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Showing posts with label Spain. Show all posts
Showing posts with label Spain. Show all posts

Tuesday 31 March 2015

The Podemos revolution: how a small group of radical academics changed European politics

a Podemos political party banner being put up in Spain



Giles Tremlett in The Guardian




At the start of the 2008 academic year, Pablo Iglesias, a 29-year-old lecturer with a pierced eyebrow and a ponytail greeted his students at the political sciences faculty of the Complutense University in Madrid by inviting them to stand on their chairs. The idea was to re-enact a scene from the film Dead Poets Society. Iglesias’s message was simple. His students were there to study power, and the powerful can be challenged. This stunt was typical of him. Politics, Iglesias thought, was not just something to be studied. It was something you either did, or let others do to you. As a professor, he was smart, hyperactive and – as a founder of a university organisation called Counter-Power – quick to back student protest. He did not fit the classic profile of a doctrinaire intellectual from Spain’s communist-led left. But he was clear about what was to blame for the world’s ills: the unfettered, globalised capitalism that, in the wake of Ronald Reagan and Margaret Thatcher, had installed itself as the developed world’s dominant ideology.

Iglesias and the students, ex-students and faculty academics worked hard to spread their ideas. They produced political television shows and collaborated with their Latin American heroes – left-leaning populist leaders such as Rafael Correa of Ecuador or Evo Morales of Bolivia. But when they launched their own political party on 17 January 2014 and gave it the name Podemos (“We Can”), many dismissed it. With no money, no structure and few concrete policies, it looked like just one of several angry, anti-austerity parties destined to fade away within months.

A year later, on 31 January 2015, Iglesias strode across a stage in Madrid’s emblematic central square, the Puerta del Sol. It was filled with 150,000 people, squeezed in so tightly that it was impossible to move. He addressed the crowd with the impassioned rhetoric for which opponents have branded him a dangerous leftwing populist. He railed against the monsters of “financial totalitarianism” who had humiliated them all. He told Podemos’s followers to dream and, like that noble madman Don Quixote, “take their dreams seriously”.Spain was in the grip of historic, convulsive change. The serried crowd were heirs to the common folk who – armed with knives, flowerpots and stones – had rebelled against Napoleonic troops in nearby streets two centuries earlier. “We can dream, we can win!” he shouted.

Polls suggest that he is right. Since 1982, Spain has been governed by only two parties. Yet El País newspaper now places Podemos at 22%, ahead of both the ruling conservative Partido Popular (PP) and its leftwing opposition Partido Socialista Obrero Español (PSOE). If Podemos can grow further, Iglesias could become prime minister after elections that are expected in November. This would be an almost unheard-of achievement for such a young party.

Many in the Puerta del Sol longed to see that day. “Yes we can! Yes we can!” they chanted. Other onlookers shivered, recalling Iglesias’s praise for Venezuela’s late president Hugo Chávez and fearing an eruption of Latin American-style populism in a country gripped by debt, austerity and unemployment. But without Podemos, supporters feared, Spain faced the prospect of becoming like Greece, with its disintegrating welfare state, crumbling middle class and rampant inequality.

On stage that day, Iglesias declared that Podemos would take back power from self-serving elites and hand it over to the people. To do that, the new party needs votes. If that means arousing emotions and being accused of populism, so be it. And, as the party’s founders have already shown, if they have to renounce some of their ideas in order to broaden their appeal, or risk upsetting some in their grassroots movement by tightening central control, they are ready to do that, too. The aim, after all, is to win.

At first glance, Podemos’s dizzying rise looks miraculous. In truth, the project evolved over a long time, though even the organisers did not know it would eventually spawn a party, or that a global financial crisis would provide their opportunity. In Spain today, one-third of the labour force is either jobless or earns less than the minimum annual salary of €9,080. In big cities, the sight of people raiding bins for food or things to sell – a rarity in pre-crisis Spain – is no longer shocking. A fatalistic gloom has settled over a country that rode a wave of optimism for three decades after it transformed itself from dictatorship to democracy. After years of economic growth, the financial crisis burst Spain’s construction bubble. Countless corruption cases – involving both the PP and PSOE – have stoked widespread anger towards the established political class. “A political crisis is a moment for daring,” Iglesias told an audience recently. “It is when a revolutionary is capable of looking people in the eye and telling them, ‘Look, those people are your enemies.’”

He is not the first Pablo Iglesias to shake Spain’s political order. He is named after the man who founded the PSOE in 1879. (His parents first met at a remembrance ceremony in front of Iglesias’s tomb.) As a teenager, Iglesias was a member of the Communist Youth in Vallecas, one of Madrid’s poorest and proudest barrios. He still lives there today, in a modest apartment on a graffiti-daubed 1980s estate of medium- and high-rise blocks. (“Defend your happiness, organise your rage,” reads one graffiti slogan.) Even as a teenager, he was “a leader and great seducer”, recalled a senior Podemos member who had attended the same youth group. Iglesias studied law at the Complutense University before taking a second undergraduate degree in political science. He went on to write a PhD thesis on disobedience and anti-globalisation protests that was awarded a prestigious cum laude grade


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 Podemos leader Pablo Iglesias rails against the monsters of ‘financial totalitarianism’, and tells the party’s followers to ‘take their dreams seriously’. Photograph: Dani Pozo/AFP/Getty

It was at Complutense, where he began to lecture after receiving his doctorate, that Iglesias met the key figures who would help him found Podemos. Deeply influenced by Antonio Gramsci, the Italian Marxist thinker who argued that a key battle was over the machinery that shaped public opinion, this group also found inspiration at the University of Essex. There, the Argentine academic Ernesto Laclau began in the 1970s to write a series of works on Marxism, populism and demoracy which, along with work by his Belgian wife Chantal Mouffe (now at the University of Westminister), have had a profound impact on Podemos’s leadership. Their complex 1985 book, Hegemony and Socialist Strategy, remains a key point of reference for Podemos’s leadership.

Socialism, Laclau and Mouffe argued, should no longer focus on class warfare. Instead, socialists should seek to unite discontented groups – such as feminists, gay people, environmentalists, the unemployed – against a clearly defined enemy, usually the establishment. One way of doing this was through a charismatic leader who would fight the powerful on behalf of the underdogs. Laclau and Mouffe encouraged this new left to appeal to voters with simple, emotionally engaging rhetoric. They argued that liberal elites decry such tactics as populism because they are scared of ordinary people becoming involved in politics.

“There is too much consensus and not enough dissent [in leftwing politics],” said Mouffe, an elegant 71-year-old, at her London apartment in February. To her, the rise of rightwing populists such as Marine Le Pen’s Front National in France or Nigel Farage’s Ukip in the UK is proof that the post-Thatcherite consensus – cemented by “third way” social democrats such as Tony Blair – has left a dangerous vacuum. “The choice today is between rightwing or leftwing populism,” Mouffe told Iglesias in a TV interview in February.

If Iglesias had long seen neoliberals as the enemy and social democrats as sellouts, he eventually came to view the traditional far left as well-meaning fools. They damned television as lowbrow and manipulative, refusing to see that people’s politics were increasingly defined by the media they consumed rather than by loyalty to parties. This was something Spain’s aggressive far-right pundits had grasped in the mid-2000s, setting up television channels that exercised much the same pressure on the PP as Fox News does on the Republicans in the US. Iglesias believed it was time for the left to do something similar.

In May 2010 he organised a faculty debate that limited speakers to turns of 99 seconds. He named the event after the ska anthem One Step Beyond. Iglesias asked Tele-K, a neighbourhood TV channel partly housed in a disused Vallecas garage, to record them. “I was amazed by Pablo’s skills as a presenter, and by the care they had taken in setting it up,” Tele-K director Paco Pérez told me. He was sufficiently impressed to invite Iglesias to produce and present a debate series. Iglesias and his small team of students and activists took the idea seriously, although the station’s audience was tiny. “Pablo would even rehearse – something we’d never seen,” said Pérez. “The amazing thing was that we started to get a big online audience. It became a cult show.” La Tuerka (a play on the Spanish word for nut or screw), an initially earnest round-table debate show, became the seed for Podemos.

* * *

On 15 May 2011, Íñigo Errejón, the man who would become Podemos’s No 2, reached Madrid from Quito, Ecuador. Errejón was days away from presenting a PhD thesis at Complutense University that linked the success of Evo Morales, Bolivia’s first indigenous president, to the ideas of Gramsci, Mouffe and Laclau. Friends suggested that he head straight to the Puerta del Sol, where something extraordinary was happening.


Demonstrators gather near Madrid’s Puerta del Sol for a ‘March for Change’ organised by Podemos in January. Photograph: Gerard Julien/AFP/Getty

Somehow a protest march had turned into a camp that eventually drew tens of thousands of protesters. The indignados, who would inspire the Occupy movement, then took over city squares across the country, railing against politicians. “They don’t represent us!” became the rallying cry. Polls showed that 80% of the public backed the protestors. Some even carried Spain’s red-and-gold flag, a sign that this was bigger than the standard leftwing protests at which the purple, gold and red flag of Spain’s long-lost Republic usually dominated. The indignados debated at open-air assemblies, taking turns to speak and using hand gestures – raised waving hands for “yes”, crossed arms for “no” – to express agreement or disagreement.

For Iglesias and his fellow theorists at Complutense University, the protests made perfect sense. The consensus between Spain’s two biggest parties around German-imposed austerity had turned many citizens into political orphans, with no one to represent them. “Those with the power still governed, but they no longer convinced people,” Errejón told me recently.

Still, a month after the protests began, the squares had emptied. Six months later, at the end of 2011, Spain elected a new government, amid warnings that, whoever won, German chancellor Angela Merkel would be in charge. Disillusioned voters saw that even the PSOE offered little more than cowed obedience to Merkel’s demands for more austerity. Following a low turnout, Mariano Rajoy’s PP won an absolute majority and introduced further cuts while slowly taming budget deficits that had topped 11%. The indignado spirit, it seemed, had been crushed.

In fact, indignado assemblies continued to meet, and for the most politically active, La Tuerka became essential viewing. With time, the show moved to the online news site Público, and became more polished. Each show would begin with Iglesias or his fellow Complutense professor Juan Carlos Monedero delivering a monologue, followed by debate and rap music. When Iran’s state-run Spanish-language television service, HispanTV, asked for an Iglesias-presented show, starting in January 2013, the team jumped at it. The show, called Fort Apache, opened with Iglesias astride a Harley Davidson Sportster motorbike, placing a helmet over his head and – after a close-up of his eyes – slinging a massive crossbow across his back before roaring off. “Watch your head, white man. This is Fort Apache!” he warned in the trailers. They were still, however, preaching mostly to a small number of the already converted.


All that changed on 25 April 2013, when Iglesias appeared on a rightwing debate show on the small channel Intereconomia. “It is a pleasure to cross enemy lines and talk,” said Iglesias by way of introduction. He was outnumbered. He would be debating against four conservative pundits. But Iglesias had come prepared and acquitted himself well. Soon, he was receiving invitations to appear on debate shows on Spain’s mainstream channels. Ratings surged as Iglesias, equipped with endless facts and a series of simple messages, wiped the floor with fellow debaters. The cocksure young lecturer usually sat with one ankle resting on a knee and an arm casually thrown behind his chair, his smile occasionally slipping into condescension. He repeated, mantra-like, that the blame for Spain’s woes lay with “la casta”, his name for the corrupt political and business elites he claimed had sold the country to the banks. The other enemy was Germany’s chancellor Angela Merkel and the unelected officials who oversaw the euro from the European Central Bank in Frankfurt. Iglesias did not want Spain to leave the European Union, but he was not satisfied with it either. Above all, he wanted Spaniards to recover “sovereignty”, a concept that, like many others, remained fuzzy.


Ratings surged as Iglesias, equipped with endless facts and simple messages, wiped the floor with fellow debaters

A media star had been born. Many knew him just as “el coletas” (“the pony-tailed one”). Iglesias had spent years honing his technique, doing theatre and even attending a presenter’s course at state television RTVE’s academy. Communication, he had already declared in his PhD thesis, was key to protest. For years he and Monedero had been telling Spain’s communist-led leftwing coalition Izquierda Unida (IU) that it should learn from the Latin Americans and widen its appeal. Now they proposed a broad leftwing movement, with open primaries at which outside candidates such as Iglesias could stand. They received a firm no from IU leader Cayo Lara, who later declared that Iglesias had “the principles of Groucho Marx”. So they created it themselves.

* * *

The Podemos plan was cemented over a dinner in August 2013, during the four-day “summer university” of a tiny, radical party called Izquierda Anticapitalista (IA). Iglesias and IA heavyweight Miguel Urbán, then a then 33-year-old veteran of multiple protest movements agreed to work together, creating the strange and tense marriage between a single, charismatic leader – Iglesias – and an organisation that hates hierachy. “Pablo had political and media prestige, but that was not enough,” Urbán told me. “We needed an organisational base that stretched across the country, and that was IA.”

The plan was daring and highly improbable. It was to be an 18-month assault on power, with the ultimate aim being to replace the PSOE as leaders of the left and unseat Prime Minister Rajoy at the 2015 general election. The core clique of like-minded academics from the Complutense political sciences faculty, who were veterans of La Tuerka, would manage the campaign. At last, they would be able to try out their ideas on a national scale.

The first test for Podemos would be the May 2014 European elections. Many voters view the European parliament as toothless because the EU’s major decisions are taken elsewhere. With so little at stake, they take risks in the polling booth. Iglesias and Urbán saw the European elections as a potential springboard for their 2015 general election campaign. The party’s name – which echoes not just Barack Obama’s 2008 campaign slogan, but also a TV jingle for Spain’s European and World Cup-winning football team – came during a car journey a few months after the forming of the initial pact between Iglesias and Urbán. “We thought of ‘Yes you can!’, but that already existed,” said Urbán. “So then we went for Podemos [We Can]. It was nicely affirmative.”

On January 17 2014, Iglesias officially announced the creation of Podemos at a small theatre in Lavapiés, the hip Madrid district that over the past decade has filled up with alternative bookshops, galleries and bars. Iglesias (his eyebrow stud now removed in order to improve his electoral image) explained that a cornerstone of the Podemos project would be indignado-style “circles”, or assemblies. These circles, built around local communities or shared political interests, could meet, debate or vote in person or online. He told the crowd that if 50,000 people signed a petition on the Podemos website, he would lead a list of candidates at the European parliamentary elections in May. The target was reached within 24 hours, despite the website crashing for part of that time.

Pablo Echenique got involved with Podemos via its regional ‘circles’, and was elected as an MEP in 2014. Photograph: Jose Luis Cuesta/Cordon Press/Corbis

The Podemos project was born with two contradictions that would become increasingly apparent over time. First, it would be both radical and pragmatic in its pursuit of power. Second, it pledged to hand control to grassroots activists, despite the fact the party depended on one man’s popularity. But at the beginning, these tensions were far from most people’s minds. Excitement and idealism were the norm.

Pablo Echenique, a research physicist with spinal muscular atrophy, saw the Lavapiés speech on YouTube at his home in Zaragoza, central Spain. Three years earlier, Echenique had bumped along Zaragoza’s streets in his electric wheelchair to join the indignado protesters. He was excited by the debates, but frustrated by the lack of action. “They had no bite,” he told me. “There was no answer about what to do next.” When, four days after the Lavapiés speech, Iglesias travelled to a cultural centre beside Plaza San Agustín in Zaragoza for his first European election campaign meeting , Echenique got there early, but the 180-seat hall filled quickly. “Soon there were 500 people outside, so Pablo said: ‘I know it’s cold, but it’s worse not to have a job. We don’t fit here, so let’s go out into the plaza.’ It was freezing.”

It was in Zaragoza that Urbán first realised that Podemos might succeed. “As I waited at the door, someone asked whether I was from Podemos in Zaragoza,” Urbán told me. “I was in charge of Podemos’s organisation, but thought we didn’t really exist yet, so I just said I had come from Madrid. He replied, ‘Well, I’m from Podemos in Calatayud.’ That’s a town with just 20,000 inhabitants. Suddenly I realised that something really had changed. It was the political equivalent of occupying the squares.” A pattern was set, of packed campaign meetings that were generally ignored by the press. For those involved, it was exhilarating. Urbán took home the money gathered at the meetings to count. “We would get €2,000 from a single meeting. It was like belonging to a church,” he said.


Iglesias said politics was like sex: you start off doing it badly, but learn with experience

Echenique was inspired. “I told Pablo, ‘You say we should get organised, but I’ve never been in an organised political party. Can you give me some ideas?’ Pablo said it was like sex: you start off doing it badly, but learn with experience.” Echenique joined two circles, one in Zaragoza and one online-based group for people with disabilities. He was one of 150 candidates put forward by circles for the European parliament. These were ranked in order by 33,000 people who signed on for free to the party website. Iglesias came first and Echenique was fifth. Only one of the top 12 candidates was over 36 years old.

Podemos then embarked on the complex process of writing a “participative” election manifesto, based on ideas from the circles and then voted for online. The result was original, but also impractical and uncosted. It called for a basic state salary for all citizens and non-payment of “illegitimate” parts of the public debt, although the manifesto did not specify which parts these were – two measures that Podemos has since back-pedalled on.

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 Alexis Tsipras (left), leader of Greece’s Syriza party and now the country’s prime minister, with Podemos leader Igelsias. Photograph: Lefteris Pitarakis/AP

Little more than a month before the European elections, Podemos’s own polling revealed that only 8% of Spaniards had heard of them. However, 50% knew who Pablo Iglesias was. The party took the controversial step of changing its logo, putting Iglesias’s face on it to ensure it would go on the ballot slips. Eighteen days before the vote, the state-run pollster CIS said Podemos might scrape one seat.

On the night of the election, Podemos surprised everybody. It took 8% of the vote, with Iglesias, Echenique and three others becoming MEPs. Amid all the celebration, Iglesias remained cool. The PP was still in government, he warned. The battle had only just begun.

* * *

Eight months after the elections, on a flight back to Madrid from Athens in January, Iglesias sat, as he always does, in a budget seat. He had just helped Alexis Tsipras of Syriza close a campaign rally with a line by Leonard Cohen – “First we take Manhattan, then we take Berlin” – and a few well-pronounced words in Greek. It was an early start after a late night, but he was already in work mode. “I drink Red Bull so that I can read on long flights,” he said in the lounge, as a Greek businessman who owned restaurants in Madrid insisted on paying for our cafe freddo at the coffee kiosk and enthused about the changes coming to both countries.

In person, Iglesias’s combative public persona gives way to careful politeness (“Like the perfect son-in-law,” according to Mouffe). Unlike other leading politicians, he refuses to ride around in official cars, but he has lost his freedom to walk down the street or go into a bar without being stopped. When we arrived at Madrid’s Barajas airport, a lottery ticket vendor who caught sight of him stopped in her tracks. “You don’t have to buy. Just win!” she said, eyes bulging.

Iglesias was energised by his Athens visit, but Tsipras had been less effusive the night before, when, at a party on the terrace of a nightclub with spectacular views of the Parthenon, I asked him whether a future Podemos victory was key toSyriza. Not really, he answered. “Their elections are not for a while,” said the man who, three days later, became Europe’s lone austerity rebel. “I think we will open roads for them.”

Spain is not Greece. Austerity may be hurting – the Roman Catholic charity Caritas distributed food, clothes and help to 2.5 million people (one in 20 Spaniards) last year – but it has not produced the scenes of deprivation that one regularly sees on the streets of Athens, such as the queues at charity pharmacies where those excluded from state medical care go for medicines. Still, “if this can happen to us,” said Iliopoulou Vassiliki, a pharmacy volunteer, expressing a fear shared by many Podemos supporters, “who will be next?”

A few days after Iglesias returned from Athens, Iglesias visited Valencia for a rally. Podemos will win much of the youth vote at the general election, but those who attend their rallies – many of them members of local Podemos circles – are mostly older. Activism comes more easily to those in their forties and above, many of whom recall the heady early years of Spain’s democratic transition and are surprised by the younger generation’s passivity. Loudspeakers pumped out Patti Smith’s People Have the Power to 8,000 people packed into the basketball stadium. “Here comes the rockstar moment,” warned a Spanish journalist as Iglesias and Errejón appeared to raucous applause. A middle-aged woman in leopardskin-print trousers bellowed: “Presidente! Presidente!” Someone else shouted: “Long live the mother who gave birth to you!”

As capital of a region notorious for political corruption, Valencia is fertile ground for Podemos. Iglesias read out a letter from Nerea, a girl who was there on her ninth birthday. “We like you because you help people,” it said. “Thank you for giving my parents hope again.” The father held the girl above his head. “They [the establishment] aren’t afraid of me, Nerea. They are afraid of you and families who have said, ‘That’s enough!’,” said Iglesias, before segueing into a series of slogans: “The smiles have changed sides”; “Of course we can!” John Carlin, an El País writer, says Iglesias is selling a religious tale similar to that of Jesus expelling the money changers. The implication is that Podemos’s followers prefer the uplifting feeling of shared faith to cool reason. I recalled a volunteer in a Podemos office in Madrid who surprised me by confiding that he would not vote for them. “There is too much emotion,” he said.

Podemos activist Irene Camps had come to the rally with circle members from Manises, a struggling industrial town near Valencia’s airport where a former PP mayor is being tried for (which he denies). One evening a few weeks after the rally, Camps and I stood outside the local Consum supermarket with half a dozen women who were waiting to go through its bins for food. Nearby, a huge theatre, the construction of which started during Spain’s boom days before the 2007 crash, sat unfinished. “Everyone’s talking about Podemos. We should give them a chance,” said Paqui Fernández, the women’s self-appointed leader. She and her friends recalled that this land was occupied by “cave-houses” – homes built from holes in the rock – in the 1950s. It was a reminder of how far Spain has come since the death of Francisco Franco in 1975, but also that memories of poverty are not that old. Camps is part of Spain’s recently expanded, but now shrinking and scared, middle class. “If we don’t change things,” she said. “I’ll end up like Paqui.”


The party’s use of transparency websites, voting tools and online debate is already cutting-edge

The next day, bathed in winter sunshine, Camps helped at an open-air Podemos assembly on a ramshackle estate of detached houses in countryside outside Manises. Timid locals stepped into a circle of earnest, purple-shirted activists and were applauded for airing their fears. The party’s 900-odd circles are key to Podemos’s participative approach and local popularity, but they are hard to control. (The party still does not have a full list of them.) Anyone can join in and vote.

If Podemos wants to be more than a traditional party or a top-heavy populist movement then it must deliver on direct democracy. The party’s use of transparency websites (detailing all spending, including salaries), voting tools and online debate is already cutting-edge. Its Plaza Podemos debating site regularly attracts between 10,000 and 20,000 daily visitors. “Nothing on this scale using online tools is happening anywhere else in the world,” Ben Knight, one of the entrepreneurs behind a collaborative decision-making app, Loomio, told me.


 Spain has not suffered the same deprivations as Greece, but austerity is hurting, and there is widespread anger towards the established political class. Photograph: Pablo Blazquez Dominguez/Getty Images

But on the wider use of direct democracy, as with other matters, Podemos does not yet have a settled strategy. The only fixed principles are that senior party members, including Iglesias, should be sackable by referendum, and that post-electoral coalitions must be voted on by supporters. Whether Podemos can balance the demands of its grassroots activists, who expect to shape policy, with the powerful influence of Iglesias and his clique of Complutense academics, remains one of the most challenging questions for the party’s future.

When it came to finally deciding on the party’s structure at an open assembly last autumn, Iglesias’s team wanted a strong leader. Echenique’s rival proposal for a shared, three-person leadership gained the backing of many activist circles, but won just a fifth of the 112,000 votes cast online. “You could say that Iglesias got the more superficial votes,” said Miguel Arana Catania of LaboDemo, a digital consultancy that advises Podemos. “These were the people who had seen him on television.” It is only at a local level, or when turnout is low, that the Complutense group loses control.

* * *

Charismatic leadership is hardwired into Podemos. Senior members admit the project would be impossible without Iglesias’s vision, television skills and leadership. That does not make him a Hugo Chávez, as some would like to claim, but it does raise questions about how much power he might accumulate. “I am not irreplaceable,” Iglesias himself has declared. “I’m an activist, not an alpha male, and I place myself under the orders of the majority.”


Members of his close-knit team of 60 people, who have mostly worked out of cramped offices with curling carpets and broken doorbells, often profess undying loyalty. “I take attacks on him personally,” admitted one. Many of his team have shed their studies, careers or relationships over the past year as the Podemos project has taken off. Those with children – a tiny minority, since the average age is 26 – complain that the work is too draining. Men predominate, though the party presents “zipper” lists of candidates (so-called after the teeth of a zip), with men and women alternating, for public posts. Others who would like to work for Podemos say the salary cap of €1,900 per month is prohibitive. (Earnings above that from public positions are donated to the party and other causes.)


Iglesias is aware of the paradox of a party with anti-capitalist roots bidding to administer a market-based economy

Podemos has a new Madrid headquarters a few floors down from the scruffy rooms where it had set up camp after the European elections. It was in this bland office block that, 13 months after founding his party, Iglesias agreed to meet for a sit-down interview. “At last, the world’s most sought-after man,” joked one of his staff as we waited outside his door. Iglesias looked oddly out of place in this pristine but anodyne new home, with its hotel-style fitted carpets and shiny wooden doors. His bracelets and his hair, neatly gathered in a colourful elasticated band, contrast with his unflashy day-to-day uniform of checked shirts, jeans or cheap chinos and trainers. (“None of them are interested in money,” a fellow lecturer said of Podemos’s Complutense core.) He admitted he was tired, and a slightly gaunt look emphasised the sense of asceticism.

Iglesias is aware of the paradox of a party with anti-capitalist roots bidding to administer a market-based economy. “In the short term we are limited to using the state to redistribute a little more, have fairer taxes, boost the economy and start building a model that recovers industry and brings back sovereignty. We accept that the euro is inescapable. The change we represent is, in some way, about recovering a consensus that 20 years ago would even have included some parts of Christian democracy.” Among other measures, he would stimulate the economy by redistributing money to the poor and boosting the public payroll, adding more tax inspectors, judges and social-service workers, and paying for this with higher taxes.

An Iglesias government would take some lessons from Syriza. He did not see the deal that Syriza made in February, which gave Greece a four-month extension on its bailout, as a climb-down by his friend Tsipras. “A small, weak country that is much less important to the eurozone and the EU than Spain, has changed the way things are done – by adopting a tough, stony-faced stance,” he said. In negotiations, Iglesias would use Spain’s muscle as the eurozone’s fourth-largest economy (which, implicitly, makes it big enough to bring the currency down). “You can’t get everything you want, but if you start out hard-faced and tough, then the results are completely different.”

Iglesias likes to deflect questions about populism by pointing to Rajoy’s 2011 electoral pledge to create 3.5m jobs, when the economy has actually shed 600,000 since then. “The real populists are those who make impossible promises,” he said. But the party ties itself in knots over the description. Errejón told me opponents were both right and wrong to call them populists. “The establishment uses populism as a synonym for telling the impoverished majority what it wants to hear,” he said. “That takes us straight back to the idea that only the better-off should vote. It is as if the masses were childlike.” Iglesias sidestepped the issue with a flash of intellectual arrogance. “Laclau would never use the concept of populism in the way that readers of the Guardian would understand it,” he said, denying that there was any demagoguery in Podemos and adding that, to Laclau, most politics was populism anyway.

His bid for greater sovereignty for Spaniards includes a wider separation ofEurope from the US, which he feels dictated EU policy over Ukraine. “I don’t feel any ideological sympathy for Putin, but I think the EU was wrong to take such a belligerent stance with Russia,” he said. Referring to the Maidan protests that eventually led to the revolution, he said: “It was unreasonable to back what – to use a softer expression than coup d’etat – was an illegal displacement of political power.”

Iglesias saw no conflict between Podemos’s values and presenting a programme on what many see as a propaganda channel for Iran’s repressive theocracy. “In Fort Apache, I have complete control over style and content,” he said. Were he prime minister, Iglesias would happily keep presenting shows and conducting interviews with actors, film directors, intellectuals and politicians. “It would be a way of showing that you can devote yourself to politics without stopping doing other things,” he said. “I don’t know whether it would be possible in practice. The diary of a prime minister brings limitations, but we are here to change things.”


One journalist wrote that Iglesias is selling a religious tale similar to that of Jesus expelling the money-changers

Regional elections on 24 May will show whether Podemos has peaked. In recent months, Ciudadanos, a new centre-right rival, has transformed the political landscape once again. With its pledge to oust the establishment and usher in a new era of transparent, corruption-free politics, Ciudadanos offers a safe alternative to those scared of Podemos. It even has, in Albert Rivera, a young and charismatic – but far more orthodox – leader to rival Iglesias. A resurgent Spanish economy, now growing and creating jobs much faster than most of Europe, may boost Rajoy at the general election or, at least, hand a semi-healed economy to whoever succeeds him. Press scrutiny, which has shone light on the close links between some senior Podemos people and Venezuela, also hurt their brand just before March 22 elections for the parliament of the strongly socialist southern region of Andalucia, where they nevertheless doubled their vote (from European elections) to 15%.

But the Podemos earthquake has already shattered the status quo, forcing the PSOE into electing a young new leader – Pedro Sánchez – while IU disintegrates into bitter infighting over whether to ally with the party that may prove its nemesis. El País’s pollster narrowly makes Podemos Spain’s most popular party, but the party cannot enter government without seeking coalition allies among the “old” parties it damns as part of “la casta”. That may force it into opposition. “Hopefully Podemos would be willing to work with us,” former PSOE minister Juan Fernando López Aguilar told me in Brussels in December. “But so far, I perceive a threatening mix of arrogance, self-infatuation and condescension.”

It is tempting to see Podemos as a well-planned operation by a group of talented academics, following a populist script written by a line of radical thinkers, but that would be too simple. It is really the result of an open-ended effort by unorthodox idealists to effect change, combining youthful conviction with a desire to test out their ideas in the real world. As it attempts to forge a new consensus, however, it is inevitably drifting away from its radical roots. At a class Iglesias gave to visiting students at the European parliament in December – perhaps his last for a long time – he recognised that if he governs by Europe’s current capitalist rules, leftwing critics will accuse him of being a cowardly reformist. “The answer to that is: ‘And where are your arms for getting rid of capitalism?’” he said. Realism, then, as much as idealism, will dictate Podemos’s future. Only when put into practice will we discover how, or if, the Podemos participative “method” changes democracy, European politics or ordinary lives. But what is certain is that Iglesias has proved the point he liked to make to his students: the powerful really can be challenged.

Thursday 5 June 2014

Where is the cheapest place to buy citizenship?

 By Kim Gittleson


It is a cliche used from Bond to Bourne: the classic spy image of a suitcase filled with cash and multiple passports for a quick getaway. But increasingly it is not spies that are looking for a second passport, but a growing number of "economic citizens".
Henley and Partners citizenship expert Christian Kalin, who helps to advise clients on the best place to spend their money, estimates that every year, several thousand people spend a collective $2bn (£1.2bn; 1.5bn euros) to add a second, or even third, passport to their collection.
"Just like you diversify an investment portfolio, you want to diversify your passport portfolio," he says. The option has proven popular with Chinese and Russian citizens, as well as those from the Middle East.
Cash-strapped countries have taken notice. In the past year alone, new programmes have been introduced in Antigua and Barbuda, Grenada, Malta, the Netherlands and Spain that either allow direct citizenship by investment or offer routes to citizenship for wealthy investors.
However, concerns have been raised about transparency and accountability.
In January, Viviane Reding, vice-president of the European Commission, said in a speech: "Citizenship must not be up for sale."
But for now, at least, it seems that those with money to spare are in luck, with half a dozen countries offering a direct citizenship-by-investment route with no residency requirements.
Essentially, citizenship that is very much for sale.
Dominica
By far the cheapest deal for citizenship is on the tiny Caribbean island of Dominica.
For an investment of $100,000 plus various fees, as well as an in-person interview on the island, citizenship can be bought.
However, experts caution that because the interview committee meets only once a month, actually getting a Dominican passport can take anywhere from five to 14 months.
Since Dominica is a Commonwealth nation, citizens get special privileges in the UK, and citizens can also travel to 50 countries, including Switzerland, without a visa.
St Kitts and Nevis
The Caribbean islands of St Kitts and Nevis have the longest running citizenship-by-investment programme (CIP) in the world, which was founded in 1984.
There are two methods to obtain citizenship, with the cheapest option being a $250,000 non-refundable donation to the St Kitts and Nevis Sugar Industry Diversification Foundation, a public charity. A second option involves a minimum $400,000 investment in real estate in the country.
The programme has recently been singled out by the US Treasury, which cautioned that Iranian nationals could be obtaining passports and then use them to travel to the US or make investments, which could violate US sanctions. (St Kitts closed its programme to Iranians in December 2011.)
However, Mr Kalin of Henley and Partners, which helped to set up the programme, says that while the programme has its issues, "St Kitts is relatively well run - it's in a way a model."
He adds that Caribbean locations are good for interim passports for "global citizens" who are looking to eventually establish themselves via investments in other "economic citizenship" programmes like those in Portugal or Singapore.
Antigua and Barbuda
Antigua and Barbuda introduced its CIP in late 2013, with similar parameters to the St Kitts model: a $400,000 real estate investment or a $200,000 donation to a charity.
In a speech announcing the programme, Prime Minister Baldwin Spencer cited a common reason that countries have increasingly introduced CIPs: an economic slowdown and "the virtual disappearance of traditional funding sources".
He cited both the St Kitts example as well as the United States, which allows foreigners to obtain a green card under the EB-5 visa if they invest $500,000 in a "targeted employment area" and create 10 jobs. (Since 1990, foreigners have invested more than $6.8bn and the US has given out 29,000 visas through the EB-5 programme, although there is a yearly cap of 10,000.)
However, Mr Spencer also said: "The Antigua and Barbuda Citizenship by Investment Programme is not an open-sesame for all and sundry."
Malta
"Citizenship-by-investment programmes are certainly on the rise, especially in Europe," says University of Toronto law professor Ayelet Shachar.
The tiny nation of Malta recently came under fire when it announced plans to allow wealthy foreigners to obtain a passport for a 650,000 euro investment with no residency requirement, which would have made it the cheapest European Union (EU) nation in which to purchase citizenship.
Prime Minister Joseph Muscat estimated about 45 people would apply in the first year, resulting in 30m euros (£24m; $41m) in revenues.
After pressure from EU officials, officials changed the rule to require potential passport holders to reside in Malta for a year and raised the investment to 1.15m euros.
The uproar exposed rising tensions over the definition of citizenship, according to Prof Shacher.
"At stake is the most important and sensitive decision that any political community faces: how to define who belongs, or ought to belong, within its circle of members," she says.
"The heft of the applicant's wallet is the new answer, according to citizenship by investment programmes. This is in breach of our standard naturalisation and citizenship requirements that focus on establishing a genuine link between the individual and the new home country."
Cyprus
Cyprus is the other EU nation to offer a direct citizenship-by-investment route.
The cost of the programme was slashed to 2m euros in March, partially in an effort to placate mostly Russian investors who lost money when Cyprus was forced to accept a strict European Union bailout.
(The 2m euro figure applies when one invests as part of a larger group whose collective investments total more than 12.5m euros; an investment of 5m euros in real estate or banks is still required for an individual.)
But Mr Kalin cautions against a Cypriot investment, noting that the programme initially cost 28m euros, then 10m euros, then 5m euros.
"It's a good example of how not to do it - you bring a product to market and totally misprice it and it gets cheaper every six months. It is ridiculous," he says.

Saturday 8 December 2012

European Gypsies have Indian Genes


Gypsies arrived in Europe 1,500 years ago, genetic study says

Migrants from India came to continent much earlier than previously thought, analysis suggests, and arrived in the Balkans
Gypsies in a shanty town in Madrid, Spain
Gypsies in a shanty town in Madrid, Spain. Photograph: Navia/Cover/Getty Images
In parts of Europe they are still shunned as disruptive outsiders or patronised as little more than an exotic source of music and dance, but Gypsies have ancient roots that stretch back more than a millennium, scientists have proved.
A genetic analysis of 13 Gypsy groups around Europe, published in Current Biologyjournal, has revealed that the arrival on the continent of their forebears from northern India happened far earlier than was thought, about 1,500 years ago.
The earliest population reached the Balkans, while the spread outwards from there came nine centuries ago, according to researchers at Spain's Institute of Evolutionary Biology and elsewhere.
"There were already some linguistic studies that gave clues pointing to India and genetic studies too, though without being precise about the where or when," said David Comas, who led the research group.
"Now we can see that they arrived in one single wave from the north-west of India around 1,500 years ago."
Gypsies were originally thought to have come from Egypt and some of the earliest references to them in English, dating back to the 16th century, call them "Egyptians".
Early European references describe wandering, nomadic communities who were known for their music and skill with horses.
They arrived in Spain in the 15th century or earlier – with records of groups of up to a hundred Gypsies travelling together, often led by someone who termed himself a "count" or "duke" – and held on despite attempts to expel them or imprison those who refused to give up their language and culture.
They were accompanied by a legend that they had been expelled from Egypt for trying to hide Jesus.
The new study now sets their arrival in Europe in the sixth century – a time when Britain was still in its early post-Roman era.
Gypsies, often referred to as Roma, are found across all of Europe and make up the continent's largest ethnic minority. There are about 11 million of Gypsies in Europe.
Centuries of discrimination, including systematic extermination by some 20th-century fascist regimes, have helped keep many of them marginalised.
"There is still widespread discrimination and this is the most marginalised minority in Europe," said Robert Kushen of the European Roma Rights Centre in Hungary.
Both France, during Nicolas Sarkozy's presidency, and Italy, under Silvio Berlusconi, targeted Gypsy communities with populist eviction policies, while long-running discrimination continues in much of eastern Europe.
Sarkozy's Socialist successor, François Hollande, has done little to change policies in France.
"They suffer from forced evictions – and have been targeted recently in both France and Italy," Kushen said. "And it seems that in some places, like Romania and Bulgaria, the laws applying to free movement within the European Union don't quite apply to them in the same way that they apply to other people."
But the stereotypical wandering Gypsy in a mule-drawn caravan belongs to the distant past. The vast majority of Europe's Gypsies have long been settled. "There is still the myth of the nomad, which drives bad policy in places like Italy, where the government maintains they are nomads when in fact they are not," said Kushen.
His group has called on the European Union to bypass national governments, many of whom ignore EU rules on the treatment of Gypsies and Roma, in order to enforce policies.
And Comas's study shows not only that they share common ancestry from north-west India, but also that they have mixed extensively with other Europeans.
"That is more pronounced in northern and western Europe," he said. "They conserve the genetic footprint from India, but their ancestors are both European and Indian."

Thursday 5 July 2012

What's so wrong with negative fields anyway?



When England set cautious fields they are called tactically naïve; but they win
Ed Smith
July 4, 2012


A month ago, I had one of the most interesting conversations I've ever had about sport. It was in a tiny restaurant in Paris with the brilliant football writer Simon Kuper. The subject was how Spain became the world's dominant football culture.
Spain have now won Euro 2008, the 2010 World Cup and Euro 2012. They are also currently world champions at Under-19 and U-17 levels. The Spanish way - high skill, brilliant passing, and little focus on physical size or brutality - has mastered the world. Not only are Spain serial winners, they have also set football's philosophical agenda.
Our conversation in Paris began with football, but I realised afterwards that the question applied to all sports. How do games evolve? Can original thinkers change their sports forever? Is intelligence - or better still, insight - the most underused resource in sport? Can you think your way to success?
Kuper explained to me that the origins of modern football began with a single inspired insight by the superb Dutch player and coach Johan Cruyff. Like many great ideas it sounds obvious but it is actually profound. The pass, that is what really matters in football. The precision, the perfection of the pass. Everything else - the arm-waving, the brave running around, the passionate sweat and tears - is peripheral. Being better at passing is what wins football matches.
Prompted by Cruyff, Barcelona set up La Masia academy to educate players about the pass. When you watch Spain mesmerise opponents, you are watching an idea brought to life. There is a bloodline that runs from Cruyff - via Pep Guardiola - to Xavi, Iniesta and Fàbregas, the champions of Europe, champions of the world. One idea changed the game forever. Spanish dominance is not just based on skill. It is founded on brains.
Yet the most interesting part of the story is the resistance to Spain's success, the refusal to follow the logic that has created it. Throughout Euro 2012, English pundits continued to accuse Spain of being "boring". The English old guard even condemned Spain's selection and tactics. How risk-averse, how stupid of Spain not to play a centre forward at all? Well, Spain won the final 4-0, without playing a centre forward for much of the game. Their first goal was brilliantly set up by Fàbregas, a midfielder picked instead of a regular centre forward. Stupid Spain, boring Spain? Behind the insult, observe the anger. When a pack of conventional thinkers are confused, they lash out at what they don't understand.
We see the same criticisms thrown around in cricket, the same reluctance to accept that new thinking might lead to better results. Here is an example. Pundits often ridicule captains for setting "negative" fields. The assumption is that it is always a "positive" move (i.e. that it will lead to more wickets) to have more slips and fewer fielders saving the single.
But what is positive, what is negative?
When I was a player, I often liked batting against very "positive" fields. Because I liked to bat at a reasonable tempo, feeling that the scoreboard was ticking along. Many players have a natural tempo, a pace of scoring that makes them feel they are in control. In a perfect world, of course, batsmen should be able to defend for hours without worrying about the scoring rate. But most batsmen are human beings.
 
 
I would much rather bat against an egotistical captain trying to impress the crowd than an unobtrusive captain trying to stop me batting in the way that suited me
 
That's why I often found it easier to score runs against flashy, "positive" captains, who were always trying to set eye-catching "aggressive" fields. While they were arranging catchers in apparently original groupings, runs flowed from the bat. I would much rather bat against an egotistical captain trying to impress the crowd than an unobtrusive captain trying to stop me batting in the way that suited me.
Now I've retired, I can reveal an effective and underused tactic: stop people scoring (whatever the type of match) and you'll probably get them out. This has become even more relevant to Test cricket during the era of T20 cricket. Batsmen have become increasingly used to hitting boundaries in Test cricket because T20 has changed the way people feel about their natural scoring rate. That's why Andrew Strauss is unafraid to have more fielders saving one and fewer catchers in Test cricket.
When England set cautious fields, they too are called "tactically naïve". And they win. When Spain don't play a centre forward, they are called boring and tactically naïve. And they win.
It is time to revisit some definitions. What are tactics but tools for winning sports matches? And since when was it naïve to play to your strengths?
A case study of thinking and winning is the story of the Oakland Athletics in baseball. Thanks to the book, and now film, Moneyball, it is has become one of the famous stories in sport. As with Cruyff's insight about the pass, the over-performance of the Oakland A's began with a single insight. The best way to approach winning a baseball match is not thinking about scoring runs. It is to focus on getting on base. A run is usually the by-product of getting on base. Runs are hard to predict; getting on base is much easier to assess and calculate. So the Athletics focused on the tractable, controllable parts of the match, ignoring the headline-grabbing end-product.
In 2002 the Athletics unveiled their new strategy. Guess what: the pack of baseball pundits and insiders didn't like it. They accused the Athletics of wrong-headedness, hubris and over-intellectualism. Undeterred, Oakland won a record 103 matches out of 162.
Conventional wisdom moves at a glacial pace because people become attached to ideas that are no longer relevant. Military historians say that generals are always preparing to fight the war that has just ended. So it is in sport.
Boring Spain, naïve England, wrong-headed Oakland? I prefer the idea that sport is always evolving, with new ideas driving the pace of change.
Former England, Kent and Middlesex batsman Ed Smith's new book, Luck - What It Means and Why It Matters, is out now. His Twitter feed is here

Wednesday 13 June 2012

Europe will thrive. But we could be doomed to a life on the fringes

There is a Little England-ism that would have us leave the EU fold. It would be a disaster
Santander Bank - Cambridge branch, Sidney Street Cambridge UK
Santander: familiar on our high streets and part of the Spanish banking system that needs bailing out Photograph: Kumar Sriskandan / Alamy/Alamy

Taxi drivers and eminent commentators are agreed. The euro is an unmitigated disaster. It should never have been launched. Europe's elites over-reached themselves, locking the proud peoples of Europe in a disastrous straitjacket without any democratic mandate or ongoing accountability. This is payback time. Its collapse won't be pleasant, but the sooner the whole experiment is ended and Europe becomes no more than a loose association of free-trading nations with freely floating exchange rates the better. Eurosceptics have been vindicated.

This has become a settled British media and political consensus and now hardly seems the moment to challenge it. After all, Spain needs a massive bailout of its tottering banking system, including Santander, so familiar on every British high street, before the Greek election next Sunday. This appears to have been agreed yesterday. If Greece were to leave the euro before the bailout is complete, the bank run would overwhelm Spain and spread elsewhere. The EU and the IMF have only days to avoid a calamity. Southern Europe would confront run-away inflation and slump.
Nobody knows what will happen. Now Spain has got its bailout, Germany will agree to a fully fledged European banking union before the end of June, in which all eurozone countries guarantee each other's bank deposits and bank debt, agree common banking supervision and joint means to ensure every eurozone bank has sufficient capital. This should cut the poisonous link between the banking crisis and the public debt crisis. I also bet that the next Greek government will cut a deal to allow it to stay in the euro with less austerity.

In addition, a combination of ultra-cheap money and big infrastructure spending, again agreed reluctantly by Germany, across the continent will start to lift the European economy. The EU will have muddled through and the system held, because in the end the costs of break-up or for any one country exiting were just too prohibitive.

But the situation is dangerously volatile and the Germans may be too slow to act. It may be that we face months of bank runs and pandemonium and that the euro is reduced in essence to a north European euro bloc, including France and Germany but not most of southern Europe. But the big point is that one way or another the euro will have survived in some form because the member countries will have pulled together. And what will remain will be immeasurably stronger and more integrated – a euro area with a banking union, common governance of fiscal policy and political structures to match. Not a federal superstate but a new amalgam of nation states within a new international architecture – and with a newly forged European identity.

One of the byproducts of the crisis is that every European has become aware of the continent's interdependence. What happens in Greece, Spain, Ireland, France or Germany affects everyone else. Like it or not, we have to co-exist. In which case, this becomes a moment of existential choice for Britain. Eurozone members are not only fighting for the euro because the costs of collapse are so awesome. Europe must have a monetary order to underpin its ambitions to be a single market.

Devaluation, touted as a panacea across the British economic and political spectrum, certainly works for an individual country if it can devalue against others that hold their currencies stable. But as Keynes argued so effectively, if devaluation becomes the default policy for the entire system – the temptation in a world of floating exchange rates – then the consequence is disaster. It is an invitation for everyone to engage in beggar-my-neighbour economic policies by trying to rig their currency to boost their exports and minimise their imports, just as China has been doing for 30 years. A single market needs an accompanying monetary order – a heartland Keynesian proposition. This is not a doctrine of euro elites. It is how a single market can be made to work for all its peoples.

Which is why post-crisis Europe will be so tough for Britain. The EU that survives with its euro will be the centre of the European order. It will set interest rates and fiscal policy that will become the benchmark for every other European country. It will be the biggest and most desirable market in Europe and it will set the rules for how trade is conducted within its jurisdiction. Already it is happening. Senior ministers and officials have recognised that Britain had to agree to the banking union – with incalculable consequences for the City – but could do little or nothing to shape it. Financial regulation will be organised in Brussels for the benefit of euro member states. If we don't like, we can lump it. It will be across the board, from economics to climate change.

There is general delight that we are not part of this emerging superstate – a language that misrepresents what Europe is becoming. A referendum will cement our detachment or even lead to exit. Sceptics say the model for us to follow is Switzerland. The truth is that we would be a sort of Greater Guernsey, suffering an accelerated economic rundown. We will proudly float the pound, despite evidence that what floating means in practice – for a country with a huge international financial sector such as ours that sucks in capital from abroad – is systemic overvaluation and the evisceration of our traded goods sector: an economic doomsday machine.

Our foreign-owned car industry, dependent upon exports to the EU single market, will gradually migrate back to Europe or low-cost Asia. On a range of key strategic interests – finance, agriculture, fishing, transport, energy, IT and data security – benchmark policy will be made in Brussels, Paris and Berlin. They will have brought the EU through the crisis; their debts will be to each other, not us.

For the British Eurosceptic none of this counts. The vision is of endless austerity, prioritising deficit reduction above all else and evisceration of the social contract at home, and a refusal to recognise interdependence abroad or that there is any need constructively to create rules and an international order, especially in Europe. We should all resolutely tighten our belts and export our unemployment to others in a world of floating exchange rates and nonexistent international rules. It is a doctrine of arid meanness and nationalistic jingoism, an appropriate editorial line for populist centre-right newspapers, but nonsensical for a state with real interests to protect and advance. Britain stood aside from the euro crisis. It will stand even more aside from what follows, leaving us not just economically diminished but culturally shrunken.

Sunday 3 June 2012

This Cruel Austerity Experiment has Failed

The facts are clear. This cruel austerity experiment has failed

While the human cost of economic stupidity is all too visible, the world's leaders are paralysed by their dogma
Sooup kitchen in Athens
A woman receives a free meal from a soup kitchen organised by a Greek humanitarian group in Athens’ main Syntagma Square. Photograph: Kostas Tsironis/AP
Last week was an awesome warning of where go-it-alone austerity can lead. It produced some brutal evidence of where we end up when we place finance above economy and society. The markets are now betting not just on the break-up of the euro but on the arrival of a new economic dark age. The world economy is edging nearer to the abyss, and policymakers, none more than in Britain, are paralysed by the stupidities of their home-spun economics. Yanis Varoufakis, ex-speechwriter for former Greek prime minister George Papandreou and now an economics professor in the US, said last week: "There is precisely zero chance of austerity working. It is the same as thinking you can escape from gravity by waving your arms up and down."

It could hardly be more sobering. Money has flooded out of Spain, Greece and the peripheral European economies. Signs of the crisis range from Athen's soup kitchens to Spain's crowds of indignados protesting in the streets against austerity and a broken capitalism. Youth unemployment is sky-high. Less visible is the avalanche of money flowing into hoped-for safe havens in the US, Germany and even Britain. The last time the British government could sell government bonds at interest rates as low as today's was in the early 1700s.

George Osborne and his acolytes proclaim this as a triumph of the government's economic policies. They are gravely mistaken. Rather it portends fears that the international economic order may collapse because if so many countries are simultaneously pursuing austerity, where's growth to come from?

Virtually everywhere you look there are signs of a weakening world economy. At home, manufacturing suffered its biggest plunge for three years, and this in an economy already suffering its longest depression since the 19th century. American jobs growth is petering out. Unemployment in Europe averages 11%. Even China witnessed a sharp fall away in factory activity in May.

Yet none of this should be a surprise. We live in the aftermath of one of the biggest financial and intellectual mistakes ever made. For a generation the world, with the London/New York financial axis at its heart, surrendered to the specious theory that lending and financial contracts could grow many times faster than the underlying economy. There was a blind belief that in a free market banks could not make mistakes. Free markets didn't make mistakes – only clumsy bureaucratic states made economic mistakes. Or so they said. Financial alchemists, guided by the maxims of free market fundamentalism, could make no such errors.

Except that they did. The result was the financial crisis of 2008. Had governments not underwritten their overstretched banks with trillions of dollars, euros and pounds, an even worse global slump would have ensued. But while the banks could continue trading, the hundreds of trillions of loans and financial contracts they had made did not go away.

And because governments had guaranteed their deposits, as in Ireland, or had to inject capital into them as Spain has been doing all last week, this private bank debt has steadily become public debt. Here is a classic case where all the gains were privatised, and all the losses were socialised. It was the much-maligned state that had to step in and clear up the mess left behind by the private sector. The free market wasn't so free after all – in fact it proved astonishingly expensive for the public purse. People across Europe still pay the price.

This is no solution. Overstretched banks have become more cautious about lending new cash; and even strong banks are caught up in the backwash because if they step into the breach they could fall into a vortex of falling property prices and declining economic activity, becoming weak in turn. So as banks stand aside from their crucial function of generating credit, governments and central banks must step in to generate the demand that has now disappeared.

But they have not done so to a sufficient degree. Part of the problem is that the more bank debt that governments guarantee, the less room for manoeuvre they feel they have – especially as their stagnating economies forces up welfare spending and depresses tax revenues.

But the larger problem is intellectual. The dominant ideology of the day – from the same roots that delivered the crisis – forbids it. A consensus stretching from US Republicans through to Angela Merkel's Christian Democrats via George Osborne's Treasury continues to claim that the state is the source of economic bad. The state threatens enterprise, invites damaging taxation, and is the root cause of spreading inflation. The state must balance the books just as the private sector must.

This is not just an economic but a moral necessity, they argue. Living within one's means rather than "maxing" out on debt appeals to American, British and German individualistic Protestantism. Inflation is even more a sign of moral degradation: it means reneging on promises, rewarding spendthrifts and penalising savers. We had the good years. Now we must take our medicine. The public and private sectors must retrench simultaneously worldwide. Enterprise and free markets will do the rest. The "march of the makers" will step in to fill the void left by public austerity measures.

This is a first-order moral and economic mistake. Human beings need each other for mutual support. In economic terms this means that no individual, either as a person or a company, can manage existential risk by themselves. That risk needs to be shared and mitigated otherwise the risk is not accepted. There would be no enterprise or innovation – the risks of failure too great. That is why there is a role for both private and public sectors. It is governments who provide the means through which we express our social obligations and pool our risks.

This is the heart of Keynesian economics – a different set of moral and economic propositions than those which prevail. Today we can see an almost laboratory experiment on a global scale of why Keynes was right and his detractors wrong. There is no doubt what Keynes would advocate now: a government-sponsored increase in demand co-ordinated across as many countries as possible and an acceptance of a temporary but closely managed increase in inflation to reduce the real value of debt.
The enormous legacy of private debt – whether in Britain, Germany, Spain, the US or Greece – and the fiendishly complicated way so many of the loans have been organised and distributed around the world financial system cannot be easily unwound. Sir Philip Hampton, chair of RBS, warned this week it might take a generation for RBS investors to recover their money.

The choice is thus stark. To commit to decades of economic stagnation, the break-up of the eurozone, the risk of trade protection and autarchic economic policies, the dismantling of the west's social contracts, the imposition of high unemployment and the political fallout that will follow.

Or to change course.

The technical means are relatively simple. Governments must replace targets for inflation with targets for the growth of prices and growth of output combined. Central banks should inject money into their financial systems by offering to buy new bank loans made to support new investment, new innovation or new infrastructure – helped by partial government guarantees.

Governments also need to increase demand. They can do this directly – with targeted and time-limited tax cuts or spending increases. They can also move indirectly, taxing the rich more aggressively and re-allocating the proceeds in tax cuts to those on middle incomes and lower who tend to spend more – along the lines that both presidents Obama and Hollande have proposed. There is also a case for a financial transactions tax – both to raise crucial revenue and to cap the growth and frenetic speed of financial transactions. Finance has become too powerful. It needs constraining.

Will any of this happen? The west is at a cross-roads, and although such proposals will be fiercely opposed by the British, German and American right they need to be beaten back. After all, it is their ideas that have brought us to this pass. It is not too fanciful to argue that the future of western capitalism depends upon how this argument plays out – and how quickly, if at all, there is a change of course.