Why do the poor vote for the rich? Or seek refuge in xenophobic populism?

My sister in Greece playing Greek melodies.

This morning I read in a German newspaper that a quarter of the people living in cities in the famous Ruhrgebiet, the industrial area par excellence that propelled post-war economic growth and prosperity in Germany and other countries in Europe such as the Netherlands, is living in poverty.

My sister, who lives in Greece, is telling me continuously how poor people in Greece are suffering the consequences of a crisis that they did not cause, but that was caused by the rich (and the less rich)  in the United States and Europe as well as in other countries including Greece. I hear similar stories from friends in Portugal, Spain and Italy. But poverty is not restricted to southern Europe.

In letting the poor pay for the problems the rich have caused there is an important and democracy undermining mechanism: austerity measures and privatisation of public services are presented as if the people themselves wanted them. 'Democracy' is willingly used to 'legitimise' measures that favour the rich.

As a result, people are losing confidence that democracy (which is reduced to voting for politicians who seem to care more about those who have power rather than those who lack power) will bring them any good. This is part of the explanation of why xenophobic, populist parties and movements have gained such strength in Europe.

How come the poor are still voting and keeping the rich in policy influencing positions that are contrary to their interests?

The answer is simple: because they do not see or are not aware of an alternative. An equally important explanation is, because they think the normal state of affairs is that the rich, and the so-called experts (lawyers and economists) decide.

Can we break this unfortunate and democracy undermining 'normal' state of affairs? I will try to answer that important and difficult question in one of my next posts.

Jan Tinbergen

The photo above was taken 25 years ago in Nauplion, Greece, where I participated in a conference on the debt crisis in Latin America and other countries during the 1980s. 

In 1982 I had spent seven months in Mexico, Nicaragua, Belize, Costa Rica, Panama and Brazil to talk to small farmers, economists and (former) politicians including the former president of Costa Rica, Don Pepe, that is, José Figueres, about the external debt problem of Latin America and the international economic policies of rich countries that contributed to its emergence.  

José Figueres was critical of the economic policies of rich, western economies and I promoted his views, and those of others including Wim Duisenberg, Jan Kregel and Maria da Conceição Tavares,  in 1983 in a booklet published jointly by the Dutch Labour Party and the Transnational Institute. Jan Timbergen lauded the booklet saying, "it sheds light on aspects [of the debt crisis] that the media hide in jargon. The sense of humour... makes it a good read." 

The title of the booklet was "De schuld van wie?" which has the double meaning of "Who is to blame?" and "Whose debt?" The second meaning referred to the US debt as an important cause of Third World debt. Many years later, I made this the topic of a Fondad conference that resulted in two books: Global Imbalances and the US Debt Problem: Should Developing Countries Support the US Dollar? and Global Imbalances and Developing Countries: Remedies for a Failing International Financial System.
 
My interest in the global financial system and its impact on the daily lives of poor people arose in the 1970s from my work in favour of democracy and economic and social justice in Chile and other Latin American countries.

The kids on the picture above are my daughter and son. They are now 29 and 27. My daughter works at the Netherlands Ministry of Education, Culture and Science in The Hague, and my son works at the Science Park in Amsterdam where he is doing a PhD in computational science.

Robert Aliber in Amsterdam

Many years ago, in the early 1980s, famous Brazilian economist Maria da Conceição Tavares told me that the best book I could read about the global financial system was The International Money Game by Robert Aliber.

I bought it, read it, and liked it.

Last year, I had the privilige of seeing Robert Aliber at a meeting in Brussels. I liked his talk and asked him whether he had ever been at the Dutch central bank to tell my friends there how he sees the current crisis. He had not, so I arranged a visit for him to De Nederlandsche Bank (central bank) in Amsterdam. He met various people and gave a seminar.

Talking to him over lunch, and during a visit of the two of us to the Rijksmuseum, and at a dinner with him, my wife, and two friend of us (one of them is a member of the Board of FONDAD), I had the opportunity to share ideas, experiences and emotions.

Later, back in the US, Bob Aliber let me know he had very much enjoyed his trip to Amsterdam.

Argentina's struggle with the vulture funds

For those who follow the news about Argentina's struggle with the vulture funds:

pago soberano de la deuda

Griesa calificó de “ilegal” el proyecto para pagarle a los bonistas pero rechazó el pedido de los buitre

21.08.2014
El juez neoyorquino Thomas Griesa calificó de “inválido e ilegal” el proyecto de Ley impulsado por Argentina para el pagosoberano a los bonistas reestructurados y rechazó también el pedido formulado por los fondos buitre, que apuntaba a colocar al país en situación de “desacato” por llevar adelante esa iniciativa en el Congreso Nacional.

 

ampliar

En la audiencia, que se extendió por espacio de una hora y quince minutos y que se concretó esta tarde en la sede de la Corte Distrital Sur de Nueva York, Griesa volvió a instar a las partes a que se sienten a negociar junto a, Daniel Pollack, el special master (mediador) designado por el propio magistrado.

“En este caso, está tan claro como puede estar, que de alguna manera, en algún momento, espero más temprano que tarde, habrá un acuerdo” entre las partes, afirmó el juez.

El magistrado rechazó a la vez el pedido de imponer la figura de “desacato” al país, formulada por los fondos buitre NML y Aurelius, tanto en el encuentro de hoy como en la carta que le enviaron ayer para solicitar una “audiencia de emergencia”, tras el anuncio del plan de pago soberano realizado por Argentina el martes por la noche.

“¿Cómo (la figura) de desacato contribuye a un acuerdo?”, les preguntó Griesa a los abogados de los fondos buitre, al argumentar su decisión de rechazar el pedido formulado por los holdouts.

El abogado de NML, Robert Cohen, sostuvo que ellos comparten el hecho de que “tiene que haber un acuerdo” entre las partes, pero alegó que “la República tiene que sentir (...) la necesidad de acuerdo” para que esa instancia sea lograda.

En esa línea, Cohen sugirió la aplicación de sanciones al país aunque luego, tras la pregunta realizada por el juez, agregó que las mismas podrían ser discutidas en otra audiencia convocada para el mes de septiembre.

Por su parte, el abogado de Aurelius, Edward Friedman, sostuvo que aplicar la figura de desacato contribuiría porque enviaría "un claro mensaje” a Argentina y a terceras partes que podrían asistir al país en la iniciativa de pago soberano.

Friedman planteó entonces implementar un proceso de dos pasos: primero el desacato y luego las sanciones.

Al respecto, el letrado representante del país, Carmine Boccuzzi, afirmó que la figura de desacato no contribuiría de ninguna forma a lograr un acuerdo negociado entre las partes. También advirtió que “no hay bases” para aplicarlo dado que no hubo violación en las acciones que llevó adelante Argentina ni casos previos de países soberanos que hayan sido encuadrados bajo ese marco legal.

Lo que la República Argentina “está haciendo, es abiertamente, un proyecto de Ley como parte de un proceso democrático”, explicó Boccuzzi.

Luego de las intervenciones de los abogados de las partes, Griesa tomó la palabra en los últimos 35 minutos de audiencia, tras la exposición de los abogados que estuvo enmarcada en la descripción de los últimos acontecimientos en torno al caso y argumentaciones legales.

El magistrado reiteró que, según lo que dicta su fallo, si Argentina realiza el pago de intereses a los bonistas reestructurados, debe también pagar a los tenedores de títulos que no ingresaron a los canjes de deuda de 2005 y 2010, que litigaron ante su juzgado.

Griesa dijo que el proyecto de Ley enviado al Parlamento para su tratamiento, no contiene “provisión” de pago a los bonistas que rechazaron los canjes, por lo que es “inválida e ilegal”.

El magistrado denegó asimismo, el pedido de desacato formulado por los fondos buitre, argumentando que en estas instancias no contribuye en la continuidad del caso y convocó a las partes a seguir con un “proceso que lleve a un acuerdo”.

The madness of breaking news

Since it is summer holidays I repeat an old post that is still valid today:

Monday, October 13, 2008

My uncle Gino's advice

When I look at my face in the mirror while shaving my beard, I always think of my uncle Gino from Toronto, who used to give investment advice (he had his own investment letter for many years). One morning, the only morning I stayed at his home near Toronto, he told me that I did not need to hurry when shaving, as this would not finish the job more quickly. "Just do it quietly," he suggested.

This morning I had to think of my uncle Gino's advice when I was hurrying back to my computer to finish a post I've wanted to write for a long time, about visions of the future of finance in the global system. Why should I be in a hurry, I said to myself, if it won't speed the writing of a good piece?

The picture shows my uncle Gino in his youth, in the Netherlands. He died a couple of years ago, in Canada, the country that had become his new home when he emigrated in the late 1940s or early 1950s. I know him as one of my many uncles and aunts in Canada (my brother also lives in Canada). Gino was a successful investment adviser until he lost his money, not because of an international credit or debt crisis but because of something else.

PS: I see that the original date of drafting the first two paragraphs of this post appears as the date of this post. However, today it's 25 November 2008 and not 13 October 2008, so "normally" I would have felt that I should hurry to finally finish that post on visions of the future. But, listening to my uncle Gino's advice and seeing the speed of information and the speed of financial transactions as one of the problems of global finance and development, I know that slow writing (and slow financial transactions) may make a better contribution to world stability than all this frenzy chasing after financial news and financial opportunities.

Es esa locura de "breaking news" y "today's financial opportunities" (Act now!) en que vivimos que es una de las causas de la crisis... It is this madness of "breaking news" and "today's financial opportunities" in which we are living that is one of the origins of the crisis...

The calmness needed to change the world

A 2000 year old olive tree, painted by Aafke Steenhuis

A year ago I wrote on my other blog, in Spanish, that while my wife and I were listening to the singing of the blackbird (merel in Dutch) in our garden and having breakfast, I said we should be able to stop for a day or a week the world of agitated minds, to make them think and talk more calmly about a few key problems of our capitalist world.

In Spanish I wrote: "...mientras tomábamos desayuno y escuchábamos al canto del mirlo en nuestro jardín, [dije] que tendríamos que ser capaces de parar el mundo de las cabezas agitadas durante un día o una semana entera, para que ellas piensen y charlen con calma sobre algunos problemas claves de nuestro mundo capitalista".

That is the kind of psychological mood (with the extremes of individual and mass hysteria... by the way, is neoliberalism a kind of mass hysteria or is it just a doctrine?) of calmness that I would favour when a policy alternatives oriented G24 or G25 (see my post A new G24 to change the world?) would discuss a mass media and internet campaign (making use of facebook and blogger and whatever there is to reach younger people, which is crucial, as this should be a wide and long horizon effort) on the basis of experts giving talks at parliaments.

The title I gave to my post of a year ago on the other blog (its name is "Tutto è possibile") was "Manca la calma", which I would translate into "Calmness is Missing". 

How does one become a banker?

In the previous post I spoke about the horrible world of finance and economic policies. But it need not be horrible at all, or, in correct English: the world of finance and economic policies does not need to be horrible. And, I would add, you can also enjoy looking at the world of finance and economic policies and engage with joy in actions and thinking related to that world.

The reverse of what I wrote in my previous post can also be true: the horrible world of international solidarity.

When I was seventeen I went a whole day to a psychological test bureau in Utrecht to help me choosing the right university study. At the end of the day they suggested to me to study either economics, sociology or dentistry. I chose sociology as I thought (and still think) economics is part of it.

When I was forty and had already founded FONDAD, I went through a long and difficult period of conflict with NGO leaders participating in FONDAD who pretended to represent the world of international solidarity. I learned a lot thanks to that conflict (they tried to kick me out of my office in The Hague and tried to forbid me to use the name FONDAD) including that those who are working in the world of international solidarity can be terrible, opportunist and full of false pretenses.

Would I have been able to work with joy in the world of finance and economic policies?

There is a funny note to my psychological test in Utrecht at age seventeen. The testers thought it likely that I would abandon my study in economics after a couple of years to become a banker. (That was not the reason I dropped the idea of studying economics; the reason for that was what I just said.)

How does one become a banker? What emotional character or mood drives you to become a banker and stay a banker, either a commercial or a central banker?

I will ask some of my banker friends, both from commercial and central banks.

Schizophrenic

I have another blog, in Spanish, that is more personal and emotional. Today I wrote the following on that blog (I will translate at the end):

La lámpara de arriba, una 'kroonluchter' en holandés, viene del cuarto del director de Fondad cuando tenía todavía su oficina en La Haya, en la misma calle donde se encuentra el palacio de la reina Beatrix, el Noordeinde. En esa misma calle había una galería de arte que me gustaba visitar para olvidar un momento ese mundo horrible de las finanzas y de políticas económicas que están a favor de los que tienen mucha plata (dinero) en vez de los que tienen poca o nada.

A partir de más o menos (no hay una fecha precisa) 1972 he vivido en dos mundos, uno de la solidaridad humana y el otro de la plata y del poder. Me muevo entre esos dos mundos y es un milagro (me gusta más la palabra italiana miracolo) que no he devenido (es 'devenir' en francés y también lo es en castellano?) esquizofrénico.

In English:

The lamp above, a 'kroonluchter' in Dutch, comes from the office of the director of Fondad when he still had his office in The Hague, in the same street where the palace of Queen Beatrix is (was), the Noordeinde. In that same street there was (is) an art gallery that I liked visiting to forget for a moment the horrible world of finance and economic policies that favours those who have a lot of money, rather than those with little or no money.

From roughly (there is no precise date) 1972 onwards I have lived in two worlds, one of human solidarity and the other of money and power. I move between these two worlds and it is a miracle (I prefer the Italian word miracolo) that I have not become schizophrenic.

A hopeless effort?

Thinking about how policy proposals can be made to be adopted I remember what I once wrote in a long article published in English and Japanese, in which I said in the first paragraph that economic policymakers tend by both temperament and training to be rather narrow-minded; their thinking moves in a groove.

I said this in the mid-1980s and I think that part of the explanation for the current crisis in the core of the capitalist world lies in this narrow-mindedness and 'groove' thinking of policymakers. And I do not think that they will change, nor that others can convince them to change their mind.

So it seems that my whole idea of forming an international group of 24 or 25 experts who will advocate in various parliaments around the globe a change of policies, is a hopeless effort. Just like all the other efforts.

Or is it not?

Reforming the global financial system

I want to invite you to agree or disagree with a thought I am playing with to stimulate my thinking about an agenda for the proposed new G24 (some readers have suggested to call it G25 to distinguish it from the existing G24):  

I do not think we should maintain or make more shock proof the current world financial system and give it a crucial role in restoring global economic growth. 

Instead, we should reform the international monetary and financial system and think more about, and discuss more widely, the kind of global economic growth (or de-growth) we want in response to needs and desires, and the way a reformed global financial system may support growth or de-growth.

Even though reform of the global financial system lacks the support from Europe and the United States, we should continue efforts to reform the system. 

This is one of the issues for which the G25 should formulate good policy proposals and find the right people to promote them.