cyclical' measures. If this is the case, then the fiscal expansion would have to be permanent to be successful, which in turn would mean that the public sector would eventually come to dominate the economy entirely. Japan is the classic example.

    (2) Fiscal solutions whether counter-cyclical or in the form of a permanently open tap will increase the stock of safe assets. The stock of safe assets has been increasing every year since the second world war and this appears to be co-incident with a similar increasing trajectory in inequality. Fiscal measures might succeed in generating inflation and increasing the velocity of money and perhaps also increasing average employment and wages, but if they do so without pushing inequality downwards there is reason to be cautious.

    (3) A solution based on the private sector or at least having the private sector do an equal share of heavy lifting ought to be preferable simply from a perspective of political pragmatism. Fiscal solutions can be slow, prone to regular reversal due to changes in elected parties and captured by special interests. Fiscal programs are also more problematical for smaller nations with limited international clout who may be forced down a particular route by a more powerful neighbour or trading bloc. Likewise fiscal solutions probably need to be co-ordinated cross-border which makes all the above problems even worse.

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    1. 1. Permanent deficits do not mean a big public sector. One can run a deficit of X% of GDP with a public sector taking 10%, 20%, 60% or any other % of GDP.

      2. Inequality has not increased since WWII. The Gini coefficient dropped between WWII and around 1970, then it rose again back to where it started. The rise was mainly during Thatcher's reign (surprise, surprise).

      3. As in No.1 above, the fact that for example a socialist high public spending government comes to power SHOULDN'T result in a higher deficit. However I appreciate politicians are incompetent, i.e. they're likely to increase the deficit when increasing public spending (wholly illogical). That's where the system advocated by Positive Money, Richard Werner & Co is so good: politicians do not have control over the size of the deficit - that's left to a committee of economists. But politicians DO HAVE control over strictly POLITICAL matters, like what public spending will be as a % of GDP, and how that's allocated as between education, law enforcement, etc.

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  6. From your general tone, you seem to imply that Brexit is a disaster and that the EU is generally a very good thing indeed. Respectfully, I would beg to differ here since the EU has never shown its self to be particularly effective at running what amounts to a superstate. Greece is a microcosm of this; the current situation merely promises pain upon pain for the Greeks with no respite in sight.

    The actions here of the EU bankers are typical of their general attitude and aptitude; they are not experts and seem generally exceedingly timid, especially when telling their political masters how it is and how a situation must be resolved.

    Greece will not recover as a member of the Euro, and likely not as an EU member. Rather it will remain as a small backwards financial sink reliant on its neighbours for subsidy. The most likely donor (and chief beneficiary of the Euro project) would be Germany, but explicit funding from them to other EU countries is explicitly forbidden by the German constitution.

    In other words, we have here a problematic situation where the obvious solutions are impossible, and where the actual empire-building process has been attempted arse about face anyway. A Fiscal union of countries is something you only do as a last step after political union and linkage to the two countries' currencies. Basically the Euro is a doomed project, held together only by inertia and political hubris, and the bankers charged with keeping this union in play have their hands tied behind their backs.

    We know what will happen here in time. Eventually the internal stresses inside the Euro will destroy it, but before that happens the Euro bankers will try everything they can to rescue the union, and this is certain to include plundering the assets of anyone incapable of resisting. Basically, this means you and I (or did, until the Brexit vote) in the form of levies on bank accounts, raids on pensions, and printing money.

    After this the Euro will of course collapse, but do you really want to hand around for a good hiding before the inevitable? Basically the people of Britain had a good look at two lots of politicians, and decided that whilst both are a collection of rogues, scoundrels and fools at least the British collection are more handily placed for retribution in the event of trouble and are thus likelier to stay somewhat honest.

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    1. This article is not about Brexit. Please keep to the topic.

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    2. Really?

      Your article is titled 'Austerity and the rise of populism', and you opine that 'The populist paradigm shift started with the EU referendum', so that is surely the central pillar of your argument.

      In my opinion, the previous commenter is very much on-topic and deserves a fuller answer.


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    3. Ok, I will rephrase. This piece is not about the deficiencies of the EU. It is about a much longer-term global phenomenon that in my view causes both financial and political instability.I am happy to discuss this long-cycle phenomenon. I am not preared to discuss the nitty gritty of why someone doesn't like the EU. It is off topUC for this post.

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  7. Need to ask. Was Margaret Thatcher making a "false promise" when she argued that the Euro was detrimental to the LT economic well-being of the UK?

    Or were the majority of economists in the UK making "false promises" when they argued that the UK would be better of with the Euro.

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  8. No, the point of austerity is not that "there is no money". The rationale for Keynesian fiscal policy is not difficult to understand, but ultimately it implies abolishing the budget constraint for the public sector. Whenever there is a shortfall in private demand, politicians (think of Trump or Clinton) and a bunch of bureaucrats get the mandate to throw money at the economy. You need to read a lot of Krugman or Wren-Lewis columns to believe that this policy will work.

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    1. I take your words to mean that the supply of money is suffering from an artificial limit, probably a law of some of kind. Could the public sector spending you mention include a basic guaranteed income for citizens? In America we might call it the Social Security Lifetime Supplement (SSLS).

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    2. This comment has been removed by the author.

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    3. Sounds great, but has nothing to do with what is really going on. In fact, the public sector continues growing (in Europe at least), money is thrown at all sorts of stupid public projects and programs, spending is never anti-cyclical but persistent, and public sector employees are basically overpaid everywhere (if you include the usually generous, unfunded pension schemes).

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  9. Thanks for the article. I don't know if you've read the work of René Girard but it's very interesting on the ubiquitous desire to find a scapegoat. Human psychology doesn't change very much and as a result I think society is, sadly, massively complacent about the potential for war.

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  10. How are you going to restore democracy without a nation state? It cannot be done. Internationalists were given a chance and they've failed. You can attribute war to anything, not just nationalism. Voters are fed up with internationalists utopic dreams.

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  11. Paul Samuelson attempted a proof that in a zero-growth economy, real riskless long-term interest rates will also be zero:

    https://server1.tepper.cmu.edu/Phd/DCA/samuelson.pdf

    And near-zero is what U.S. Treasury TIPS now yield, like the debt of all other creditworthy governments.

    Yet, in what country on the planet can a politician win election, or a pension manager remain employed, on a promise of 0% growth?

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  12. Excellent beautifully written article and diagnosis, even if I do hope the prognosis is wrong. There are a some additional points to consider. First Greece and the UK are not comparable from an economic POV because the UK is a sovereign currency country and Greece is not, the UK is not nearly as vulnerable to foreign bank exploitation as Greece experienced from mainly German banks, and the UK does not have the culture of tax evasion that has been prevalent in Greece. Second there is a new school of economic thought that has been incubating since about the early 1980s usually called Modern Money Theory (MMT) that can much more effectively deal with the economic cycles described, at least for sovereign currency countries. Third there is a better alternative to war that needs to be promoted, - a better EU that is a fiscal as well as a monetary union. Only a common fiscal policy set can overcome the disparate economic problems of EU countries, especially the need to resort to austerity economics. Fourth, the USA, at least, is not dealing with austerity. The economy is doing surprisingly well and the fiscal arrows have not yet been taken out of the quiver. The biggest problem in the USA is demographics, which economists have not yet learned how to address. Finally, who can actually carry out a war and on whom under present world economic conditions? The only likely aggressors are Russia or China and neither of them has the economic and cultural issues being faced in Europe.

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  13. Much as I empathise with your view that things are likely to get ugly, your sketch of the fiscal background seems somewhat at odds with the facts.

    Per the IMF*, UK general government total expenditure going into the crisis was 39.5 % of GDP against general government revenue of about 36.5%. During the crisis, total expenditure peaked at 45.5% of GDP and has very gradually fallen away to a current level of 39.5% again. Revenue briefly dropped to just over 35% in 2009 and has since fluctuated around 36% of GDP. So, peak net general government borrowing was around 10% of GDP in 2009 and 2010 and has slowly come back to a 2015 deficit of 4.4%.

    Does this really constitute "austerity"?

    Sweden and Switzerland provide an interesting, and perhaps instructive, counterexample. Including both seems useful since, measured by government involvement in the economy, they straddle the UK with Sweden between about 7-10% of GDP above in terms of total expenditure while Switzerland ranged between 7-13% below. Both reacted to the crisis in a low-key fashion. Pre-crisis net general government lending (i.e. fiscal surpluses) gave way to moderate net borrowing, topping out at 1.68% of GDP for Sweden and 0.25% for Switzerland.

    As a result, net general government debt in Switzerland fell from 30% of GDP in 2007 to 23.8% now. Sweden's equivalent numbers are -16.2% and -15.5% against the UK's 38% and 80.6%. Both Sweden and Switzerland, unsurprisingly in my view, enjoy unusually high levels of gross national savings (est for 2016 at 30.8% of GDP for Sweden, 32.5% for Switzerland vs 13.76% for the UK).

    I'll stop there but it seems to me even this very brief sample of real-world figures casts a rather different light on the potential sources of our current undoubted dilemmas.

    * http://www.imf.org/external/pubs/ft/weo/2016/01/weodata/weorept.aspx?sy=2006&ey=2016&ssd=1&sort=subject&ds=.&br=1&pr1.x=15&pr1.y=6&c=132%2C134%2C176%2C144%2C146%2C158%2C112%2C111&s=NGDP_RPCH%2CNGDPD%2CNGSD_NGDP%2CLUR%2CGGR_NGDP%2CGGX_NGDP%2CGGXCNL_NGDP%2CGGXWDN_NGDP%2CBCA_NGDPD&grp=0&a=

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    1. I despair when people attempt to "prove" or "disprove" austerity on the basis of total government expenditures.

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  14. Historically, resurgent nationalism has always led to war. I see no reason why this time should be different.

    Of course I may be totally wrong, but I think things have changed since the world wars in a number of relevant ways, ones that are not usually mentioned in this context:

    1) Mass conscription no longer exists in Western countries, with a tiny handful of exceptions. There has been a lot of talk about how the British government has had trouble recruiting civil servants to handle Brexit because the potential recruitment pool of the civil service as a whole is so overwhelmingly anti-Brexit. Similarly, soldiers today are paid professionals who won't go for just any idiotic nationalist fantasies just because the political leadership asks them to.

    2) Wars resulting in mass casualties for one's own side have become politically impossible already some time ago. This is so to the extent that wars such as the Vietnam and Iraq Wars were let go to ruin because, although the leadership knew what it would have taken to win, the opportunity cost of winning was too high in terms of deaths. The Vietnam War is remembered as a shameful bloodbath for the US Army, but it had 58,315 men killed in action over a decade, while the Battle of Kursk in World War II killed more than 600,000 in just seven weeks. Battle deaths have become such a rare exception from the norm that in the Iraq War, they had generals attend the funerals of teenage corporals, and being almost apologetic about the fact that someone, anyone, from their army had actually died in their war. By comparison, imagine if they had had a general give a memorial speech at each of the 11 million military funerals in World War I.

    3) No war in today's world could be truly major without the involvement of NATO. And for better or worse, the United States, the major player in NATO, is gripped by probably the strongest isolationist mood in 100 years.

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    1. "This time is different" is the most dangerous statement in the world. I deliberately used it to see if anyone would fall into the trap. And you did. Congratulations.

      The more people who think like you, the more likely it is we will sleepwalk our way into war, just as we sleepwalked our way into financial crisis because we believed there would never be another crash.

      The way we do war may have changed. But we are still humans, and humans have not fundamentally changed their nature. We are the most dangerous predators ever to live on Earth, and we are naturally belligerent towards our own species.

      I repeat, this time is NOT different, in any really fundamental way.

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  15. Your great post reminds me of another parallel between previous eras of approaching calamity and our own, via Yeats.

    I've sometimes wondered how sensitive, decent folk (like Yeats) could at times be taken in by the nastiest of right wing populisms. It's a question I still don't know the answer to but am reminded of frequently these days.

    It's appalling to see, over the last year or so, certain sections of the left veering off towards nationalism and even some degree of Trumpism ("I don't agree with everything he says, but..."). It's nasty and very concerning.

    I wish people would realise that when internationalism and solidarity are subtracted from progressive ideals, and a dose of scapegoating added, you're left with something not dissimilar to right wing populism.... potentially even fascism.

    Also, if you fight the far right on it's own terms, you will lose.

    Troubling times.

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  16. Thank you Frances, for this detailed and expansive analysis of where Western democracy has arrived after 40 years neo-liberalism - and thanks to Friedrich Hayek and QE.
    If you haven't seen it already there's a wonderful documentary titled 'Requiem of the American Dream' with Noam Chomsky. You can see it on Netflix. Noam takes us back to USAs founding fathers (a group of wealthy white guys) and leads us up through to the 20th Century's creation of the 'consumer' (who's sole purpose is to 'buy stuff'). The 1960s in the USA was the one period where the system was shaken up a bit due to mass activism. That seems to be the only method of changing the system that has ever worked. Time for Action.
    Here's a trailer for the doc: https://www.youtube.com/watch?v=zI_Ik7OppEI

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