Economics

Thoughts about the Job Guarantee: A Reply

Published by Anonymous (not verified) on Mon, 20/11/2017 - 10:56pm in

Tags 

Economics

A response to the Nov 17 thoughts of Simon Wren-Lewis

Simon Wren-Lewis has put up a very considered post on the Job Guarantee which deserves an appropriate response. I have been calling for Simon to write about the Job Guarantee for a very long time, and I’m grateful he has done so. It is a very good piece from an alternative point of view and I hope I can do it justice in this reply.

Simon writes: “But MMT (Modern Monetary Theory) economists go beyond that to suggest that [the Job Guarantee] could be a permanent feature,”.

Certainly in the UK it is already a permanent feature — albeit in a heavily restricted form. The requirements of the Universal Credit system is that individuals have to work 35 hours a week (The Claimant Commitment) looking for jobs that, in aggregate, cannot exist in return for their money at the princely rate of £2.09 per hour.

So the suggestion is to turn that into something that is more useful macroeconomically.

Simon writes: “The main problem that Gregg discusses in his paper is the ‘Lock-in’ effect, where those in a JG job reduce their search activity.”

MMT economists do not really consider this a problem. Or if it is a problem, the issue is one for the private sector to solve not the Job Guarantee.

It’s worth pausing at this point and ask ourselves why this problem cannot be dealt with by unemployment benefit. And that’s because the benefit cannot be paid at the living wage rate. Others in work will not stand for it, largely for two reasons:

(i) the person receiving the money has not earned that money by giving up their time — as the people working have.

(ii) the people working cannot choose to take the money instead of the work they are currently doing.

The Job Guarantee deals with both those problems The Job Guarantee is an alternative job offer open to everybody, neatly dealing with both dimensions of the resentment issue.

(As an aside: you’ll note that Basic Income only attempts to deal with (ii) — in a manner that requires massive tax rises).

The Job Guarantee job is employment, like any other job. If people want to spend their entire careers on the Job Guarantee they can do so. If somebody wants to leave a position outside the Job Guarantee and take a Job Guarantee job they can do so.

If the private or public sector doesn’t like that, then they just have to learn to compete. The problem lies with them and their attitude to employees, not with the Job Guarantee. After all, in other ‘talent’ segments of the economy firms have to fight with each other for limited labour. All the Job Guarantee does is turn the ‘gig economy’ into the ‘talent economy’ for everybody.

But it’s not all one way. Because we no longer have to worry about jobs in the private sector we can stop worrying about Uber, zero hours contracts and false self-employment. Automation is no longer a threat, but an opportunity, and private firms can be encouraged to automate as fast as possible. The minimum wage becomes market determined as a delta from the Job Guarantee living wage. Or more accurately, the minimum package becomes market determined. It is entirely feasible for some jobs offering great prospects to offer less than the Job Guarantee living wage. After all, there are still some people who believe Cowell when he says he’ll make them a star…

Simon writes: “As I understand it any worker without a job would be offered a JG job.”

Everybody has access to the Job Guarantee job — currently working or not — for the anti-resentment and competitive reasons stated above. If an individual is resident and permitted to work in the nation then they can take a Job Guarantee job at any time. It can be part-time or full-time.

You can see the Job Guarantee as a zero-hours gig where the boot is on the other foot. If you’ve worked less than 35 hours in the week, the Job Guarantee employer has to provide work and pay you for it.

Simon writes: “The obvious response would be for private and public sector employers paying minimum wages to increase their pay sufficiently to stop this happening, which in turn would often lead private sector firms to raise prices.”

I have to say I’m surprised by this statement, because it is the usual right wing argument against raising the minimum wage. The evidence is that it doesn’t happen. The wage changes are absorbed by the productive process.

In MMT terms we say that a quantity adjusting firm will always outcompete a price adjusting firm. Your average hairdresser will just work longer hours in response to a bigger queue, not shut the shop and put the prices up.

If firms put prices up, then that is evidence of insufficient competition in a market area, or evidence that competition is no longer delivering productivity and innovation improvements for that market area (therefore profit serves no useful purpose and the firm should ideally be transferred to worker ownership or nationalised). Once you ‘set expectations’ amongst profit firms that raising prices will be treated with a harsh competition authority response and/or tax rises, you’ll get the quantity adjustment you’re looking for.

Remember, once we have a Job Guarantee all private firms are ultimately disposable. Just like Cowell’s stars, there is always somebody else with a dream ready to have a go.

When a Job Guarantee is introduced, all that happens is the minimum non-guarantee wage becomes market determined not socially determined. The difference is that the Job Guarantee is a socially determined job, not just a socially determined wage. So all of a sudden the non-wage factors of the job become part of the competitive mix.

If you set the Job Guarantee as a 9–5, Monday to Friday job, decent pension and conditions and all the minimum wage jobs in the economy are the same in the same local area, then the minimum wage is likely to settle at or around the Job Guarantee wage.

If the minimum wage jobs are all terrible hours, miles away, night shifts, split shifts, zero-hour contracts, etc. then the new market determined minimum wage will be considerable higher — or the conditions will improve markedly. All that is happening here is that the market is suddenly having to adjust to paying the full cost of their ‘social pollution’, just as they would with any other environmental regulation.

Simon writes: “it would seem probable that the existence of JG jobs paying the minimum wage would attract some workers from private sector minimum wage jobs.”

Absolutely. Fully expected and part of the design. The Job Guarantee will end the parasite economy that Nick Hanaeur speaks of. The firms that will survive will be those that understand the basic Fordist notion that the earnings of the firm depend in some degree upon the wages the firm pays — as Nick notes in his piece.

And because the Job Guarantee is a job and, at least partially, a directable labour pool, if any of the parasite firms were providing a service that can no longer be provided profitably by the market, then the Job Guarantee can pick up that function and deploy labour to provide it.

Simon writes: “The existence of IU [involuntary unemployment], and the possibility of joining their number. becomes a threat that keeps inflation stable. In a JG economy that threat is greatly reduced, both because an alternative job is always available and it will pay more than unemployment benefit.”

For me this comes at the problem from the wrong viewpoint.

The scenario Simon chooses is this one:

Business is tight. Employer A hires Labourer B at the minimum wage. Employer A can then pile more and more work and hours on Labourer B because B’s alternative is the dole. So B ends up earning far less than the minimum wage for their hours while Employer A earns super-normal profits, or perhaps even normal profits in a downturn, when they shouldn’t.

Hardly fair is it. We have a minimum wage for a reason.

However that scenario only applies in a system that is systemically short of demand and has no alternative employers bidding for Labourer B. There are other scenarios over the business cycle. When you get alternative employers popping up, as you do in an expansion, you get the following:

Business is good. Employer A hires Labourer B at the minimum wage. Employer A piles on the work. Employer C pops up, but doesn’t like the unemployed because they have no idea if they will turn up. Instead Employer C offers the minimum wage and promises faithfully to be nicer to employees. So Labourer B changes jobs, and Employer A is stuck because the alternative is unemployed people who they have no idea will turn up, let alone work the crazy hours now expected. Then Employer C piles on the work… Rinse and repeat.

You’ll note the scenario is highly dynamically disruptive, yet this is the scenario that plays out pretty much every day in areas like the construction business. It is partially the reason why getting things completed is so difficult. The cultural dynamic is corrosive and workers walk off the job.

Now let’s look at boom time:

Business is really good. Employer A hires Labourer B at the minimum wage. Employer C pops up, doesn’t like the look of the unemployed and starts touting round their alternative offer at a higher rate. Labourer B asks for more money, or they’ll move. Employer A doesn’t like the look of the unemployed, because they have no idea if they’ll turn up, so agrees to pay more money because there’s loads of work coming in and charges accordingly.

The unemployed buffer has little effect on the behaviour of business because it is a one way trap designed to frighten labour.

Now lets replay those interactions with a Job Guarantee in place.

Business is tight. Employer A hires Labourer B at the market determined minimum wage. Employer A can no longer pile on the work onto Labourer B because there is a guaranteed decent employer who Labourer B will move to if ill-treated. So Employer A has to keep the work at a reasonable level. Employer A now earns normal profits, and may move into a loss, while the worker earns the minimum wage.

Surely that is how it should be?

Let’s do the expansion phase:

Business is good. Employer A hires Labourer B at the minimum wage. Employer C pops up offering the minimum wage and has the choice of Labourer B or new Labourer D currently with a track record of reliability on the Job Guarantee. Employer A would be happy to retain Labourer B but knows they have the option of Labourer D. Neither Employer A, nor Employer C can pile on the work, because the Job Guarantee is known to be decent. So both Employer A and Employer C get the labour they require at a fair deal and stuff finally gets done.

And the boom phase.

Business is really good. Employer A hires Labourer B at the minimum wage. Employer C pops up offering the minimum wage because they have the choice of Labourer B or new Labourer D currently with a track record of reliability on the Job Guarantee. Labourer B asks for more money. Employer A would be happy to retain Labourer B but knows they have the option of Labourer D so they turn the wage rise down. Labourer B can’t get any more money out of Employer C either for the same reason. Yet still neither Employer A, nor Employer C can pile on the work, because the Job Guarantee is known to be decent. So both Employer A and Employer C get the labour they require at a fair deal and stuff finally gets done.

Importantly Employer Z will tend not to pop up and stay around because policy has been set sufficiently tight that the Job Guarantee buffer will not exhaust. But even if it did the Job Guarantee remains a credible threat to labour services in the private firms. Nobody can become a parasite business. Competition for labour would ultimately eliminate one of the other players, force their profits down to the new normal, or drive an innovation cycle (doing more with less). All of which leads to cheaper prices, not more expensive ones.

This is why we say the Job Guarantee is a superior buffer. It promotes the same competitive response between the Job Guarantee buffer and private firms as there are between private firms where labour operates in a talent economy. This is because under the Job Guarantee, the workers can deliver a proven track record of engagement with the Job Guarantee, as opposed to a perception of inactivity on the dole.

So in reality the number of people on an unemployed buffer would always be far higher than a Job Guarantee buffer because the risk to business of engaging the unemployed is so much higher. Therefore they will move into bidding from each other much earlier in the cycle and because the unemployed buffer isn’t a credible threat to private business labour services you get an unpleasant dynamic where capital can pass its losses onto workers.

The mistake is the usual mainstream one of using aggregate concepts like NAIRU to analyse a currency zone that is hetereogenous in nature.

NAIRU is the exhaustion of the unemployment buffer at specific micro-physical points in the currency area sufficient to cause a dynamic feedback effect that impacts inflation. That happens because the unemployment buffer is insufficient threat to the labour services of private firms, the spend side withdrawal automatic stabliser effect is too weak spatially (compounded by tax credits) and discretionary policy is too loose.

You don’t get anywhere near that on a Job Guarantee because you actually set discretionary policy tighter than you would under Monetary Policy Targeting (MPT). You never want the guarantee employment buffer to exhaust anywhere spatially and unanchor the currency. However, because Job Guarantee cleans up parasite private firms and is spatially targeted to areas without enough work (unlike tax credits which are pro-cyclical spatially and pro-parasite firms), you actually get a higher aggregate across the currency area. Job Guarantee smooths and dampens the hot spots in a currency area so that the currency area as a whole can go further.

So in effect you get a lower size of the buffer overall at the cost of a higher buffer in few places that would be hot spot boom areas under MPT.

Since the productivity of JG workers is necessarily higher than that of an unemployed buffer and there will be fewer of them overall at full expansion the productivity of the entire economy is necessarily improved — even before you factor in the effects on business investment of eliminating the parasites.

Simon writes: “JG and the lock-in effect will also reduce geographic mobility,”

Again that is a feature, not a bug. The concept that workers should wander the continent looking for their next gig is a middle class concept, not a working class one. The point was well made in Beveridge(1944) §111

This .. may serve to illustrate the folly of expecting a common-form social outlook amongst persons with entirely dissimilar experiences and traditions. Middle-class people, trained for the professions, expect to have to follow the job wherever it may take them. The same holds good only to a very limited extent among the working-class people.

The point is reinforced in §112

Family circumstances and age make some individuals in practice immoveable. And wholesale transference should be regarded as bad social policy. It involves a sacrifice of social capital, that is to say of the services of health, education and amenities which have been built up for a community of a certain size and will be wasted if the community sinks to half or a quarter of that size. The assumption on which the policy was based …, namely that it was impossible or undesirable to control the location of industry … will, to later generations, condemned to struggle with its consequences, appear a sad example of blindness leading to drift.

Working people live in communities and largely wish to remain there. Business serves the people, not the other way around, and it must go where the people are and adapt its processes to do so.

Simon writes: “ The JG wage would not be able to do this. As the authors note, active stabilisation policy would still be required to do this, although the number of JG jobs could be a useful indicator of what action was required, just as the unemployment rate is now. Another way of saying the same thing is that the JG does not supplant the need for active macroeconomic stabilisation.”

I’ve re-read the Mosler and Silipo paper and, try as I might, I can’t see any mention of ‘active stabilisation policy’ — certainly nothing involving the requirement for an ‘independent central bank’ which I presume is the implication. The Job Guarantee puts the currency on a ‘labour hours standard’ and allows the currency to float internationally. It creates a genuine full employment situation where classical tax and spend policies then apply. If government wants more, say, discretionary education provision it has to make room for it in the full employed economy via its legislative powers by taxing, ordering events, banning things, or constraining the banks.

Conclusion

Simon Wren-Lewis’ positive contribution to the Job Guarantee debate is very welcome, and shows there is a real desire to deal with the failures of trickle-down growth and punative scapegoating as cures for unemployment.

The Job Guarantee is a strong spend side automatic stabiliser that responds instantly, spatially and automatically. You don’t need any politicians involved and you certainly don’t need any unelected technocrats at central banks. It bypasses human decision making almost completely at the day to day level with the job choices delegated right down to the social entrepreneurs implementing the guarantee. All politicians have to do is set the direction and speed by determining democratically the minimum socially acceptable job and then setting tax policy so that the wage from the guarantee job delivers the real resources needed to live. Then the politicians, and the technocrats, can just get out of the way.

Comments are welcome on the article link in the MMT Reddit Group.

If you liked this article, please click the ‘heart’ below to recommend it to others, and use the share buttons to spread the word. Remember Modern Money Matters.

Thoughts about the Job Guarantee: A Reply was originally published in Modern Money Matters on Medium, where people are continuing the conversation by highlighting and responding to this story.

The chancellor must end austerity now – it is punishing an entire generation

Published by Anonymous (not verified) on Mon, 20/11/2017 - 10:05pm in

Tags 

Budget, Economics

I co-signed this letter published in the Guardian this morning:

Seven years of austerity has destroyed lives. An estimated 30,000 excess deaths can be linked to cuts in NHS spending and the social care crisis in 2015 alone. The number of food parcels given to impoverished Britons has grown from tens of thousands in 2010 to over a million. Children are suffering from real-terms spending cuts in up to 88% of schools. The public sector pay cap has meant that millions of workers are struggling to make ends meet.

Alongside the mounting human costs, austerity has hurt our economy. The UK has experienced its weakest recovery on record and suffers from poor levels of investment, leading to low productivity and falling wages. This government has missed every one of its own debt reduction targets because austerity simply doesn’t work.

The case for cuts has been grounded in ideology and untruths. We’ve been told public debt is the outcome of overspending on public services rather than bailing out the banks. We’ve been told that while the government can find money for the DUP, we cannot afford investment in public services and infrastructure. We’ve been told that unless we “tighten our belts” we’ll saddle future generations with debt – but it’s the onslaught of cuts that is punishing an entire generation.

Given the unprecedented economic uncertainty posed by Brexit negotiations and the private sector’s failure to invest, we cannot risk exacerbating an already anaemic recovery with further public spending cuts. We’ve reached a dangerous tipping point. Austerity has failed the British people and the British economy. We demand the chancellor ends austerity now.

Joseph Stiglitz Professor, Columbia University

Ha-Joon Chang Professor, University of Cambridge

David Graeber Professor of anthropology, LSE

Ann Pettifor Director, Prime Economics

Danny Dorling Professor, University of Oxford

Saskia Sassen Professor, Columbia University

Sir Richard Jolly Emeritus professor, Institute of Development Studies

Mike Savage Co-director of International Inequalities Institute, London School of Economics

David Blanchflower Professor of economics, Dartmouth College

Richard Murphy Director of Tax Research UK, City, University of London

Kate Pickett Professor of epidemiology, University of York

Richard G Wilkinson Emeritus professor of public health, University of Nottingham

And many others

“Is Populism a Problem”? – a story for the World Forum for Democracy 2017

Published by Anonymous (not verified) on Mon, 20/11/2017 - 9:41pm in

If you’ve ever shared a room with an
elephant… you know what matters isn’t the presence of an unpredictable beast –
what matters is the fragility of that room.

lead MANILA, Nov. 14, 2017 (Xinhua) -- Philippine President Rodrigo Duterte speaks at a press conference after the closing ceremony of the 31st Association of Southeast Asian Nations (ASEAN) Summit. Rouelle Umali/Press Association. All rights reserved.“Fuck you,” — EU — “Why are you
complaining so much about me threatening the criminals… the European Union now
has the gall to condemn me. I repeat it, fuck you!”

Those are the words of my country’s
president, Rodrigo Duterte, whom you may have heard of. “Clearly, he’s a
colorful guy,” Barack Obama said, after Mr Duterte called him a
“son-of-a-whore” for criticising human rights violations occurring now in the
Philippines.

Shocking, isn’t it? I see concern in
your faces. How could such a beast come to power, when the Filipinos you know
are warm, hard-working, law-abiding? Among such wonderful people, how could a
ruler like Duterte be so popular?

It’s a long story. I’ll start at the
end.

                                            
*      *     *

Last year, on the final day of
campaigning before our presidential election, I
attended the rallies of each of the five candidates. I didn’t go to hear the
politicians, because they usually make the same promises. No, I went to
understand the concerns of the voters – to learn the hope behind their vote.

In one rally, voters believed in the
patron who provided for their city. At another rally, members of the middle
class supported the incumbent party and its promises of economic prosperity. At
a third, the disenfranchised had faith in the compassion of a moviestar’s
daughter. At the fourth, students voting for their first time were convinced of
their feisty candidate’s incorruptability.

Mr Duterte’s rally was completely
different. His supporters came from across the nation, through all classes and
age groups. His rally was huge, filled with infectuous optimism – people in costumes,
with picnic baskets, flying kites they made by hand in Duterte’s honor. As one
elderly observor said, shaking his head in wonder: “It’s like People Power all
over again.” He was referring to the mass protests three decades earlier that
ousted Ferdinand Marcos and restored democracy after 14 years of dictatorship.

Prior to this election, I opposed Mr
Duterte for four reasons: his promises to kill suspected criminals, his disdain
for democratic checks and balances, his warmth towards an encroaching China,
and his allegiances with crooked politicians including the heirs of the
dictator. I heard Duterte’s promises and I exercised my democratic right to not
choose him. But at that final rally, on that intoxicating night when Filipinos
made their choice clear, it felt like Duterte’s campaign slogan would be proven
true: Change is coming.

I began to doubt my doubts. Maybe I
was wrong. Maybe he was different. Maybe his violent rhetoric was just
drama, as his supporters claim. I confess, I came to believe in Duterte,
because any leader who can evoke such optimism among Filipinos – that is
a leader I will support. Not because I believe in him, but because I believe in
the power of the Filipino people to do great things when we are moved. He said he knew Duterte was a risk, but it was
worth it for a chance at real change.

At that rally, I interviewed many
people – and there’s one I’ll never forget. Across his heart, a Duterte
T-shirt. On his head, an army helmet. In his hands, a large Philippine flag
waving proudly. He had crossed the country to be counted that night. He grew up
opposing the Marcos dictatorship, because his home province in the south had
been abused during the regime. He said he knew Duterte was a risk, but it was
worth it for a chance at real change. To my concerns about Duterte’s threats to
dismantle democracy, the man nodded. “If that happens,” he told me, “it is up
to us all to reverse it.”

                                             
*     *     *

“It is up to us all.” How can we argue
with that? And because it is up to us all, to each of us politics is personal.

That’s why our story tonight is not
about Rodrigo Duterte. I started with his words only because, at a forum for
democracy, where we look apprehensively at populism around the world, for me as
a Filipino to not mention him would be to ignore the elephant in the room. And
if you’ve ever shared a room with an elephant, as I’m sure you all have, you
know what matters isn’t the presence of an unpredictable beast – what matters
is the fragility of that room.

This story is my country’s, and also
mine. Not because the story of my self is the story of my nation, but because
the story of my nation is the story of me. I’m proudly Filipino, though
I look Chinese, sound American, have a Spanish name, am an atheist among a
majority of Christians, lived in Canada during the dicatorship, and returned
home afterwards to grow up privileged in an impoverished society. The Filipino
experience is complicated.

Did you know we are Asia’s oldest
democracy? In 1898, we ended four centuries of Spanish rule and established the
continent’s first free republic. Our constitution was based on what was proven
good from all the great constitutions of the world. But our ally the United
States betrayed us and conquered us into a colony – in what they called a “benevolent assimilation” – promising independence only when the élite among us could learn to govern democratically.

When the Second World War arrived,
Japan spun its brutal subjugation as ‘liberation from the West.’ After the
atomic bombs ended the war, America finally gave us independence. Our new nation
was broken, yet free.

But in a paradise like the
Philippines, war seems inevitable. Our leaders fought those who sought equality
through communism, until years later that struggle gave Marcos a handy excuse
to suspend democracy, extend his presidency, and plunder our economy.

Into that trauma I was born. That was
my generation’s inheritance. Just as what is happening today will be inherited
by the students I teach. My hope is that we can give them something
worthy of their hope.

My teenage years, you see, were
blessed with the optimism of a newly liberated country. After the dictatorship,
my family finally returned home. My father’s business was soft-drink bottling
but his dream was public service, and he ran for office because at the time
anyone could. I saw campaign trails and grand plans, then the dirty tactics he
faced, and the hypocrisy of those around him when he was in government. I hated
politics because I saw what it promised, but I knew what it does.

Then one day, at the turn of the
millennium, as I was driving to the supermarket, the convoy of the son of
President Joseph Estrada parted the traffic with blazing sirens and windows
bristling with guns. Out of foolish principle I refused to cede my right of
way. They pursued my car, cornered me at an intersection, and alighted to beat
me and pull me through my open window. I was saved from god knows what only by
revealing my surname – the only time in my life I’ve invoked my father. Thus I
learned how in the Philippines only privilege ensures safety.

That’s when I became political, because politics is
personal  – as personal as a fist in your
face.

When the massive corruption of the
Estradas drove Filipinos again into the streets, I marched for my first time,
believing fully in the woman who would oust him. I thought the ends justified
the means, even though President Estrada had been democractically elected.

Hope came easily after we replaced him
with Gloria Arroyo  – a wealthy economist
who went to Georgetown with Bill Clinton. When she ran for re-election against
Estrada’s best friend, and was caught cheating in the polls, I supported her
still. Justice had to be served to deserving criminals like Estrada.

But Mrs Arroyo turned out as bad as
the rest, pardoning Estrada for political gain, and overseeing nine years of
corruption. When Benigno Aquino III was voted in, the proper democratic
transfer was a breath of fresh air. I hoped our tiger economy during his
checkered six-years would push us into prosperity – that the promise of ‘eventually’
would prove good enough.

It didn’t. A promise of eventually,
however realistic, is easily replaced by a promise of soon. Change is coming,
Duterte vowed. He promised he’d solve the drug problem in six months. He’d
succeed, he said, or step down.

Six months and one year later, his
popularity has exonerated him from broken promises. It’s also cost thousands of
lives. And destroyed thousands more.

                                                     
*     *     *

In one slum in Manila, I interviewed a
family whose father organized religious processions and had just passed a drug
test and police clearance as part of a job application. Yet one night he was
lined up along with nearly 80 others as police led the women and children out
of sight. The men were arrested without warrants or due cause, slapped with
random charges, asked for bribes, and a handful later ended up dead.

That man’s family sold their shanty to
afford his bail. As they spoke, neighbors flocked to also share their stories –
eager to be finally heard. One woman’s brother was executed; one man’s son
remained wrongfully behind bars; the rest had similar tales of woe.

In slums, crime scenes, and jails
across the capital, I heard the same stories of police abuse, and having
nowhere to turn to. Injustice continued even after death as families were
forced to bury loved ones using police-accredited funeral homes, owned by
former cops or soldiers, who charged 10 times the going rate – some 800 euros
gouged from those who barely earn a euro a day. That’s when I became political, because politics is
personal  – as personal as a fist in your
face.

None of that’s surprising if you
consider Philippine history. Always in power is a revolving carousel of rulers,
not leaders, who are variations of corruption, incompetence, and impunity.
Never in power are we citizens who, in theory, should be able to use integrity,
excellence, and community support to rise and lead our country, but who, in
practice, cannot  – not in a land
ruled by oligarchs, celebrities, warlords, and dynasties.

With typical impunity, our rulers even
revise history. We’re now told that the tragedy of the dictatorship was written
by the victors – who vanquished our strongman but have proved so untrustworthy
that we’re willing to question history itself. If we don’t know whom to believe
how do we know what to believe? In our social-media age, we’re influencers or
followers, not pioneers and leaders.

That’s why the authoritarian legacy of
our past is alluring  – because our
dysfunctional democracy can supposedly only be disciplined by a strongman. Many fear that Duterte is going in that
direction, starting by burnishing his idol. Last year, the body of Ferdinand
Marcos was re-interred as a hero, while his son came only 2 percent shy of the
votes for the vice-presidency – a result he’s contesting and may well overturn.
How can the family that stole billions, and oversaw tens of thousands of human
rights violations, be steps away from ruling again?

                                                   
*     *     *

Asia’s oldest democracy has never been
a democracy. We no longer know what it’s supposed to look like – how to define
it, defend it, much less make it work. Roughly 80 percent of our legislature is
ruled by dynasties. Political parties form not by ideology but by expediency
and opportunity. Virtue is seen as hypocrisy waiting to be exposed, while
vulgarity is spun as honesty attesting to authenticity.

It often feels as if democracy, having
bested communism in the Cold War, gave up making a case for itself across the
world. It’s like the suitor who wins a bride, but after the honeymoon takes up
drinking, habitually farts under the covers, and scolds her for not doing as he
says.

To such complacency, belligerent
populism is a repudiation. To many, the West is sanctimonious  – funding coups, exploiting resources,
forging dubious relationships with leaders who may be bastards but are your
bastards. When the democratic ideal gets hollowed out by realpolitik, who can
admire what it’s become?

Two percent of the population controls
most of the wealth, media is polarized into biases, voters embrace fake news,
reality TV stars wield nuclear missiles, and neo-imperialism displaces millions
who are unwelcome in the countries who caused their displacement. As all that
spirals, we seek truth in Twitter, find community in Facebook, and look to
memes for wisdom.

Meanwhile, countries like Singapore,
the UAE, and China have dizzyingly thrived without democracy – astute in
governance, benevolent in dispensation, single-minded towards progress. Democratic pieties be damned.

To those who believe in saviours, Mr
Duterte fits this zeitgeist: Angry, pragmatic, impatient towards western
values, and ready to discard the human rights of suspected criminals to punish
the human wrongs against unsuspecting innocents.

It’s easy to understand why so many
excuse so much. And so much has indeed been excused. For two years,
Duterte encouraged others to kill criminals, vowing to fill Manila Bay with
their bodies. When police killed 32 suspects in one night, he called it
beautiful and said if “we could just kill another 32 every day, then maybe we
could reduce what ails this country.” He declared he’d be happy to slaughter 3 million drug users. He promised
cops pardons. And encouraged them to give guns to unarmed suspects.

Our justice system has never been
effective in punishing criminals, and many insist that the victims of the drug
war deserve to die. They reject the undeniable logic that the government is ultimately
responsible – either complicit in the violence, incompetent in stopping it, or
both. In this form of populism, every killing is overdue judgment without due
process  ­– no trial, defence, witnesses,
or sentencing by an accountable representative of the state. Duterte’s
supporters celebrate the surrender of hundreds of thousands of drug users, and
a crime rate that has dropped 10 percent.

But that’s simplistic. The murder rate
is up 30 percent. More than 50 kids have been killed in the drug war. Evidence
often implicates police. And the government has quashed efforts to stop the
bloodshed. Opposition figures have been jailed or accused of crimes.
Whistleblowers have fled the country. Media companies are taken over,
discredited, or threatened with closure for their criticism. The heads of
institutions constitutionally mandated to limit the president now face impeachment
and removal. Dissenting voices are cast as destabilizers and suffer character
assassinations, criminal charges of libel, and threats of violence. That’s how populism subverts democracy in places like the
Philippines – by posing as democracy... frustrated by too much freedom.

That’s how populism subverts democracy in places like the
Philippines – by posing as democracy paralyzed by checks and balances,
frustrated by too much freedom. Popularity, in all its might, is cast as right
– even if actually it is wrong.

                                                     *     *     *

Through propaganda, online abuse, fearmongering, and tailored legislation,
those at the top are using us – our faith manipulated into ceding our remaining
protections. Hindered in discourse and oppositional representation, the
minority is bullied by the majority who serve those in authority; it is simply élitism in sheep’s clothing. Cruelty posing as pragmatism.

But if we really are pragmatic, this
is my question: What if a benevolent strongman turns no longer
benevolent? Some shrug, saying our ruler is trustworthy. Okay, then, what
happens when the benevolent strongman isn’t strong enough to be
benevolent? With our democratic protections dismantled, how can we protect
ourselves?

Fortunately, we’re not there – not
yet. Our democractic institutions shakily hold on. For now, we must safeguard
our democracy by refusing to save it by undermining it again. To those above
the law, we must stubbornly apply our laws. Mr Duterte has to be held to his
mandate as a democratically elected president – with all its accountability
and constitutional limitations under which he must serve all
Filipinos. By that he will be judged, to later face his alleged crimes,
to be exonerated if innocent or punished if guilty. We demand due process for
him because he’s rejected it for others.

But as I said, this isn’t his story.
It’s ours. The problems run beyond him, as do the solutions. Duterte is a
symptom, and symptoms reveal our course of treatment towards a cure. Our body
politic is feverish, fighting to be healthy.

I admit, it seems contradictory.
Citizens are angry – but never in my life have we been more politically
engaged. Social media is abusive and divisive, but also provides unparalleled
opportunity for discourse. Populism succumbs to demagoguery, but populism by
its definition pursues the concerns of the people. Democracy is under threat,
but now we who believe in it must work for it to survive. Our personal roles
are increasingly clear. Citizens are angry – but never in my life have we been more politically
engaged.

As a teacher and writer I try to
instill in my students and readers the daunting responsibility of seeing
themselves as leaders. Because that’s what every single one of us turns out to
be, usually without realising it. Whether it’s leading your family, household,
church group, team of workmates, community, city, or nation – we are all
leaders. And such broad leadership thrives only in democracy – that system of
small groups represented by chosen individuals, that together form larger
groups in which everyone is represented and empowered to participate, so that
no one is either indispensible or overlooked, so that power is an opportunity
held equally by all and not just an élite group or trusted savior.

I also urge my students to think not
what they’ll be when they grow up – doctor, lawyer, politician – but instead
think of what problems they want to fix, because our problems are many, and if
they can identify those that stir their passions then they’ll know what
courses, skills, perspective, and careers they need to solve them.

Because isn’t that democracy? Not choosing who gets to be strongest, and supporting them as followers. But ensuring that the weakest is supported to lead their loved ones into a better world where all of us are empowered to take an active role in finding solutions?

Philippine democracy still stands,
such as it is. And our median age is 21-years-old. I naively find hope in
history’s continuing arc. Bad examples often teach us best how to be good – and
the next generation can choose from so many. One of my students remarked
recently that watching our old fogey leaders run the world is like watching
your grandmother trying to operate her first smartphone. And he’s right.

Perhaps we should listen to those who have their whole lives at stake, while much of ours is squandered. And empower them with all they need to thrive as leaders. And in the meantime do our level best not to scupper all they’ll inherit. For clearly it’s only through them that real change is coming.

How, now, concludes this tale of
populism in the Philippines and its wobbly democracy?

We end where we began – at that intoxicating
rally, with that man wearing his hope on his chest and waving the Philippine
flag. We leave here tonight with his wise demand: “It is up to us all."

Sideboxes
'Read On' Sidebox: 

openDemocracy was at this year's World Forum for Democracy,
exploring the impact of populism on our media, political parties and democracy (see WFD2017) and our WFD2017 page.

Country or region: 

Philippines

Topics: 

Civil society

Conflict

Culture

Democracy and government

Economics

Ideas

International politics

Rights: 

CC by NC 4.0

“Is Populism a Problem”? – a story for the World Forum for Democracy 2017

Published by Anonymous (not verified) on Mon, 20/11/2017 - 9:41pm in

If you’ve ever shared a room with an
elephant… you know what matters isn’t the presence of an unpredictable beast –
what matters is the fragility of that room.

lead MANILA, Nov. 14, 2017 (Xinhua) -- Philippine President Rodrigo Duterte speaks at a press conference after the closing ceremony of the 31st Association of Southeast Asian Nations (ASEAN) Summit. Rouelle Umali/Press Association. All rights reserved.“Fuck you,” — EU — “Why are you
complaining so much about me threatening the criminals… the European Union now
has the gall to condemn me. I repeat it, fuck you!”

Those are the words of my country’s
president, Rodrigo Duterte, whom you may have heard of. “Clearly, he’s a
colorful guy,” Barack Obama said, after Mr Duterte called him a
“son-of-a-whore” for criticising human rights violations occurring now in the
Philippines.

Shocking, isn’t it? I see concern in
your faces. How could such a beast come to power, when the Filipinos you know
are warm, hard-working, law-abiding? Among such wonderful people, how could a
ruler like Duterte be so popular?

It’s a long story. I’ll start at the
end.

                                            
*      *     *

Last year, on the final day of
campaigning before our presidential election, I
attended the rallies of each of the five candidates. I didn’t go to hear the
politicians, because they usually make the same promises. No, I went to
understand the concerns of the voters – to learn the hope behind their vote.

In one rally, voters believed in the
patron who provided for their city. At another rally, members of the middle
class supported the incumbent party and its promises of economic prosperity. At
a third, the disenfranchised had faith in the compassion of a moviestar’s
daughter. At the fourth, students voting for their first time were convinced of
their feisty candidate’s incorruptability.

Mr Duterte’s rally was completely
different. His supporters came from across the nation, through all classes and
age groups. His rally was huge, filled with infectuous optimism – people in costumes,
with picnic baskets, flying kites they made by hand in Duterte’s honor. As one
elderly observor said, shaking his head in wonder: “It’s like People Power all
over again.” He was referring to the mass protests three decades earlier that
ousted Ferdinand Marcos and restored democracy after 14 years of dictatorship.

Prior to this election, I opposed Mr
Duterte for four reasons: his promises to kill suspected criminals, his disdain
for democratic checks and balances, his warmth towards an encroaching China,
and his allegiances with crooked politicians including the heirs of the
dictator. I heard Duterte’s promises and I exercised my democratic right to not
choose him. But at that final rally, on that intoxicating night when Filipinos
made their choice clear, it felt like Duterte’s campaign slogan would be proven
true: Change is coming.

I began to doubt my doubts. Maybe I
was wrong. Maybe he was different. Maybe his violent rhetoric was just
drama, as his supporters claim. I confess, I came to believe in Duterte,
because any leader who can evoke such optimism among Filipinos – that is
a leader I will support. Not because I believe in him, but because I believe in
the power of the Filipino people to do great things when we are moved. He said he knew Duterte was a risk, but it was
worth it for a chance at real change.

At that rally, I interviewed many
people – and there’s one I’ll never forget. Across his heart, a Duterte
T-shirt. On his head, an army helmet. In his hands, a large Philippine flag
waving proudly. He had crossed the country to be counted that night. He grew up
opposing the Marcos dictatorship, because his home province in the south had
been abused during the regime. He said he knew Duterte was a risk, but it was
worth it for a chance at real change. To my concerns about Duterte’s threats to
dismantle democracy, the man nodded. “If that happens,” he told me, “it is up
to us all to reverse it.”

                                             
*     *     *

“It is up to us all.” How can we argue
with that? And because it is up to us all, to each of us politics is personal.

That’s why our story tonight is not
about Rodrigo Duterte. I started with his words only because, at a forum for
democracy, where we look apprehensively at populism around the world, for me as
a Filipino to not mention him would be to ignore the elephant in the room. And
if you’ve ever shared a room with an elephant, as I’m sure you all have, you
know what matters isn’t the presence of an unpredictable beast – what matters
is the fragility of that room.

This story is my country’s, and also
mine. Not because the story of my self is the story of my nation, but because
the story of my nation is the story of me. I’m proudly Filipino, though
I look Chinese, sound American, have a Spanish name, am an atheist among a
majority of Christians, lived in Canada during the dicatorship, and returned
home afterwards to grow up privileged in an impoverished society. The Filipino
experience is complicated.

Did you know we are Asia’s oldest
democracy? In 1898, we ended four centuries of Spanish rule and established the
continent’s first free republic. Our constitution was based on what was proven
good from all the great constitutions of the world. But our ally the United
States betrayed us and conquered us into a colony – in what they called a “benevolent assimilation” – promising independence only when the élite among us could learn to govern democratically.

When the Second World War arrived,
Japan spun its brutal subjugation as ‘liberation from the West.’ After the
atomic bombs ended the war, America finally gave us independence. Our new nation
was broken, yet free.

But in a paradise like the
Philippines, war seems inevitable. Our leaders fought those who sought equality
through communism, until years later that struggle gave Marcos a handy excuse
to suspend democracy, extend his presidency, and plunder our economy.

Into that trauma I was born. That was
my generation’s inheritance. Just as what is happening today will be inherited
by the students I teach. My hope is that we can give them something
worthy of their hope.

My teenage years, you see, were
blessed with the optimism of a newly liberated country. After the dictatorship,
my family finally returned home. My father’s business was soft-drink bottling
but his dream was public service, and he ran for office because at the time
anyone could. I saw campaign trails and grand plans, then the dirty tactics he
faced, and the hypocrisy of those around him when he was in government. I hated
politics because I saw what it promised, but I knew what it does.

Then one day, at the turn of the
millennium, as I was driving to the supermarket, the convoy of the son of
President Joseph Estrada parted the traffic with blazing sirens and windows
bristling with guns. Out of foolish principle I refused to cede my right of
way. They pursued my car, cornered me at an intersection, and alighted to beat
me and pull me through my open window. I was saved from god knows what only by
revealing my surname – the only time in my life I’ve invoked my father. Thus I
learned how in the Philippines only privilege ensures safety.

That’s when I became political, because politics is
personal  – as personal as a fist in your
face.

When the massive corruption of the
Estradas drove Filipinos again into the streets, I marched for my first time,
believing fully in the woman who would oust him. I thought the ends justified
the means, even though President Estrada had been democractically elected.

Hope came easily after we replaced him
with Gloria Arroyo  – a wealthy economist
who went to Georgetown with Bill Clinton. When she ran for re-election against
Estrada’s best friend, and was caught cheating in the polls, I supported her
still. Justice had to be served to deserving criminals like Estrada.

But Mrs Arroyo turned out as bad as
the rest, pardoning Estrada for political gain, and overseeing nine years of
corruption. When Benigno Aquino III was voted in, the proper democratic
transfer was a breath of fresh air. I hoped our tiger economy during his
checkered six-years would push us into prosperity – that the promise of ‘eventually’
would prove good enough.

It didn’t. A promise of eventually,
however realistic, is easily replaced by a promise of soon. Change is coming,
Duterte vowed. He promised he’d solve the drug problem in six months. He’d
succeed, he said, or step down.

Six months and one year later, his
popularity has exonerated him from broken promises. It’s also cost thousands of
lives. And destroyed thousands more.

                                                     
*     *     *

In one slum in Manila, I interviewed a
family whose father organized religious processions and had just passed a drug
test and police clearance as part of a job application. Yet one night he was
lined up along with nearly 80 others as police led the women and children out
of sight. The men were arrested without warrants or due cause, slapped with
random charges, asked for bribes, and a handful later ended up dead.

That man’s family sold their shanty to
afford his bail. As they spoke, neighbors flocked to also share their stories –
eager to be finally heard. One woman’s brother was executed; one man’s son
remained wrongfully behind bars; the rest had similar tales of woe.

In slums, crime scenes, and jails
across the capital, I heard the same stories of police abuse, and having
nowhere to turn to. Injustice continued even after death as families were
forced to bury loved ones using police-accredited funeral homes, owned by
former cops or soldiers, who charged 10 times the going rate – some 800 euros
gouged from those who barely earn a euro a day. That’s when I became political, because politics is
personal  – as personal as a fist in your
face.

None of that’s surprising if you
consider Philippine history. Always in power is a revolving carousel of rulers,
not leaders, who are variations of corruption, incompetence, and impunity.
Never in power are we citizens who, in theory, should be able to use integrity,
excellence, and community support to rise and lead our country, but who, in
practice, cannot  – not in a land
ruled by oligarchs, celebrities, warlords, and dynasties.

With typical impunity, our rulers even
revise history. We’re now told that the tragedy of the dictatorship was written
by the victors – who vanquished our strongman but have proved so untrustworthy
that we’re willing to question history itself. If we don’t know whom to believe
how do we know what to believe? In our social-media age, we’re influencers or
followers, not pioneers and leaders.

That’s why the authoritarian legacy of
our past is alluring  – because our
dysfunctional democracy can supposedly only be disciplined by a strongman. Many fear that Duterte is going in that
direction, starting by burnishing his idol. Last year, the body of Ferdinand
Marcos was re-interred as a hero, while his son came only 2 percent shy of the
votes for the vice-presidency – a result he’s contesting and may well overturn.
How can the family that stole billions, and oversaw tens of thousands of human
rights violations, be steps away from ruling again?

                                                   
*     *     *

Asia’s oldest democracy has never been
a democracy. We no longer know what it’s supposed to look like – how to define
it, defend it, much less make it work. Roughly 80 percent of our legislature is
ruled by dynasties. Political parties form not by ideology but by expediency
and opportunity. Virtue is seen as hypocrisy waiting to be exposed, while
vulgarity is spun as honesty attesting to authenticity.

It often feels as if democracy, having
bested communism in the Cold War, gave up making a case for itself across the
world. It’s like the suitor who wins a bride, but after the honeymoon takes up
drinking, habitually farts under the covers, and scolds her for not doing as he
says.

To such complacency, belligerent
populism is a repudiation. To many, the West is sanctimonious  – funding coups, exploiting resources,
forging dubious relationships with leaders who may be bastards but are your
bastards. When the democratic ideal gets hollowed out by realpolitik, who can
admire what it’s become?

Two percent of the population controls
most of the wealth, media is polarized into biases, voters embrace fake news,
reality TV stars wield nuclear missiles, and neo-imperialism displaces millions
who are unwelcome in the countries who caused their displacement. As all that
spirals, we seek truth in Twitter, find community in Facebook, and look to
memes for wisdom.

Meanwhile, countries like Singapore,
the UAE, and China have dizzyingly thrived without democracy – astute in
governance, benevolent in dispensation, single-minded towards progress. Democratic pieties be damned.

To those who believe in saviours, Mr
Duterte fits this zeitgeist: Angry, pragmatic, impatient towards western
values, and ready to discard the human rights of suspected criminals to punish
the human wrongs against unsuspecting innocents.

It’s easy to understand why so many
excuse so much. And so much has indeed been excused. For two years,
Duterte encouraged others to kill criminals, vowing to fill Manila Bay with
their bodies. When police killed 32 suspects in one night, he called it
beautiful and said if “we could just kill another 32 every day, then maybe we
could reduce what ails this country.” He declared he’d be happy to slaughter 3 million drug users. He promised
cops pardons. And encouraged them to give guns to unarmed suspects.

Our justice system has never been
effective in punishing criminals, and many insist that the victims of the drug
war deserve to die. They reject the undeniable logic that the government is ultimately
responsible – either complicit in the violence, incompetent in stopping it, or
both. In this form of populism, every killing is overdue judgment without due
process  ­– no trial, defence, witnesses,
or sentencing by an accountable representative of the state. Duterte’s
supporters celebrate the surrender of hundreds of thousands of drug users, and
a crime rate that has dropped 10 percent.

But that’s simplistic. The murder rate
is up 30 percent. More than 50 kids have been killed in the drug war. Evidence
often implicates police. And the government has quashed efforts to stop the
bloodshed. Opposition figures have been jailed or accused of crimes.
Whistleblowers have fled the country. Media companies are taken over,
discredited, or threatened with closure for their criticism. The heads of
institutions constitutionally mandated to limit the president now face impeachment
and removal. Dissenting voices are cast as destabilizers and suffer character
assassinations, criminal charges of libel, and threats of violence. That’s how populism subverts democracy in places like the
Philippines – by posing as democracy... frustrated by too much freedom.

That’s how populism subverts democracy in places like the
Philippines – by posing as democracy paralyzed by checks and balances,
frustrated by too much freedom. Popularity, in all its might, is cast as right
– even if actually it is wrong.

                                                     *     *     *

Through propaganda, online abuse, fearmongering, and tailored legislation,
those at the top are using us – our faith manipulated into ceding our remaining
protections. Hindered in discourse and oppositional representation, the
minority is bullied by the majority who serve those in authority; it is simply élitism in sheep’s clothing. Cruelty posing as pragmatism.

But if we really are pragmatic, this
is my question: What if a benevolent strongman turns no longer
benevolent? Some shrug, saying our ruler is trustworthy. Okay, then, what
happens when the benevolent strongman isn’t strong enough to be
benevolent? With our democratic protections dismantled, how can we protect
ourselves?

Fortunately, we’re not there – not
yet. Our democractic institutions shakily hold on. For now, we must safeguard
our democracy by refusing to save it by undermining it again. To those above
the law, we must stubbornly apply our laws. Mr Duterte has to be held to his
mandate as a democratically elected president – with all its accountability
and constitutional limitations under which he must serve all
Filipinos. By that he will be judged, to later face his alleged crimes,
to be exonerated if innocent or punished if guilty. We demand due process for
him because he’s rejected it for others.

But as I said, this isn’t his story.
It’s ours. The problems run beyond him, as do the solutions. Duterte is a
symptom, and symptoms reveal our course of treatment towards a cure. Our body
politic is feverish, fighting to be healthy.

I admit, it seems contradictory.
Citizens are angry – but never in my life have we been more politically
engaged. Social media is abusive and divisive, but also provides unparalleled
opportunity for discourse. Populism succumbs to demagoguery, but populism by
its definition pursues the concerns of the people. Democracy is under threat,
but now we who believe in it must work for it to survive. Our personal roles
are increasingly clear. Citizens are angry – but never in my life have we been more politically
engaged.

As a teacher and writer I try to
instill in my students and readers the daunting responsibility of seeing
themselves as leaders. Because that’s what every single one of us turns out to
be, usually without realising it. Whether it’s leading your family, household,
church group, team of workmates, community, city, or nation – we are all
leaders. And such broad leadership thrives only in democracy – that system of
small groups represented by chosen individuals, that together form larger
groups in which everyone is represented and empowered to participate, so that
no one is either indispensible or overlooked, so that power is an opportunity
held equally by all and not just an élite group or trusted savior.

I also urge my students to think not
what they’ll be when they grow up – doctor, lawyer, politician – but instead
think of what problems they want to fix, because our problems are many, and if
they can identify those that stir their passions then they’ll know what
courses, skills, perspective, and careers they need to solve them.

Because isn’t that democracy? Not choosing who gets to be strongest, and supporting them as followers. But ensuring that the weakest is supported to lead their loved ones into a better world where all of us are empowered to take an active role in finding solutions?

Philippine democracy still stands,
such as it is. And our median age is 21-years-old. I naively find hope in
history’s continuing arc. Bad examples often teach us best how to be good – and
the next generation can choose from so many. One of my students remarked
recently that watching our old fogey leaders run the world is like watching
your grandmother trying to operate her first smartphone. And he’s right.

Perhaps we should listen to those who have their whole lives at stake, while much of ours is squandered. And empower them with all they need to thrive as leaders. And in the meantime do our level best not to scupper all they’ll inherit. For clearly it’s only through them that real change is coming.

How, now, concludes this tale of
populism in the Philippines and its wobbly democracy?

We end where we began – at that intoxicating
rally, with that man wearing his hope on his chest and waving the Philippine
flag. We leave here tonight with his wise demand: “It is up to us all."

Sideboxes
'Read On' Sidebox: 

openDemocracy was at this year's World Forum for Democracy,
exploring the impact of populism on our media, political parties and democracy (see WFD2017) and our WFD2017 page.

Country or region: 

Philippines

Topics: 

Civil society

Conflict

Culture

Democracy and government

Economics

Ideas

International politics

Rights: 

CC by NC 4.0

What I want for the Budget part 1: Some effective tax reforms to create tax justice in the UK

Published by Anonymous (not verified) on Mon, 20/11/2017 - 6:05pm in

Tags 

Budget, Economics, HMRC

Budget week is coming. Following the Paradise Papers there will be hopes that more might be announced on steps to be taken to beat tax abuse. Amongst my many hopes that will be dashed I share this aspiration, but not now entirely in the ways that many NGOs who campaign in this issue do. That’s not to say that their demands are wrong or inappropriate, because that would not be true. If, as for many such organisations the aim is to beat international tax avoidance by multinational companies then what is called the A, B and C of measures called for by the Tax Justice Network is wholly appropriate. They are:

  • Automatic information exchange that works from tax havens,
  • Beneficial ownership of companies on public record, and
  • Country-by-country reporting.

We quite emphatically need all three. I support the demands.

But I am also well aware that they are not enough. In the context of the domestic economy and the need to both regulate that better and beat abuse within it then international tax abuse is only one of the issues that we face. My guess (and everyone does some guesswork here because we’re dealing with estimates of what is inherently unknown) is that offshore and international tax abuse is unlikely to make up more than twenty per cent of the UK tax gap. The rest is domestic and I have to say that if effective steps are to be taken then this abuse within the UK has to be tackled as well.

There are five big elements. One is the existence of shadow companies that trade unregulated within the UK economy because both HMRC and Companies House have entirely withdrawn from making any attempt to regulate the UK company sector.

The second is the cash in hand economy, which persists and is much bigger than HMRC say it is. See page 19 here.

The third is the abuse of UK allowances and reliefs. Domestic abuse is bigger than offshore abuse in all likelihood. That’s covered from page 43 here.

The fourth is tax loss in capital taxation, which seems to be largely ignored but which is very significant. That’s detailed from page 27 onwards here.

And then there is crime, from deliberate non-payment of tax owing by walking away from companies that owe it, to manufactured abuse. There are a number of references in the link already provided.

It is these elements, plus offshore abuse, that make up my estimate of the tax gap, which is three times the size of HMRC’s.

The question is what to do about this. That is always the harder issue. And that is where politicians need to become more savvy, because the problems here are deeply embedded in the UK tax system and so harder to identify and address than offshore abuse (against which the campaign should continue). My suggestions in approximate order of priority are fivefold (I have limited myself).

First the culture of HMRC needs to be utterly reformed. It has a passive senior management far too focussed on delivering cost savings to keep their Treasury paymasters happy than on the task they actually have to achieve of running an effective, and fair tax system. Root and branch reform of the management of our tax system is required. including having HMRC accountable to parliament via a Ministry of Tax, a Minister of Tax in the Cabinet, a Tax Select Committee and an Office for Tax Responsibility to act as internal auditors of HMRC reporting to that Select Committee. I set out my reasoning here.

Second, we have to properly calculate the tax gap. It is done, half heartedly at best by HMRC at present, most of their data is estimates and they have ignored IMF advice on the issue. Until we know what tax there is to collect we won’t get it. Full Fact investigate this here.

Third, HMRC need more staff, and they continue to need to be based locally. The idea that HMRC can operate from just 14 offices (none west of Bristol in England, north of Glasgow in Scotland and none in East Anglia at all) is sheer madness. It denies people access. And it destroys local knowledge. Tax has to work in the community. Worse, it will undermine good governance in HMRC, result in  the loss of a considerable number of older experienced staff who will not now move long distances to keep their jobs, and creates real risk that each office will develop its own working practices from which tax injustice will follow.  I argue the case for a more local HMRC from page 52 here. There is more on this issue here.

Fourth, we need to secure information on all the companies that are really trading in the UK at any point in time. This is possible but legislation is required to, firstly, require that any bank providing services to a UK company or trust has to supply information to HMRC on the fact that they are doing so, and then HMRC and Companies House must be legally required to secure information from that company or trust or from those who manage, own, or benefit from it. I have already drafted law to make all this possible. Full details can be found here. I can think of little that can beat the tax gap more than this, and the absurd fact is that we now expect banks in Cayman and Jersey to do this but we do not do it ourselves, which is madness.

Fifth, I strongly recommend that as many tax reliefs and allowances be closed down as possible, or that they be restricted in scope. As I noted recently, pension tax relief now costs the UK £50 billion a year and we have a surplus of savings already. That is madness.   I explain all the issue at length over a range of taxes here.

Undertake these reforms and we really begin to beat tax abuse. We have a long way to go.

——-

The next part of What I want for the Budget is available here.

Shooting ourselves in the foot?

Published by Anonymous (not verified) on Mon, 20/11/2017 - 1:22pm in

Tags 

Economics

Whatever your position on renewable energy for our domestic needs might be, trying to scuttle our second biggest export earner is reckless economics and irresponsible politics.

“In the Beginning…Was the Unit of Account” – Twelve Myths About Money

Published by Anonymous (not verified) on Mon, 20/11/2017 - 3:26am in

Tags 

Economics

Jan Kregel presented a great dinner speech at the recent Modern Monetary Theory Conference, touching on some of the fundamental ways we think about money and economics. (Sorry, no recording or transcript available.) I had a brief conversation with him afterwards, and we followed up with a few emails.

The quotation in the title of this post is condensed from the final line of one of his emails — a line that made me laugh out loud:

“So I guess we start from that — in the beginning was the word, and the word was the unit of account?”

Okay, yes: money-dweeb humor. But the implications are kind of profound.

The Word. LogosIndeed. I’ve written about this before — how writing in its earliest forms emerged from tally sheets, accounting. Even, that its emergence was the first step on the road to outsourcing our memory onto iPhones, maybe even (only somewhat tongue in cheek) causing human brains to shrink over millennia.

Jan’s great line, and our conversations, prompt me to set down some thoughts on this ever-vexed subject. Herewith, twelve widespread usages and conceptions that, in my experience, tie our money discussions in knots. Please assume that anything you don’t like here is mine, not Jan’s, and apologies to those who have heard some of this from me before.

(A proleptic response to an inevitable digression: I’m assuming a closed national or world economy for simplicity. The “rest of world” sector, and the exchange rate with Martian currency, are not considered.)

#1. Money was invented around 700 BCE. No. That’s when coins were invented — handy physical tokens making it easy to transfer assets from one person’s (implicit) balance sheet to another’s. Money existed on something like balance sheets — tallies of who owns what and who owes what — long before that; those tallies go back thousands or tens of thousands of years. Mentions of monetary values in written documents — designated in staters, drachms, whatever — were widespread long before anyone thought of using coins for asset transfers.

The earliest coins, by the way, may well have been badges of honors and offices issued by religious authorities. Somehow people started exchanging them, and voila: physical currency. This had little or nothing to do with butchers and bakers or convenient time-shifting of purchases. That’s a made-up armchair myth (though the convenience benefit is real). Wampum, likewise, wasn’t used for trade exchange until Europeans captured that “money” system and transformed it.

#2. Money is a “medium of account.” (Whatever “medium” means in that phrase…) Money was invented when some clever tally-keeper, totting up cows and horses and bags of grain, invented the arbitrary unit of account — a unit that allows those heterogenous goods to be tallied on a single sheet, in a common unit of value. We find price lists of assorted goods on some of the earliest Sumerian tablets, for instance, and price lists can’t exist without a unit of account. It’s hard to know, but it seems like this clever technology might have been invented multiple times over the millennia.

If this historical tale holds water, the earliest forms of money were just…the value of tallied (balance-sheet) assets, with the value designated, denominated, in a unit of account. In the beginning…

By this thinking, an “asset” is a labeled balance-sheet entry, designating the value of an ownership claim — again, designated in a unit of account. These “asset” things only exist on balance sheets. The claims themselves may be informal — you own the apple on your kitchen counter by norm, convention, and common law. Or they may be formal, inscribed in one or more legal instruments and a supporting body of law and norms. The forms and terms of these ownership-claim instruments are myriad and diverse.

Money in this sense is the UofA-designated value of an ownership claim (perhaps formally recorded in an asset entry).

Ask a real-estate zillionaire, “how much money do you have”? The answer has nothing to do with physical dollars in wallets, or any particular class of ownership claims/assets that are tallied up in “monetary aggregates.” It’s about total assets or net worth — necessarily, designated in a unit of account.

The problem arises when we confute these two common meanings of the word. Start watching: you’ll often see it happen even within a single sentence. This ubiquitous muddle — trying to talk about two different things using the same word — has engendered unending confusion.

Both uses of the word are perfectly valid and useful; they just mean completely different things.

#3. There is such a thing as non-fiat money. Nope. (A better description is “consensus” money. The consensus is usually enforced by the fiat powers of a government, temple authorities, etc.) The consensus exchange or “face” value of precious-metal coins must always be higher than the market value of the metal substrate. If the reverse were true, people would just melt them down. Outside the fiat/consensus purview of the issuer, those coins many only retain their substrate value. So they’re still valuable for far-flung trade, or if authority breaks down, because the commodity may still retain consensus value. (That security in itself can contribute to holding up their consensus face value.)

Ditto cigarettes in POW camps. There are physical things called cigarettes, but there’s also this conceptual thing that emerges when people start using them in general trade: a cigarette.” Or “the cigarette.” It’s a unit that can be used to designate the value of other things.

The consensus value of coins and currency is based on the stability of the unit of account. (See: Brazil.) The coins are just physical tokens representing a unit of exchange — an asset that can be transferred, and that’s designated in the unit of account. In the beginning…

#4. Money “is” debt. Or, “you are paying with liabilities.” Money, by any definition, is always and everywhere an asset of the holder. The $5 bill in your pocket or the five dollars in your checking account are assets on your balance sheet. Paying, spending, is transferring assets to someone else — from the lefthand side of your balance sheet to the lefthand side of theirs.

Now of  course money issuance is often associated with the creation of new balance-sheet liability entries — think government deficit spending — but those liabilities are posted to the money issuer’s balance sheet. The recipient gets an asset: the credit half of the tally stick. That’s what gets passed around in spending and payments. The debt side is generally held on the balance sheet of large, powerful creditors or institutional authorities.

This isn’t just true of “cash”; government bondholders are obviously holding assets. The debt is on the government balance sheet. “Holding debt” is a handy shorthand for finance types, but considered even briefly, it makes no literal sense at all. How could you hold or own something you owe?

Ditto “paying with liabilities.” If you transfer a liability from the righthand side of your balance sheet to the righthand side of another’s, you are unlikely to receive much thanks, or any value in return.

These usages can be useful, stylized ways of referring to particular economic, financial, and accounting relationships. Which is fine as long as users are perfectly clear on how the thinking is stylized. But on their face they don’t make sense, and they engender great confusion. Money is always an asset of the holder.

#5. People “spend out of income.” Spending, payments, always come from asset balances. That’s what payments are — asset transfers. When you write a check, you withdraw from your checking-account balance. When you buy a bag of Doritos at 7-11, the money’s coming out of your wallet. It’s impossible to “spend out of” the instantaneous event of somebody handing you a five-dollar bill. Once it’s in your hand, once it’s an asset you own, you can spend it.

“Spending out of income” is another of those common usages — a useful shorthand way to talk about spending more or less than you receive over a period. It’s an unconsidered commonplace that deeply confuses our conversations about money.

#6. There’s a difference between “inside” and “outside” money. After new money is issued, its origin is immaterial in the particular. Where did the $100 in your checking account “come from,” originally? Say I borrowed it, or got it in a tax refund, or whatever, then paid it to you. It’s impossible to say, and it doesn’t matter, where it came from.

New assets appear in account balances from 1. government deficit spending, 2. bank lending, and 3. holding gains. Then people swap them for other assets, or transfer them to pay for newly produced goods and services. Whether the money came from “inside” or “outside” sources (or holding gains), once it’s circulating among accounts, it’s just…money. As we all know, money is fungible.

Certainly, newly created liability entries associated with money issuance can be economically significant. And some particular financial instruments retain a meaningful and influential financial or economic (ultimately institutional) relationship to particular liability entries. But in the big picture once the money’s out there, it’s disconnected from its “inside” or “outside” origins.

#7. Monetary aggregates tell us how much “money” we have. The various monetary aggregates so beloved of monetarists (M0, M1, MZM…) share a common, unstated definition of “money”: financial instruments whose prices are institutionally pegged to the unit of account — physical coins and currency, checking account and money-market deposits, etc. Remember the 2008 headlines: “Money Market Fund ‘Breaks the Buck.’” The institutional powers and practices of pegging are diverse, and institutional pegging can fail.

This particular subset of assets — fixed-price, UofA-pegged financial instruments — comprise only about 9% of U. S. households’ $111 trillion in assets. They play a particular role in individual and aggregate portfolio allocation (more below), and they’re quite handy for buying new goods. But their stock quantity is swamped by even the price-driven change in other assets; capital gains on variable-priced instruments added $7 trillion to household balance sheets in 2013 alone. Monetarists’ fetishization of these “currency-like” financial instruments, and their aggregates, is…misplaced.

#8. If people save more money, there is more money (or “savings,” or “loanable funds”). Obviously, if you save (spend less than your income over a period), you have more money. But we don’t. Just, the money’s in your account. If you spent it instead of saving it, it would be in somebody else’s account.

Spending — even spending on consumption goods that you’ll devour within the period — is not consumption. The money isn’t, can’t be, “consumed” by spending. It’s created and destroyed by other, financial, mechanisms. If you eat less corn, we have more corn. If you spend less money, we have no more money.

#9. Saving “funds” investment. Investment spending, like all spending, comes from asset balances. “Funding” from flows is harder to nail down: If a firm this year has $1M in undistributed profits (saving) and borrows $1M, spends $1M on wages and buys $1M in drill presses, which inflow “funded” which outflow? Firms borrow to make payroll all the time. (Don’t even get me started on stock repurchases.)

I can’t resist quoting one of the best financial and economic thinkers out there (read the whole thread):

Individual money-saving isn’t even really a flow; it’s a non-flow — not-spending — just an accounting residual of income minus expenditures. (Though of course it’s a flow measure: tallied over a period of time, not at a moment in time.)

#10. Portfolio allocations — and spending — are determined by “demand for money.” The relatively small stock of monetarists’ “money” — instruments whose prices are pegged to the unit of account — is sort of a fulcrum around which portfolio preferences and total asset value (wealth) adjusts. But the vague gesture toward the unmeasurable and dimensionless notion of “demand” is not illuminating. Here in more concrete terms:

Suppose government deficit-spends $1 trillion into private-sector checking accounts. The market’s portfolio is overweight cash (assuming portfolio allocation preferences are unchanged). But the market can’t get rid of those fixed-price instruments — certainly not by spending, which just transfers them — or change their aggregate value (their price is fixed, pegged to the unit of account).

So people buy variable-priced instruments — stocks, bonds, titles to real estate, etc. — bidding up their values competitively until the desired portfolio allocation is achieved. (This, by the way, is exactly how things work in the more advanced Godley/Lavoie-style, “stock-flow consistent” or SFC models.)

The economic implications of this: A trillion-dollar deficit-spend results in $1T more in private-sector assets (the “cash”), plus any asset-value runups from portfolio adjustments triggered by that cash infusion. (This is before even considering any effects on new-goods spending — the so-called “multiplier” — or the proportion of spending devoted to investment — Keynes’s particular fixation.)

Sure, if wealthholders are feeling nervous — more concerned with return of their wealth than returns on their wealth — they may prefer instruments that by their very nature guarantee stability, non-decline relative to the unit of account. They’ll sell variable-priced instruments, running down their prices until the market reaches its preferred portfolio allocation. “Liquidity preference” is one rather strained way to refer to this straightforward idea of portfolio allocation preferences.

Likewise, “demand for money” is a cute conceptual and verbal jiu-jitsu, flipping straightforward understandings of portfolio preferences on their heads. Demand is supposed to influence price and/or quantity. But it can’t influence the “price of money” or the aggregate stock of fixed-price instruments — only the prices, hence aggregate total, of variable-priced instruments. This notion does far more to confuse than to enlighten.

Takeaway: holding gains and losses — which are almost universally ignored in economic theory even though they’re the overwhelmingly dominant means of wealth accumulation — are the very mechanism of aggregate portfolio allocation. If you’re only considering “income”-related measures (which ignore cap gains), there’s no way to think coherently about how economies work.

#11. The interest rate is the “price of money.” This is like saying a car-rental fee is the price of a car. The price of a dollar (a unit of exchange) is always one, as designated in the dollar (the unit of account). The cost of borrowing is something else entirely. Like “demand for money,”  “the price of money” is just verbal and conceptual gymnastics, inverting the very meaning of the word “price,” and trying to shoehorn money-thinking into a somewhat inchoate notion of supply and demand (that’s constantly refuted by evidence). It’s not helping.

#12. Central bank asset purchases are “money printing.” Not. Sure, the Fed magically “prints” a zillion dollars in reserves to purchase bonds. But then it just swaps those reserves for bonds, which are “retired” from the private sector onto the Fed’s balance sheet. Private-sector assets/net worth are unchanged; the private sector just has a different portfolio mix: more reserves, less bonds.

Ditto when the Fed sells the bonds back (as it’s now doing and promising to do, a bit); it re-absorbs the private sector’s reserve holdings and releases bonds in return, disappearing the reserves back into its magic hole in the ground. (As Milton Friedman observed, banks have both printing presses and furnaces.) Again: no accounting effect on private-sector assets or net worth.

QE and LSAPs do have some asset-price, hence balance-sheet, effect, at least while they’re happening; the central bank has to beat market prices by a smidge to play the whale and buy all those bonds. Bond prices go up and yields go down. Which will push investors’ portfolio allocations more into equities and other “risk assets,” driving up their prices some. But the first-order accounting effect is just to change private-sector portfolio allocations.

So there: twelve conceptions about money that have made it difficult or impossible for me, at least, to think coherently about the subject. Here’s hoping these thoughts are useful to others as well.

=============

I’d like to end this post with the same question for my gentle readers that I went to Jan with. Units of account are very odd conceptual constructs indeed. They’re not like other units of measurement — inches, degrees centigrade, etc. — which generally have some physical objective correlative: “length” or “warmth” or suchlike. Units of account tally “value,” which basically means value to humans, a function of human desire. And human desires, of course (“preferences”), vary.

So my question: what’s a good metaphorical or figurative comparison to help us understand and explain this strange conceptual thingamabob? Is money an invention like algebra? Are there other conceptual constructs that are similar to units of account, comparable mental entities that can help us think about what these things are? I can’t think of any good analogies. It’s vexing.

Extra points question: what is “the bitcoin”?

Yes: In the beginning was the word. Words are one of the main things, maybe the main thing, that we use to think together. All thanks to my gentle readers for any help in doing that.

Related posts:

  1. The Giant Logical Hole in Monetarist Thinking: So-Called “Spending”
  2. All Currency is “Fiat” Currency
  3. No: Money Is Not Debt
  4. You Don’t Own That! The Evolution of Property
  5. The Mysterious Stock of “Loanable Funds”


Pickwickian economics

Published by Anonymous (not verified) on Sun, 19/11/2017 - 9:23pm in

Tags 

Economics

Mill provides a good illustration of the tension between fallibilism and anti-foundationalism​. Mill’s first principles are supposed to be empirical and not necessary truths, but for economics to be an empirical subject at all, they have to be beyond genuine doubt, since they provide the only empirical element in an otherwise deductive system. The certainty […]

The lobbies of glyphosate: a danger to the health of Europeans and of their democracy

Published by Anonymous (not verified) on Sun, 19/11/2017 - 4:23am in

The court summons these citizens received for a few splashes of paint on
the facade of this powerful lobby’s headquarters illustrates the increasing
criminalization of protest in Belgium. Francais, Español.

open Movements
The openMovements series invites leading social scientists to share their research results and perspectives on contemporary social struggles.

lead EZLN - Ensemble Zoologique de Libération de la Nature, November 9, 2017, Brussels. Some rights reserved.On November 9, nine citizens were summoned before a Brussels tribunal for
a peaceful action to denounce the European lobbies of the agro-chemical sector and
their overweening influence in the EU negotiations on the ban on glyphosate, a
carcinogenic pesticide notably commercialized by Monsanto. The report by the NGO “Corporate
Europe Observatory”
shows that
these lobbies of the agro-chemical sector have been particularly active in the debates
during the last 6 months.

A bunch of Belgian activists decided to face down the powerful lobbies through
symbolic non-violent actions. Their affinity group was named the
"Zoological Assemblage for the Liberation of Nature", better known by
its French acronym "EZLN" in a clear reference to the Mexican
Indigenous rebel “Zapatista Army for National Liberation” that has the same acronym
in Spanish (“Ejercito Zapatista de Liberación Nacional”). While the context and
the causes are much different, the Belgian EZLN activists have been inspired by
the Mexican rebels. They borrow the poetic language of their communiqués, as
well as their determination in the struggle from below against those in power,
building from below “a world in which many worlds fit”.

On March 9, 70 activists held a hilarious
action
denouncing the power of these lobbies. They
entered the corridors of the European Crop Protection Association’ headquarter
in Brussels, disguised as animals with the ecological slogan "We are the
nature that defends itself". This 5-minute tour of the building left
some straw, stickers and some red water paint on the windows, but nothing was
broken. Eight months later, nine of these activists faced trial in the main
tribunal of Brussels.

The action of March 9 was part of various smaller actions by the EZLN to
place the blame squarely on commercial lobbies and transnational corporations
for major damage to nature. Similar affinity groups are active in Brussels and
across Belgium against advertising billboards and against repressive Belgian
policies against refugees and migrants. Overnight between November 6 and 7,
they replaced 2100 advertisements in public spaces with posters denouncing an
oppressive migration policy and calling on citizens to wake up to these unfair
policies.

The court summons these citizens received for a few splashes of paint on
the facade of this powerful lobby’s headquarters illustrates the increasing
criminalization of protest and symbolic direct action in Belgium. Similar
trials are under way against "voluntary mowers" of GMO cereal fields
and for the hijacking of one advertising screen.

Intellectuals and numerous environmental and citizens’ associations have
publicly supported the EZLN and legitimized this action by pointing to the consensus
among independent scientists on the threat posed by glyphosate to the health of
the European citizens. Beyond individual citizens’ health, the health of
European democracy is also at stake in a battle against one of its main enemies:
the lobbies.

Lobby capital

As headquarter of the European Commission, Brussels has become the world
capital of lobbies. It houses more lobbies than Washington and its rules
are far more permissive than the regulations of lobbies in the US. The anti-lobby
NGO “Corporate Europe Observatory” publishes a “Lobby Planet” guide of
Brussels that is at least as informative as its famous model the “Lonely
Planet”.

So far, Belgian citizens and policy makers have barely reacted to this
situation. The direct action by the Brussels’ EZLN and the subsequent trial
have eventually attracted some attention to this issue. They raise major questions
for our democracy: In what kind of society or political regime do we live, when
whistleblowers on their toes face trial for non-violent action to denounce the
power of lobbies? Is it reprehensible to point at the lobbies or is it a citizen's
duty to draw the attention of policy makers to the threat they have posed to
our democracy?

The history of social movements teaches us that symbolic and non-violent action
has been a particularly effective mode of action to denounce unfair political or
social conjunctures. Such "disruptive acts" aim at breaking the political
routine, sparking debates, triggering the population to act on a major issue
that is little debated in society and asking policy makers to position
themselves in front of this problem in order to progressively adjust
the balance of views and set up new regulations.

Changing
hearts and minds

On December 1, 1955 on a bus in Alabama, an Afro-American student
refused to cede her seat to a white man, as the law ordered at this time. Her
action sparked a huge debate and boosted the civic rights movement that
eventually led to the racial segregation laws in the United States. Who
would condemn Rosa Parks today? Her action was clearly illegal but her statue
now sits at in the heart of the US Capitol in Washington.

Pointing at the power of lobbies in the European Union, the EZLN plays a key role in our democracy. They are
part of this "alert system equipped with antennae highly sensitive to the
problems of society" that Jürgen Habermas placed at the heart of the
democratic public space. John Keane explains that the monitoring of policy
makers is even more central to contemporary democratic regime than fair
elections.

Such symbolic actions
are efficient when they are combined with solid reports and analyses by civil
society experts, researchers and journalists. The EZLN aims at broadly
disseminating a range of reports available on lobbying and lobbies at the heart
of the EU. In the last couple of years, dozens of articles, books and reports
have unveiled scandals connected to the influence of lobbies on a wide range of
issues. Together, they show that, rather than marginal dysfunctions, lobbies
are often at the core of political systems, both at the EU and at the national
levels. In their bestseller “Lobbykratie”,
journalists Uwe Ritzer and Markus Balser show how German policies are built
under constant monitoring and pressure by the industrial sector. They notably document
that, on various occasions, the proximity between industrial lobbies and
political power has led to some noticeably sudden adjustments by Angela Merkel
during negotiations at the European Council.

Has the European Union become a "lobbycracy"? The threat of lobbies against democracy is certainly
exacerbated by the rising concentration of wealth in the hands of a few in a
world where the turnover of some transnational companies is higher than the GDP
of entire countries. The power of lobbies is not inevitable. Policymakers have
the ability to regain the power they left to the lobbyists. However, they won’t
impose new regulations on lobbies without citizens’ mobilization and an
awareness of the issue among public opinion. The hilarious actions by the EZLN
(in its Brussels version), invite all of us not to remain passive in one of the
most fundamental battles to defend democracy in the 21st century.

Animal parade. EZLN. Some rights reserved.

How to cite:
Pleyers G.(2017)
The lobbies of glyphosate: a danger to the health of Europeans and of their democracy, Open Democracy / ISA RC-47: Open Movements, 18 November. https://opendemocracy.net/geoffrey-pleyers/lobbies-of-glyphosate-danger-...

 

 

Sideboxes
'Read On' Sidebox: 

WeMove.EU is giving evidence against glyphosate at the European
Parliament as a result of 1.3 million Europeans signing the European
Citizens’ Initiative (ECI) against glyphosate in under six months. Live hearing at 3pm CET on Monday, November 20, 2017.

Sidebox: 

More from the openMovements partnership.

Country or region: 

Belgium

Topics: 

Civil society

Conflict

Democracy and government

Economics

International politics

Science

Rights: 

CC by NC 4.0

The lobbies of glyphosate: a danger to the health of Europeans and of their democracy

Published by Anonymous (not verified) on Sun, 19/11/2017 - 4:23am in

The court summons these citizens received for a few splashes of paint on
the facade of this powerful lobby’s headquarters illustrates the increasing
criminalization of protest in Belgium. Francais, Español.

open Movements
The openMovements series invites leading social scientists to share their research results and perspectives on contemporary social struggles.

lead EZLN - Ensemble Zoologique de Libération de la Nature, November 9, 2017, Brussels. Some rights reserved.On November 9, nine citizens were summoned before a Brussels tribunal for
a peaceful action to denounce the European lobbies of the agro-chemical sector and
their overweening influence in the EU negotiations on the ban on glyphosate, a
carcinogenic pesticide notably commercialized by Monsanto. The report by the NGO “Corporate
Europe Observatory”
shows that
these lobbies of the agro-chemical sector have been particularly active in the debates
during the last 6 months.

A bunch of Belgian activists decided to face down the powerful lobbies through
symbolic non-violent actions. Their affinity group was named the
"Zoological Assemblage for the Liberation of Nature", better known by
its French acronym "EZLN" in a clear reference to the Mexican
Indigenous rebel “Zapatista Army for National Liberation” that has the same acronym
in Spanish (“Ejercito Zapatista de Liberación Nacional”). While the context and
the causes are much different, the Belgian EZLN activists have been inspired by
the Mexican rebels. They borrow the poetic language of their communiqués, as
well as their determination in the struggle from below against those in power,
building from below “a world in which many worlds fit”.

On March 9, 70 activists held a hilarious
action
denouncing the power of these lobbies. They
entered the corridors of the European Crop Protection Association’ headquarter
in Brussels, disguised as animals with the ecological slogan "We are the
nature that defends itself". This 5-minute tour of the building left
some straw, stickers and some red water paint on the windows, but nothing was
broken. Eight months later, nine of these activists faced trial in the main
tribunal of Brussels.

The action of March 9 was part of various smaller actions by the EZLN to
place the blame squarely on commercial lobbies and transnational corporations
for major damage to nature. Similar affinity groups are active in Brussels and
across Belgium against advertising billboards and against repressive Belgian
policies against refugees and migrants. Overnight between November 6 and 7,
they replaced 2100 advertisements in public spaces with posters denouncing an
oppressive migration policy and calling on citizens to wake up to these unfair
policies.

The court summons these citizens received for a few splashes of paint on
the facade of this powerful lobby’s headquarters illustrates the increasing
criminalization of protest and symbolic direct action in Belgium. Similar
trials are under way against "voluntary mowers" of GMO cereal fields
and for the hijacking of one advertising screen.

Intellectuals and numerous environmental and citizens’ associations have
publicly supported the EZLN and legitimized this action by pointing to the consensus
among independent scientists on the threat posed by glyphosate to the health of
the European citizens. Beyond individual citizens’ health, the health of
European democracy is also at stake in a battle against one of its main enemies:
the lobbies.

Lobby capital

As headquarter of the European Commission, Brussels has become the world
capital of lobbies. It houses more lobbies than Washington and its rules
are far more permissive than the regulations of lobbies in the US. The anti-lobby
NGO “Corporate Europe Observatory” publishes a “Lobby Planet” guide of
Brussels that is at least as informative as its famous model the “Lonely
Planet”.

So far, Belgian citizens and policy makers have barely reacted to this
situation. The direct action by the Brussels’ EZLN and the subsequent trial
have eventually attracted some attention to this issue. They raise major questions
for our democracy: In what kind of society or political regime do we live, when
whistleblowers on their toes face trial for non-violent action to denounce the
power of lobbies? Is it reprehensible to point at the lobbies or is it a citizen's
duty to draw the attention of policy makers to the threat they have posed to
our democracy?

The history of social movements teaches us that symbolic and non-violent action
has been a particularly effective mode of action to denounce unfair political or
social conjunctures. Such "disruptive acts" aim at breaking the political
routine, sparking debates, triggering the population to act on a major issue
that is little debated in society and asking policy makers to position
themselves in front of this problem in order to progressively adjust
the balance of views and set up new regulations.

Changing
hearts and minds

On December 1, 1955 on a bus in Alabama, an Afro-American student
refused to cede her seat to a white man, as the law ordered at this time. Her
action sparked a huge debate and boosted the civic rights movement that
eventually led to the racial segregation laws in the United States. Who
would condemn Rosa Parks today? Her action was clearly illegal but her statue
now sits at in the heart of the US Capitol in Washington.

Pointing at the power of lobbies in the European Union, the EZLN plays a key role in our democracy. They are
part of this "alert system equipped with antennae highly sensitive to the
problems of society" that Jürgen Habermas placed at the heart of the
democratic public space. John Keane explains that the monitoring of policy
makers is even more central to contemporary democratic regime than fair
elections.

Such symbolic actions
are efficient when they are combined with solid reports and analyses by civil
society experts, researchers and journalists. The EZLN aims at broadly
disseminating a range of reports available on lobbying and lobbies at the heart
of the EU. In the last couple of years, dozens of articles, books and reports
have unveiled scandals connected to the influence of lobbies on a wide range of
issues. Together, they show that, rather than marginal dysfunctions, lobbies
are often at the core of political systems, both at the EU and at the national
levels. In their bestseller “Lobbykratie”,
journalists Uwe Ritzer and Markus Balser show how German policies are built
under constant monitoring and pressure by the industrial sector. They notably document
that, on various occasions, the proximity between industrial lobbies and
political power has led to some noticeably sudden adjustments by Angela Merkel
during negotiations at the European Council.

Has the European Union become a "lobbycracy"? The threat of lobbies against democracy is certainly
exacerbated by the rising concentration of wealth in the hands of a few in a
world where the turnover of some transnational companies is higher than the GDP
of entire countries. The power of lobbies is not inevitable. Policymakers have
the ability to regain the power they left to the lobbyists. However, they won’t
impose new regulations on lobbies without citizens’ mobilization and an
awareness of the issue among public opinion. The hilarious actions by the EZLN
(in its Brussels version), invite all of us not to remain passive in one of the
most fundamental battles to defend democracy in the 21st century.

Animal parade. EZLN. Some rights reserved.

How to cite:
Pleyers G.(2017)
The lobbies of glyphosate: a danger to the health of Europeans and of their democracy, Open Democracy / ISA RC-47: Open Movements, 18 November. https://opendemocracy.net/geoffrey-pleyers/lobbies-of-glyphosate-danger-...

 

 

Sideboxes
'Read On' Sidebox: 

WeMove.EU is giving evidence against glyphosate at the European
Parliament as a result of 1.3 million Europeans signing the European
Citizens’ Initiative (ECI) against glyphosate in under six months. Live hearing at 3pm CET on Monday, November 20, 2017.

Sidebox: 

More from the openMovements partnership.

Country or region: 

Belgium

Topics: 

Civil society

Conflict

Democracy and government

Economics

International politics

Science

Rights: 

CC by NC 4.0

Pages