Wednesday, February 8, 2017

Famous leftist professor James Petras defends Trump

Following up on my previous post, here is another though-provoking article, "President Trump: Nationalist Capitalism, An Alternative to Globalization", written by James Petras.

I do not fully agree with all of Petras' arguments but he says a couple of interesting things. His main argument is that anti-Trump journalists and academics have distorted Trump's views and neglected his critique of US policies and the current state of affairs.

Petras seems to support Trump's industrial policy (I am not fully sure) whereas other academics like Dani Rodrik have serious doubts about it. However, there are other academics, like Andrew Sheng, who also believe that Trump may be successful in his envisaged economic policies: "Contrary to the claims of some doomsayers, Trump’s economic policies might actually work. With enough investment in infrastructure – and with the help of negative real interest rates – Trump may well manage to revive productivity and GDP growth enough to reduce America’s debt overhang in real terms."

Let me now turn to Petras's article and quote him extensively below:

The centerpiece of Trump’s critique of the current ruling elite is the negative impact of its form of globalization on US production, trade and fiscal imbalances and on the labor market.... For two decades many politicians and pundits have bemoaned the loss of well-paid jobs and stable local industries as part of their campaign rhetoric or in public meetings, but none have taken any effective action against these most harmful aspects of globalization.  Trump denounced them as “all talk and no action” while promising to end the empty speeches and implement major changes.

His economic strategy of prioritizing US industries is an implicit critique of the shift from productive capital to financial and speculative capital under the previous four administrations.  His inaugural address attacking the elites who abandon the ‘rust belt’ for Wall Street is matched by his promise to the working class: “Hear these words!  You will never be ignored again.”

President Trump emphasizes market negotiations with overseas partners and adversaries.  He has repeatedly criticized the mass media and politicians’ mindless promotion of free markets and aggressive militarism as undermining the nation’s capacity to negotiate profitable deals.

Trump points to trade agreements, which have led to huge deficits, and concludes that US negotiators have been failures.  He argues that previous US presidents have signed multi-lateral agreements, to secure military alliances and bases, at the expense of negotiating job-creating economic pacts.

Trump’s agenda has featured plans for hundred-billion dollar infrastructure projects, including building controversial oil and gas pipelines from Canada to the US Gulf.  It is clear that these pipelines violate existing treaties with indigenous people and threaten ecological mayhem.  However, by prioritizing the use of American-made construction material and insisting on hiring only US workers, his controversial policies will form the basis for developing well-paid American jobs.

The emphasis on investment and jobs in the US is a complete break with the previous Administration, where President Obama focused on waging multiple wars in the Middle East , increasing public debt and the trade deficit.

Despite the transformation of the world order, recent US presidents have failed to recognize the need to re-organize the American political economy.  Instead of recognizing, adapting and accepting shifts in power and market relations, they sought to intensify previous patterns of dominance through war, military intervention and bloody destructive ‘regime changes’ – thus devastating, rather than creating markets for US goods. Instead of recognizing China’s immense economic power and seek to re-negotiate trade and co-operative agreements, they have stupidly excluded China from regional and international trade pacts, to the extent of crudely bullying their junior Asian trade partners, and launching a policy of military encirclement and provocation in the South China Seas.  While Trump recognized these changes and the need to renegotiate economic ties, his cabinet appointees seek to extend Obama’s militarist policies of confrontation.

Early in his campaign, Trump recognized the new world realities and proposed to change the substance, symbols, rhetoric and relations with adversaries and allies – adding up to a New Economy.

First and foremost, Trump looked at the disastrous wars in the Middle East and recognized the limits of US military power:  The US could not engage in multiple, open-ended wars of conquest and occupation in the Middle East, North Africa and Asia without paying major domestic costs.

Secondly, Trump recognized that Russia was not a strategic military threat to the United States .  Furthermore, the Russian government under Vladimir Putin was willing to cooperate with the US to defeat a mutual enemy – ISIS and its terrorist networks.  Russia was also keen to re-open its markets to the US investors, who were also anxious to return after years of the Obama-Clinton-Kerry imposed sanctions.  Trump, the realist, proposes to end sanctions and restore favorable market relations.

Thirdly, it is clear to Trump that the US wars in the Middle East imposed enormous costs with minimal benefits for the US economy.  He wants to increase market relations with the regional economic and military powers, like Turkey , Israel and the Gulf monarchies.  Trump is not interested in Palestine , Yemen , Syria or the Kurds – which do not offer much investment and trade opportunities.

Trump will most probably maintain, but not expand, Obama’s military encirclement of China ’s maritime boundaries which threaten its vital shipping routes.  Nevertheless, unlike Obama, Trump will re-negotiate economic and trade relations with Beijing – viewing China as a major economic power and not a developing nation intent on protecting its ‘infant industries’.

The negotiations with the Chinese will be very difficult because the US importer-elite are against the Trump agenda and side with the Beijing ’s formidable export-oriented ruling class.

Moreover, because Wall Street’s banking elite is pleading with Beijing to enter China ’s financial markets, the financial sector is an unwilling and unstable ally to Trump’s pro-industrial policies.

Trump does not oppose US economic imperialist policies abroad.  However, Trump is a market realist who recognizes that military conquest is costly and, in the contemporary world context, a losing economic proposition for the US.  He recognizes that the US must turn from a predominant finance and import economy to a manufacturing and export economy.

PS: I took the picture of James Petras and my wife Aafke Steenhuis in the early 1980s when he was staying a few days at our ship (houseboat) in the river Amstel in Amsterdam.

Monday, February 6, 2017

The end of the antidemocratic European Union?

Europe is entering a shaky period in its history in which almost nothing seems certain anymore. But, as with a future financial crisis, we can be sure that people and nature and buildings and infrastructure and institutions remain, which are the essence of our existence and our communities.

There is much talk about the Europe and the world we live in, but little of it contributes to a good understanding and shows ways to solve our problems. Politicians prefer to defend or attack the existing order and many journalists and social scientists simply echo their opinions (especially of those who defend the existing order). Conformism is widespread in the media, universities, ministries and large corporations.

I like to read descriptions of realities and thought-provoking analyses of them. I also like to read analyses I do not (fully) agree with, and when I agree, I often wonder if there is reason to disagree.

The following analysis is stimulating. It is written by Greek journalist Dimitris Konstantakopoulos. You can read the full article here, End of Regime in Europe!  I highlight some of his thoughts below.

About Brexit and the European Union
The European Union, at least as it stands now and with the policies and the arrogance it is producing, is simply unacceptable not just by British, but by a clear majority of all European citizens. The Maastricht system, institutional incarnation of neoliberalism (and atlanticism), imposed in Western Europe in the wake, and under the enormous impact of the collapse of “Soviet socialism”, and also of the Mitterrand (and the British Left) defeat and capitulation and of the German reunification, as it was executed, proved to be a socially regressive, economically inefficient, politically oligarchic, antidemocratic structure.
The final political blow to the legitimacy of the European Union was inflicted last year [2015], when all the world saw the way Berlin and Brussels crashed Greece, a member of the European Union.
Greeks were too weak to succeed in their rebellion. British were too strong to accept such a Union. It was History, not the Left or the Right, which put European revolt on the order of the day. European Left proved in 2015 too hesitating, too weak, too unwilling to become the leader of the Revolt till the end. A part of the European Right was there to fill the vacuum, at least at that stage. And it did it.
By voting the way they voted, British did the same that did, before them, the citizens of Cyprus, of France, of Netherlands, of Ireland, of Greece, every time they had the opportunity. They rejected massively the policies produced and imposed by the elites, both national and European ones (the two more and more indistinguishable), in spite of the enormous terror and propaganda campaigns to do the opposite.

About today's revolts in Europe
It is not a coincidence, that those revolts are happening mainly in nations which have, more or less, a strong national tradition. Cypriots have done one of the first anti-colonial revolutions after the 2nd World War, in spite of being a handful of people opposing an Empire. In the administration councils of French multinationals they speak now English, still France remains the country of the Marseillaise and it has a tendency to remember it, every time it feels the need. By the way, the first communist revolution in modern European history, the Paris commune, begun because French bourgeoisie wanted to handle the capital to the Germans. Netherlands is one of the birthplaces of European freedom, the country of Spinoza. Ireland as a country has been defined by the revolt against foreign rule. Greeks have mounted a ferocious resistance against Hitler, when most European nations had compromised with him. They inflicted in 1940-41 the first military defeat in Europe to the Axis and their subsequent resistance has provided to the Soviets and the “General Winter” precious time, while it disturbed seriously Rommel’ s logistics in Africa.

About the collapse of the neoliberal EU
Neoliberals have been able to control nearly all the media and political landscape, intellectuals and the public opinion. They were even capable of erasing mush of History from the program of western universities. You can be a graduated economist nowadays, but ignore completely Keynes or Galbraith...
By controlling everything, they fell victim of their success, believing finally blindly their own propaganda.
In the environment of prosperity of the ’90s, all that seemed extremely strong and successful. But as both the middle classes and more oppressed social strata felt the pressure of the economic crisis and then of the financial crisis of 2008, the material conditions for neoliberal hegemony begun to collapse and with them the political and ideological foundations of the European Union.

About the solution
For various reasons, the simple return of Europe to its nation-states, cannot be the solution. And even if British, French and Germans can as a minimum think and try it, nobody else can seriously believe to such a perspective. This is why, the defense of the nation-states and of what remains of democracy in their context is absolutely necessary, but in the same time is impossible without the emergence of a new project, socio-economic and international, able to replace the collapsing neoliberal Order.

Wednesday, February 1, 2017

Why did the Troika not resolve the Greek debt problem?

I get tired and angry when I read once again that the Troika of financial policy makers (ECB, Eurogroup, IMF) have not yet resolved the foreign debt problem of Greece (see e.g., http://www.cnbc.com/2017/01/27/greece-must-step-up-reforms-or-risk-losing-imf-support.html).
It's a shame they still dare to bother us with a problem they should have resolved long ago. It's a shame we do not have more capable policy makers including, and especially, given his responsibility as chair of the Eurogroup, Dutch minister of finance Jeroen Dijsselbloem. They should have resolved Greece's foreign debt problem in 2010 when it was discussed by the IMF.
One of the executive directors of the IMF who then (in 2010) saw the Greek debt problem in the right perspective and criticised his colleagues for getting onto an unhealthy and economically unsound path of lending money to Greece presumably to help it resolve its foreign debt problem but, in practice, helping it to increase its foreign debt problem and helping the banks to get payments on loans they had extended to Greece, was Brazilian economist Paulo Nogueira Batista. "The first program of 2010 was presented as a bailout for Greece, but in reality was more a bailout of the private creditors of Greece," observed Nogueira Batista.
On this blog I wrote a post about him, which happens to be one of the most-read posts (and from which I copied the quote of him): Remarkable interview on Greek debt with IMF executive director Paulo Nogueira Batista.

The unthoughtful and shameful policies of western policy makers vis-à-vis a small country like Greece reminds me of the equally shameful and unthoughtful policies they applied to so-called highly indebted poor countries (HIPCs). Once I was asked by the Dutch Ministry of Foreign Affairs to organise a workshop in order to help resolve the HIPCs foreign debt problem and this is what I said in my opening speech:

When I was asked in early summer of 2002 by officials of the Dutch Ministry of Foreign Affairs whether I was willing to organise an international workshop on how debt relief for heavily indebted poor countries (HIPCs) could be made more effective, my first thought was: “Gosh, why did they let this problem drag on for so many years? They should have resolved it long ago!”
In my opening remarks to the workshop in August 2002, I hinted at my spontaneous (but silenced) outcry in somewhat more diplomatic, but still provocative, terms, saying that I hoped the Forum on Debt and Development (FONDAD) would not be asked in three years time to organise yet another workshop on how the HIPC Initiative could be made more effective.
“The Initiative should just achieve what it is meant to do: get rid of the debt problem,” I stressed.
During the coffee break, one of the Ugandan participants came to me and said with an ironic smile “You have been pretty tough with us.”
“No,” I answered, amused, “I wasn’t blaming you so much, but rather the officials in the rich countries.”

You can read my opening speech in this book, Fondad-HIPC-BookComplete HIPC Debt Relief: Myths and Reality, on pages 1-10. It has interesting lessons for how the Greek debt problem should have been resolved instead of letting it drag on and increase.

Wednesday, January 25, 2017

Sioux mobilise against Trump

Trump moves quickly and the opposition moves quickly too. First, women protested massively and widely all over the country (and even in Amsterdam and other cities), and now Sioux (original inhabitants of the United States, treated badly by the invading immigrants mainly coming from Europe), supported by ecologists and famous personalities, mobilise against Trump's decision to restart two disputed oil pipeline projects. One of the projects is Keystone XL, connecting the US to Canada, and the other is the North Dakota project, heavily criticised by the Sioux. 


Face à Trump, les Sioux forcés à reprendre le combat

Paris Match||Mis à jour le

Alors que Barack Obama avait rejeté le tracé du fameux oléoduc du Dakota du Nord, tant contesté par la communauté amérindienne, Donald Trump à peine élu, a choisi de relancer le projet. 
Donald Trump relance la construction de deux oléoducs controversés. Le premier, le Keystone XL, reliant les Etats-Unis au Canada, avait été rejeté par Barack Obama au nom de la lutte contre le changement climatique. Après des années d'atermoiements et une avalanche de rapports, Barack Obama s'était opposé à ce projet fin 2015: «Transporter du pétrole brut plus sale jusque dans notre pays ne renforce pas la sécurité énergétique des Etats-Unis», avait-il justifié.
Mais mardi, Donald Trump a signé des décrets ouvrant la voie à la construction de cet oléoduc, soulignant que l'aboutissement du projet Keystone XL était conditionné à une renégociation avec la société canadienne TransCanada. «Nous allons renégocier certains des termes et, s'ils le veulent, nous verrons si cet oléoduc peut être construit», a-t-il déclaré lors de la signature des documents dans le Bureau ovale. Le gouvernement canadien s'est félicité de cette décision: «Lors des deux conversations que j'ai eues avec M. Trump, on a parlé du projet et j'ai souligné que oui, je suis en faveur de ce projet d'oléoduc parce que cela va amener de bons emplois (...) et de la croissance économique», a déclaré le Premier ministre canadien Justin Trudeau lors d'une conférence de presse.

Mais Donald Trump a également relancé le projet d’un autre oléoduc encore plus controversé, celui du Dakota du Nord, qui menace des sites sacrés de la tribu sioux de Standing Rock et certaines sources d’eau potable. De nombreux Amérindiens, écologistes et célébrités s’étaient mobilisées contre ce projet jusqu’à son abandon, en décembre 2016, par Barack Obama. Etendu sur quatre Etats du nord américain et près de 1900 kilomètres, ce pipeline vise à transporter l'or noir du Dakota du Nord, un des principaux pôles de production de gaz et de pétrole de schiste aux Etats-Unis, vers un centre de distribution dans l'Illinois.
A lire : L’âpre combat des Sioux contre "le serpent noir" du Dakota du Nord
La tribu a vivement dénoncé mardi la décision de M. Trump, promettant de la contester en justice. «C'est une attaque contre notre communauté, une attaque contre notre habitat», s'est exclamée Jade Begay, venue manifester mardi devant la Maison Blanche, promettant au président de revenir régulièrement «pour que vous nous voyiez et que vous nous entendiez». Mardi soir, à New York, de nombreux manifestants ont d’ores et déjà fait entendre leur colère dans une manifestation à laquelle était présente l’actrice Jane Fonda.

Saturday, December 24, 2016

Dreaming about Creating a G25?

A while ago I proposed to form a new G24, not of nations but of individuals. Such a G24 could contribute to a better world, I thought. The G24 I envisioned would be a group that created ideas (and lobbied for them) in the interest of the world community rather than companies or power groups within countries. 

I received a few enthusiastic responses but the G24 I had in mind was not established. That is not surprising, perhaps, because it is unrealistic to think that you can create a global think group without a budget. 

Thirty years ago I managed to form precisely such an international group, the Forum on Debt and Development (FONDAD). But then I received core funding from the Dutch Ministry of Foreign Affairs. As a network and research center FONDAD still exists, and I am still its director. Since May 2008 FONDAD has operated without a budget. In fact I have been working for FONDAD more than eight years without being paid for it. This proves that it is possible to constitute, or rather continue, an international group without a budget. So could a G24 still be formed, building on members of the FONDAD network and including a few more thinkers with additional expertise (see below)? 
My proposal was and is that we create a network of 24 persons to exchange ideas about possible improvements in the global system. Yeah, I know that all kinds of groups and organizations are doing that. My point is, that the G24 I envisage - which might better be called G25 to avoid confusion with the existing G24 - gives an extra boost, both intellectual and practical. 
For me, the G25 would consist of 25 creative thinkers who are experts in the fields of politics and economics, socio-economic issues (including working conditions, unemployment, exclusion and income distribution), environment / ecology, and (maritime) transport. Why maritime transport? Because 90% of world trade goes via maritime transport. (And because I'm writing a book about world ports, together with my wife Aafke Steenhuis -- who besides being a writer is also a painter; she made the drawings on the cover of the two FONDAD books exposed.) 
Profile 
To which profile must comply G25 members? I thought of the following:  
- You are curious, creative 
- You can listen to someone else 
- You speak at least two international languages (unfortunately these are European languages, unless you would like to include eg Russian, Chinese or Mandingo), besides English preferably also Spanish, French or Portuguese (see, eg, Global financial experts must understand French... and Global financial experts must play music...)
- You are a non-conformist (see, eg, Robert Triffin: "Most economists are demagogues"). 

I created FONDAD in 1986 when I was 38 years old. Now I'm 68 and soon will be 69. The G25 should consist of members whose ages range between, say, 25 and 85 years. Members are not expected to do anything else than occasionally contribute to the virtual discussion among G25 members. Examples of how I organised such virtual discussions in the past for members of the FONDAD network are:
Macro-prudential regulation 
Bill White: "The current financial system is inadequate
Three schools of thought on crisis prevention 
Asset Bubbles and Inflation 
Managing the crisis (1) 
Preventing the crisis (4)
Explaining the crisis (3) 
Explaining the crisis (1) 

I continued to moderate such discussions until last year but did not make them any longer public via this blog. If I would restart those discussions involvng people with the additional expertise I just mentioned, I don't intend to spend too much time on moderating the group, publishing its discussions and promoting its policy suggestions. Maybe someone else could do that. I am just too busy -- as are the people I'd like to involve. I'm afraid others will think the same and -- with rare exceptions -- would react by saying: It's a nice idea Jan Joost but, unfortunately, I won't have the time for participating. I would fully understand such reaction and therefore think a G25 will not emerge. However, I keep dreaming that maybe one day, before I am 85... 


Monday, December 19, 2016

Christine Lagarde was found guilty

December 19, 2016

 
BREAKING NEWS
The chief of the I.M.F. has been convicted of criminal charges. Christine Lagarde may be forced from her post and faces jail time.

Monday, December 19, 2016 9:20 AM EST


Christine Lagarde, the managing director of the International Monetary Fund, was found guilty on Monday of criminal charges linked to the misuse of public funds during her time as France’s finance minister, a verdict that could force her out of her post.
Ms. Lagarde, who began her second five-year term at the I.M.F. in February, faces a fine of up to 15,000 euros, or $15,700, and up to one year in jail. The scandal has overshadowed her work at the fund, to which she was appointed in 2011, after Dominique Strauss-Kahn resigned as managing director when he was accused of having sexually assaulted a maid in a New York City hotel.
Read more »

Sunday, December 18, 2016

European integration enters terminal crisis?

Paulo Nogueira Batista, vice president of the New Development Bank
Paulo Nogueira Batista wonders whether European integration is entering its terminal crisis after various years of increasing problems.
He sees highly polarized populations in Europe, as well as in the Middle East, Latin America and the United States.
In the developed world the polarization is a reaction to neoliberal globalisation, he observes. And in the US a man like Trump would not have been chosen in more normal circumstances.
So we are living in exceptional times. Do you agree?

Polarização

No Brasil, estamos vivendo regressão fenomenal em termos políticos, institucionais, e até em termos de comportamento
Paulo Nogueira Batista Jr., O Globo
Não sei se os brasileiros se dão conta, mas vários dos nossos problemas estão ocorrendo simultaneamente em diferentes partes do mundo. A crise não é só nossa. Se isso for verdade, ficamos, por um lado, psicologicamente reconfortados. Mas, por outro lado, é mais difícil sair do pântano, uma vez que os problemas econômicos e políticos de outros países rebatem sobre o Brasil, dificultando a superação da nossa crise.
Um traço da crise atual é a polarização da sociedade em vários países ou regiões — EUA, Reino Unido, Europa continental, Turquia, Brasil, Venezuela, por exemplo. Nem falo das guerras civis e da desordem no Oriente Médio — Síria, Líbia, Iraque, Iêmen. Nos países desenvolvidos, a polarização representa uma reação à chamada globalização neoliberal, ou seja, a rejeição do projeto socioeconômico das elites internacionalizadas.
No Brasil, o caso é diferente — o que tivemos, e temos ainda, é a rebelião das elites e da maior parte da classe média contra determinado projeto político e social, que prevaleceu no Brasil de 2003 até 2014. Não pretendo discutir hoje se a rejeição ou rebelião se justifica ou não. Mas queria destacar o quadro de crescente polarização que atinge até mesmo um país como o Brasil, que se notabilizava pela sua capacidade de conciliar divergências.
Nem sempre se observa, leitor, que nas eleições e referendos dos últimos meses a margem das vitórias foi quase sempre pequena. Parece um padrão: Brexit (sair 52%, ficar 48%), eleição de Donald Trump (por 47% a 48% no voto popular — vitória no colégio eleitoral), eleição na Áustria (vitória do candidato verde por 54% contra os 46% do candidato de um partido de extrema-direita).
No Brasil, em 2014, Dilma Rousseff se reelegeu por margem também estreita (52% contra 48%), indicando já então a divisão da sociedade, que seria agravada nos anos seguintes pela campanha pelo impeachment e seus desdobramentos. A exceção foi o referendo na Itália, do- mingo passado, em que a derrota do governo foi por quase 60% a 41%, levando à renúncia do primeiro-ministro do Partido Democrático, de centro-esquerda.
Outro aspecto notável: a disposição do eleitorado de optar por caminhos arriscados. Na Itália parlamentarista, por exemplo, estava claro que a derrota do governo levaria à queda do gabinete e, portanto, a nova eleição, em que a direita nacionalista tem, ao que parece, grande chances de vencer. O Brexit era uma aposta de alto risco para o Reino Unido, como se vê pelas dificuldades que a saída da União Europeia acarreta e continuará a acarretar.
Nos EUA, em situação mais normal, dificilmente um Trump conseguiria se eleger presidente — ou mesmo chegar a ser candidato por um dos dois principais partidos. No Brasil, grande parte da classe média saiu às ruas para pedir a derrubada da presidente eleita, ignorando ou desprezando os vários tipos de riscos que o impeachment estava tendo e continuaria a ter para o país. A violência crescente da disputa política é mais um aspecto que salta aos olhos.
No Brasil, estamos vivendo regressão fenomenal em termos políticos, institucionais, e até em termos de comportamento. Mas não só aqui: a regressão é evidente também nos EUA — muito antes da eleição de novembro — e na Europa onde o projeto “iluminista” de integração regional profunda patina há vários anos, e entrou agora em crise talvez terminal. O espaço acabou. Tento retomar noutra ocasião.
Mundo (Foto: National Geographic)
Paulo Nogueira Batista Jr. é vice-presidente do Novo Banco de Desenvolvimento, sediado em Xangai