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Tuesday 6 September 2016

Does the left have a future?

All over the west, the left is in crisis. It cannot find answers to three urgent problems: the disruptive force of globalisation, the rise of populist nationalism, and the decline of traditional work.

by John Harris in The Guardian

There is more than one spectre haunting modern Europe: terrorism, the revival of the far right, the instability of Turkey, the fracturing of the EU project. And in mainstream politics, all across the continent, the traditional parties of the left are in crisis.

In Germany, the Social Democratic party, once a titanic party of government, has fallen below 20% in the national polls. In France, François Hollande’s ratings hover at around 15%, while the Spanish Socialist Workers’ party has seen its support almost halve in less than a decade.

The decline of Greece’s main social democratic party, which fell from winning elections to under 5% in less than a decade, was so rapid that it spawned a new word, “pasokification”, for the collapse of traditional centre-left parties. Even in Scandinavia, once-invincible parties of social democracy have been hit by increasingly disaffected voters, as rightwing populists stoke anxiety about immigration and its impact on the welfare state.

The reinvention of left politics in the countries most harshly affected by the Eurozone crisis might appear to offer grounds for new optimism. In Spain, Podemos rages against the political establishment it calls “la casta”, while Greece has seen the rise of Syriza, the upstart radical party that has been in government since 2015. The energy and iconoclasm of these two movements finds echoes elsewhere – witness the unexpected wave of support in the US for the Bernie Sanders campaign. But beyond the torrid Greek experience, these developments still feel more like an expression of protest and dissent than a sign of the imminent acquisition of power.

In Britain, the Labour party embodies almost all of the crises of the modern left. Labour still does well in big cities such as London, Bristol, Leeds and Manchester, but flounders in the south and east of England. The party may also be losing its hold on its old industrial heartlands, and in Scotland it looks headed for extinction. Labour’s poll ratings have been stuck in the same lowly place since before 2010.

This is not fundamentally about the party’s current internal strife. Labour is engulfed by the same crisis facing its sister parties in Europe. Political commentary tends to focus on politicians, and describe the world as if parties can be pulled here and there by the sheer will of powerful individuals. But Labour’s problems are systemic, rooted in the deepest structures of the economy and society. The left’s basic ideals of equality, solidarity and a protected public realm should be ageless. But everything on which it once built its strength has either disappeared, or is shrinking fast.

 The western left faces three grave challenges, which strike at the heart of its historic sense of what it is and who it speaks for. First, traditional work – and the left’s sacred notion of “the worker” – is fading, as people struggle through a new era of temporary jobs and rising self-employment, which may soon be succeeded by a drastic new age of automation. Second, there is a new wave of opposition to globalisation, led by forces on the right, which emphasise place and belonging, and a mistrust of outsiders. And all the time, politics rapidly fragments, which leaves the idea that one single party or ideology can represent a majority of people looking like a relic. The 20th century, in other words, really is over. Whether the left can return to meaningful power in the 21st is a question currently surrounded by a profound sense of doubt.

On the morning of May 8 2005, Tony Blair stood on the steps of Downing Street, after an unprecedented third consecutive Labour election victory. On the face of it, this provided proof of Labour’s newfound dominance, and another occasion for union jacks, talk of a new dawn, and the same blithe optimism that had carried Blair to power in 1997. But this time he took a much more hard-headed stance. Labour had just been been re-elected on 35.2% of the vote, with the support of only 22% of the electorate. The first-past-the-post system had worked its strange magic and taken the party back into government – but on the lowest figures for any government in the democratic age.

That day, Blair seemed contrite. “I’ve listened and I’ve learned, and I think I’ve a very clear idea what the people now expect from the government in a third term,” he said. “And I want to say to them very directly that I, we, the government, are going to focus relentlessly now on the priorities that people have set for us.” He spoke of the idea that “life is still a real struggle for many people”, and devoted one section of his speech to rising public angst about immigration.

Five months later, Blair made his 12th annual conference speech as party leader, and all traces of humility had vanished. His essential message reflected one of the key strands of his political theology: the mercurial magic of modern capitalism, and his mission to toughen up the country in response to the endless challenges of the free market. “Change is marching on again,” he announced, in that messianic tone that had begun to emerge in his speeches around the time of 9/11. “The pace of change can either overwhelm us, or make our lives better and our country stronger,” he went on. “What we can’t do is pretend it is not happening. I hear people say we have to stop and debate globalisation. You might as well debate whether autumn should follow summer.”

His next passage was positively evangelistic. “The character of this changing world is indifferent to tradition. Unforgiving of frailty. No respecter of past reputations. It has no custom and practice. It is replete with opportunities, but they only go to those swift to adapt, slow to complain, open, willing and able to change.”

I watched that speech on a huge screen in the conference exhibition area. And I recall thinking: “Most people are not like that.” The words rattled around my head: “Swift to adapt, slow to complain, open, willing and able to change.” And I wondered that if these were the qualities now demanded of millions of Britons, what would happen if they failed the test?

Listening to Blair describe his vision of the future – in which one’s duty was to get as educated as possible, before working like hell and frantically trying not to sink – I was struck by two things. First, the complete absence of any empathetic, human element (he mentioned the balance between life and work, but could only offer “affordable, wraparound childcare between the hours of 8am-6pm for all who need it”), and second, the sense that more than ever, I had no understanding of what values the modern Labour party stood for.

If modern capitalism was now a byword for insecurity and inequality, Labour’s response increasingly sounded like a Darwinian demand for people to accept that change, and do their best to ensure that they kept up. Worse still, those exacting demands were being made by a new clique of Labour politicians who were culturally distant from their supposed “core” voters, and fatally unaware of their rising disaffection.

In 2010, under Gordon Brown’s butter-fingered leadership, Labour fell to a miserable 29% of the vote – its lowest share since 1983, when it came within a whisker of finishing third. Five years later, despite opinion polls suggesting a possible Labour win, Ed Miliband could only raise Labour’s vote share by a single percentage point.

If the party hoped to reassemble the electoral coalition that had just about held together through the second half of the 20th century, the world that gave rise to it had clearly gone. Trade union membership was at an all-time low, heavy industry had disappeared, and traditional class consciousness had waned.

As those foundations crumbled, so did the party’s old nostrums of nationalisation and redistribution. In their place, and in unbelievably favourable circumstances that veiled Labour’s underlying weaknesses – a long economic boom, and a Conservative party incapable of coherence, let alone power – Blair and Brown had come up with a thin social democracy that stoked the risk-taking of the City and used the proceeds to spend huge amounts of money on public services. But the financial crisis had put an end to that model as well.

Meanwhile, as deindustrialisation ripped through 20th-century economies, the instability and fragmentation embodied by the financial and service sectors was taken to its logical conclusion by new digital businesses. In turn, the latter have spawned what some now call “platform capitalism”: a model whereby goods, services and labour can be rapidly exchanged between people, companies and multinational corporations – think of Uber, eBay, Airbnb or TaskRabbit, which link up freelance workers with people who need help with such tasks as cleaning, deliveries or moving home – with little need for any intermediate organisations. This has not only marginalised retailers and wholesalers. It calls into question the traditional role of trade unions, and further reduces the power of the state, which is now locked into a pattern where innovations take rapid flight and it cannot keep up.

In retrospect, the left’s halcyon era was based on a straightforward project. When the archetypal factory gates swung open, out came thousands of men – and by and large, they were men – united by an unchanging daily experience, and ready to support a political force that would use the unions, the state, and the fabled “mass party” to create a new, much fairer world in their monolithic image.

Now, an atomising, quicksilver economy bypasses those structures, and has fragmented people and places so thoroughly that assembling meaningful political coalitions has begun to appear almost impossible. These are the social and political conditions that define relatively prosperous places such as the commuter towns of Surrey, or Essex, the centres of the knowledge economy to be found around Cambridge, and the gleaming new town of Livingston in Scotland. And in a very different way, these new conditions can be experienced just as powerfully in the tracts of the UK that modernity seems to have left behind.

In the spring of 2013, a couple of days after the death of Margaret Thatcher, the Guardian dispatched me to the post-industrial south Wales town of Merthyr Tydfil, to talk to people about the legacy of her time in power. I had been there many times before, and always beheld a place in which Labour’s decline was not a matter of symbolism and metaphor, but something to be directly experienced.

Essentially, it is a place defined by absences: of the coal and steel industries, and the huge Hoover factory that closed in 2009 – but more generally, of the ideas and institutions that once defined the Labour party and the wider Labour movement. Between 1900 and 1915, Merthyr was represented in the House of Commons by Keir Hardie, Labour’s first leader and founding icon. In 1997, the party received an astonishing 77% of the vote in the town. But by 2010, that figure had crashed to 44%, as local politics belatedly reflected a lingering sense of dismay and loss that dated back to the defeat of the miners’ strike in 1985.

As I drove into town, I clocked an EE call centre, which pays its customer services operatives around £16,000 a year. Outside the town’s vast Tesco, I spoke to two retired men, who understood what had happened to Merthyr as a kind of offence to their basic values. In the past, one of them told me, “a man wanted to be a working man: he didn’t want to be in here, stacking shelves”. When I asked him about the legacy of the miners’ strike, what he said was full of pathos and tragedy. “Thirty years ago, whatever … it’s still embedded in us down here, he said. “We still talk about it every day: what might have happened if it had gone the other way.”

In the town centre, I then met an 18-year-old who was finding it impossible to get a job. “I’ve applied and applied, and it’s all been declined,” she said. She wondered whether there was something wrong with her CV: the idea that there were perhaps larger forces to blame for her predicament did not enter the conversation. I wondered, did she know what a trade union was? “No,” she said. “I don’t. What’s that?”

One in seven Britons is now self-employed. In the US, Forbes magazine has predicted that by 2020, 50% of people will at least partly work on a freelance basis. In 2015, the Organisation for Economic Cooperation and Development reported that since 1995, “non-standard” jobs – which is to say, temporary, part-time or self-employed positions – accounted for the whole of net jobs growth in the UK since 1995.

Such is the rise of the so-called “gig economy”. Economists and sociologists talk about “the precariat”, a growing part of the population for whom work is not the basis of personal identity, but an on-off part of life from which they often need protection. Some of this, of course, is down to the venality and greed of businesses. But the central momentum behind it is rooted in technology, and what Marxists would call the “mode of production”. In a world in which businesses can survey their order books on an hourly basis and temporarily hire staff at the touch of a button, why would they base their arrangements on agreements that last for years?

Merthyr is still said to be a Labour heartland. But like so many other places, it is brimming with a sense of a politics now hopelessly out of time: older people whose sense of a meaningful Labour identity is tangled up in an increasingly distant past, and younger residents who know nothing of any of this, and have little sense of the relevance of politics to their lives. In Merthyr, 56% of voters supported Brexit; at the Welsh assembly elections of 2016, Ukip won 20% of the local vote. In such places, the sense of Labour’s fall is palpable.

Go to any traditional Labour area, and people will tell you that Labour was once “the party of the working man”. Even now, from its name onwards, this reductive understanding of Labour, its people and its essential mission still runs deep, not least within the party itself. In place of “the working man”, the New Labour years ushered in a politics pitched at “hard-working families”, a term partly intended to reflect people’s increasing antipathy towards people on benefits. Even when it was advocating enhancements to childcare and pre-school provision, Labour tended to do so in terms of getting new mothers back into paid employment as soon as possible.

Today’s Labour party has not shed these outmoded ideas about the nature of work. Both Owen Smith and Jeremy Corbyn have sketched utopian plans to somehow magic the world back to some unspecified time before 1980. Smith wants to revive the Ministry of Labour, done away with by Harold Wilson’s Labour government in 1968. Corbyn’s “10-point plan to rebuild and transform Britain” is all about “full employment and an economy that works for all”, and promises to restore “security to the workplace”. These visions are either naive or dishonest, but they reflect delusions that run throughout Labour and the left.

In a world in which work is changing radically, modern Conservatism applauds these shifts. For clued-up Tories, it is time to rebrand as “the workers’ party” – in which the worker is a totem of rugged individualism, not a symbol of solidarity. For proof, read Britannia Unchained, a breathless treatise about economics and the future of Britain co-authored by five Tory MPs who entered parliament in 2010: Kwasi Kwarteng, the new international development secretary Priti Patel, Dominic Raab, Chris Skidmore and Elizabeth Truss, who Theresa May appointed justice secretary in her first reshuffle. According to Britannia Unchained, the ideal modern worker is represented by the drivers who work for the London cab company Addison Lee. These people “work on a freelance basis. They can net £600 a week in take-home pay. But they have to work for it – up to 60 hours a week.” In this vision – taken to its logical conclusion by Uber – the acceptance of insecurity becomes a matter of heroism, and a new political division arises between the grafters and those – as Britannia Unchained witheringly puts it – “who enjoy public subsidies”. In other words, the “skivers” versus the “strivers”.

Blair tried to lead New Labour in this direction, but his attempts always jarred against his party’s ingrained support for the traditional welfare state and its attachment to increasingly old-fashioned ideas of secure employment. But in the context of the modern labour market, lionising work for its own sake will never bolster support for a politics built on those values. Instead, it may push people to the right.

People who work, after all, are no longer part of a monolithic mass: many increasingly think of themselves as lone agents, competing with others in much the same way that companies and corporations do. In the build-up to the 2015 election, I saw vivid proof of how fundamentally this erodes the left’s old understanding of its bond with its supporters.

In Plymouth, I watched a woman answer the door to a Labour canvasser with the words: “I’m a grafter – you ain’t doing nothing for me.” I spoke to a man in the north-eastern steeltown of Redcar who told me he would never vote Labour “because I work”. In the bellwether seat of Nuneaton, two women told me that Ed Miliband would probably win the election because “all the people on benefits” were going to vote for him. As these people saw it, Labour was no longer the “party of work”.

This is a hell of a knot to untangle. But for the left, a solution might begin with the understanding of an epochal shift that pushed politics beyond the workplace and the economy into the sphere of private life – a transition first articulated by feminism, with the assertion that “the personal is political”.

Belatedly building this insight into left politics does not entail a move away from the kind of regulation and intervention that might make modern working lives much more bearable, nor from the idea that government might foster more rewarding and useful work, chiefly via investment and education.
But beyond the old gospel of hard graft and the dignity of labour, any modern centre-left politics has to surely speak powerfully to elements of people’s lives – as citizens, carers, friends and parents – which it has long underplayed, and for which the incessant demands of modern capitalism leave little room. People on the left should be thinking about extending maternity and paternity leave and allowing its reprise when children are older; reviving adult education (often for its own sake, not just in terms of “reskilling”); assisting people in the creation of neighbourhood support networks that might belatedly answer the decline of the extended family; and, most obviously, enabling people to shorten their working week – think about a three-day weekend, and you begin to get a flavour of the left politics of the future.

The deep changes wrought by our ageing society will anyway begin to increase the numbers of people beyond working age, and accelerate the shift away from paid work towards caring. But the most radical shift will be caused by automation and its effects on employment. If the Bank of England now reckons that as many as 15m British jobs are under threat from technology, and if a third of jobs in the retail sector are predicted to disappear by 2025, does the myopic, often macho rhetoric of work and the worker really articulate any meaningful vision?

The left naturally embraced the mantra of the Occupy movement – the glaring division between the super rich and the rest of us embodied by the slogan “We are the 99%”. Objectively, the idea of a division between a tiny, light-footed international elite and everybody else holds true. But in everyday life, this division finds little expression.

Instead, the rising inequality fostered by globalisation and free-market economics manifests itself in a cultural gap that is tearing the left’s traditional constituency in two. Once, social democracy – or, if you prefer, democratic socialism – was built on the support of both the progressive middle class and the parts of the working class who were represented by the unions. Now, a comfortable, culturally confident constituency seems to stare in bafflement at an increasingly resentful part of the traditionally Labour-supporting working class.

The first group has an internationalised culture, a belief in what the modern vernacular calls diversity, and the confidence that comes with education and relative affluence. It can apparently cope with its version of job insecurity (think the freelance software developer, rather than the warehouse worker on a zero-hours contract). But on the other side are people who have a much more negative view of globalisation and modernity – and in particular, the large-scale movement of people. In the UK, they tend to live in the places that have largely voted Labour but supported leaving the EU, and whose loudest response to globalisation is to re-embrace precisely the “custom and practice”, as Blair put it, that modern economies tend to squash: to emphasise place and belonging, and assert an essentially defensive national identity.

Does anyone on the left want to write off the working-class voters who chose Brexit as a mass of bigots and racists?

From a sympathetic perspective, to put out a flag can be a gesture way beyond mere jingoism. It often stands as an assertion of esteem – and collective esteem, at that – in an insecure, unstable world that frequently seems to deny people any at all. Those who were once coalminers or steelworkers may now be temporarily-employed “operatives” waiting for word of that week’s working hours. In a cultural sense, by contrast, national identity offers people at least some prospect of regaining a sense of who they are, and why that represents something important. Even when it comes to resentments around immigration, a nuanced, empathetic understanding should not be beyond anyone’s grasp: people can be disorientated by rapid population change and anxious to assert a sense of place without such feelings turning hateful.

There is also a much nastier side to all this – a surge in racism, which has happened all over Europe, and appears to have been given grim licence by the Brexit vote. Even so, does anyone on the left want to write off the 3.8m people who voted for Ukip in 2012 – or the even larger number of working-class voters who chose Brexit – as a mass of bigots and racists? Even in its most unpleasant manifestations, most prejudice has a wider context, and it is clear that these modern antipathies are most keenly felt in places that have either been left behind by modernity, or represent its most difficult elements: insecure job markets, scarce housing, overstretched public services.
And this new mood is growing partly because of factors tangled up with the decline of the left: the demise of trade unions and the traditional workplace, which have left political vacuums now filled by another form of collective identity. A glaring example is the new politics of England and Englishness, which is as much bound up with class as it is with place, and has so far simmered away without finding a coherent expression.

I have met enough people who have identified themselves as “English” to know that it is usually not just a matter of national pride. It also tends to translate as a set of defiant cultural rejections, on the part of people who are not middle-class, not from London, and angry about the way that people who fit both those descriptions view the rest of the country. The UK census of 2011 was the first ever to include a question about national identity – and in England, 60% of people described themselves as English only. But the left, in Britain as much as in Europe, remains in denial about why people have taken refuge in such expressions of nationhood. This is something that applies to both so-called “Blairites”, and Corbyn and his supporters: one is so enraptured by globalisation that it thinks of vocal expressions of patriotism as a retrogressive block on progress; the other cleaves to a rose-tinted internationalism that regards such things as a facade for bigotry.

In 2014, I spent three days in and around the Kent coast, following Ukip activists, and talking to people watching their manoeuvres. In the town of Broadstairs, a group of energetic leftwing activists – who would go on to found a thriving local branch of the pro-Corbyn group Momentum – had organised a day of campaigning against Ukip, focused on Nigel Farage’s candidacy in the seat of South Thanet. I watched them debate with a man sitting on the town’s seafront, who was determined to vote for Farage, and scornful of their attempts to dissuade him.

“He’s going to be voted in, and there’s nothing you people can do about it,” he said, gesturing to them with a kind of camp contempt.

He then explained his main source of anger. His son, he said, had a speech disability, and could not find work in his chosen field of catering. “Nobody will give him a job. But a foreigner could come over here and speak not one word of English and they get a job.”

The truth of this was batted around for two or three minutes, before he came to his conclusion. “I’m brassed off,” he said, and he then spoke pointedly about his own sense of insecurity. “I’m a working man. I’ve paid all my taxes and everything. And if anything goes wrong with me or my family and I get thrown out of my house because I can’t pay my mortgage, I’ll get put in a bedsit.”

What, then, did he want? “A better England,” he said, and I could instantly sense that he had a basic set of grievances – about insecurity and unfairness – to which the political left would once have been able to confidently speak. Unfortunately, in the absence of any meaningful cultural bonds, the avowedly leftwing people to whom he was talking were residents of a completely different reality.

Can things be any different? If left politics is not to shrink into a metropolitan shadow of itself and abandon hope of gaining national power, they have to. Indeed, if British politics is not to speed towards the kind of nasty populism taking root all over Europe and calling the shots in such countries as Poland and Hungary, this is a matter of urgency – not least because as automation takes hold, the disorientation on which the new rightwing politics feeds will only increase.

Scotland is perhaps instructive. The Scottish National party’s essential triumph has been to bond with millions of people via a modern, “civic” kind of nationhood, and thereby recast a social democratic model of government in terms of identity and belonging – rather than standing on the other side of a cultural divide, as Labour now does in England. To some extent, this is a matter of clever branding, and the successive political feats pulled off by Alex Salmond and Nicola Sturgeon: the lion’s share of SNP MPs and MSPs are almost as metropolitan and media-savvy as the scions of New Labour were. But for the time being, it undoubtedly works.

South of the border, by contrast, a key part of Labour’s crisis is that it so clearly fails to speak to swaths of England – and Wales – and leaves these places open to political forces that want to sever their residual links to left politics for good. Circa 2006, it was the BNP. From around 2012 onwards, Ukip began to slowly push into Labour’s old heartlands. Now, the millionaire Ukip donor Arron Banks is said to be mulling over a new party that might capitalise on the support for Brexit in working-class Labour areas and deliver them a new political identity. The stakes, then, are unbelievably high: if the left cannot speak for the people it once represented as a matter of instinct, much more malign forces will.

If the left’s predicament comes down to a single fault, it is this. It is very good at demanding change, but pretty hopeless at understanding it. Supposedly radical elements too often regard deep technological shifts as the work of greedy capitalists and rightwing politicians, and demand that they are rolled back. Meanwhile, the self-styled moderates tend to advocate large-scale surrender, instead of recognising that technological and economic changes can create new openings for left ideas. A growing estrangement from the left’s traditional supporters makes these problems worse, and one side tends to cancel out the other. The result: as people experience dramatic change in their everyday lives, they form the impression that half of politics has precious little to say to them.

In a political reality as complex as ours, there are inevitable problems for the political right as well. It is a long time since the Conservative party has spoken the visceral, populist language that was the hallmark of Margaret Thatcher. As with Blair in 2005, the Tories were recently elected to power with the support of less than a quarter of the electorate. Similarly, in Germany, Angela Merkel’s Christian Democrats once vied with the Social Democrats for the support of a majority of the population, but they are now down to around 30%. But modern challenges for the centre-right will always be less difficult than they are for the left. The former, after all, seeks to safeguard and advance modern capitalism rather than substantially change it. Even in the absence of a broad social base, the right is sustained by big business and the conservative press, which give it huge political advantages.

The left has responded to its crisis by looking endlessly inward – but occasionally, there are flashes of hope. There is a rising recognition, among both former followers of Blair and alumni of the traditional left, that Labour’s old majoritarian dreams are probably finished – and that it should finally embrace proportional representation and build new alliances and coalitions. This change would probably trigger a split between the party’s estranged left and right, and thereby bring Britain into line with the rest of Europe, where the left’s crisis is highlighted by a tussle between traditional social democrats and new radicals.

In Britain and plenty of other places, there is growing interest in the idea of a universal basic income, built on an understanding of accelerating economic changes, and their far-reaching consequences for the left’s almost religious attachment to the glories of paid employment. It is early days for such a leap. But proposing that the state should meet some or all of people’s basic living costs would be an implicit acknowledgement that work alone cannot possibly deliver the collective security that the left has always seen as its basic mission, and that space has to be created for the other elements of people’s lives.

Whether the left can come to terms with the new politics of national identity and belonging and thereby rein in its nastier aspects is a much more difficult question – but if it doesn’t, its activists may very well gaze at their parties’ old “core” supporters across an impossible divide.

Perhaps the most generous verdict is that here and across the world, the left – radicals and liberals alike – is stuck in an interregnum. You could compare it to the predicament of the 1980s, but it is even more reminiscent of the 1930s, when the aftershocks of an economic crash saw the left pushed aside by the politics of hatred and division.

In 1931, the great Labour thinker RH Tawney wrote a short text titled The Choice Before the Labour Party, casting a cold eye over its predicament in terms that ring as true now as they must have done then. Labour, he wrote, “does not achieve what it could, because it does not know what it wants. It frets out of office and fumbles in it, because it lacks the assurance either to wait or to strike. Being without clear convictions as to its own meaning and purpose, it is deprived of the dynamic which only convictions supply. If it neither acts with decision nor inspires others so to act, the principal reason is that it is itself undecided.”

No party can exist forever. Political traditions can decline, and then take on new forms; some simply become extinct. All that can be said with certainty is that if the left is to finally leave the 20th century, the process will have to start with the ideas and convictions that answer the challenges of a modernity it is only just starting to wake up to, let alone understand.

Monday 5 September 2016

Currency wars are nothing new – but who will be the casualty of the next?



Satyajit Das in The Independent

Wars frequently take place over years, with shifts in theatres, strategy, and tactics.
The current currency wars began in 2009. Badly affected by the sub-prime crisis, the US cut interest rates dramatically and subsequently launched 3 waves of QE. Between March 2009 and August 2011, the US dollar fell by around 16 per cent on a trade weighted basis against major currencies. With its banks exposed to the 2008 financial crisis, the UK adopted similar policies resulting in a sharp fall in the Pound Sterling.

There were counter-attacks commencing late 2011/early 2012. The European debt crisis forced the European Central Bank (“ECB”) to cut rates and then launch its own version of QE. Between 2011 and 2012, the Euro fell by over 25 per cent against the US dollar. As part of Prime Minister Shinzo Abe’s economic program, the Bank of Japan (“BoJ”) expanded its QE programs, weakening the Yen, which fell by over 30 per cent between 2012 and 2015.

There were side skirmishes. After 2014, falling oil prices and diplomatic conflict with the West over the Ukraine and resulting sanctions caused a sharp fall in the Rouble. Since 2011, the Indian Rupee has lost half its value. Falling commodity prices weakened the Canadian, Australian and New Zealand dollars, Brazilian Real and South African Rand.

The battles themselves have been inconclusive. The US recovery was assisted by the weaker dollar which increased exports. But investment in the shale oil boom, growth in emerging markets, budget deficits and also prompt action to deal with banking problems were crucial. In Europe and Japan, fiscal stimulus, demand from emerging markets and a lower commodity, especially oil, prices were arguably as important as the fall in the Euro and Yen in stabilising economic activity.

The complex impact of devaluations can be seen from the case of the UK. The sharp drop in the pound after 2007 was expected to increase exports. In the early 1990s, it stimulated activity pulling the country out recession. The lower pound, this time, improved the balance of trade but not sufficiently to offset declining domestic demand and the higher cost of imports. The muted effect was driven by the lack of external demand from major trading markets such as the US and Europe, the changed structure of UK industry with its focus on services rather than raw materials, advanced machinery, automobiles and luxury goods demanded by emerging markets, and the decline in North Sea oil and gas production.

The divergence in economic cycles between various major economies caused a change in fortunes. Between August 2011 and July 2014, the US dollar rose by 11 per cent on a trade weighted basis. By January 2016, it had risen a further 25 per cent because of a strengthening US economy, anticipation of higher interest rates and the deliberate weakening of the Euro and Yen.

The rise slowed the US economy. It created pressure on emerging market borrowers with substantial US dollar debt not covered by cash flows or assets in the currency. The stronger dollar placed pressure on already weak commodity prices and resulted in a revaluation of the Yuan which is linked to the American currency.

At the March 2016 G20 Shanghai Summit, the leading economies recognised the stresses. There are suggestions that there was agreement to lower the value of the dollar. Between January and July 2016, the US dollar declined by around 5 per cent. But the accord, if there was one, unravelled quickly. At the G7 Finance Minister’s Meeting in May 2016, Japan clashed with the US on the issue of currency valuation. The dollar’s fall reversed, exposing problems for the US and global economy.

The war is entering a more dangerous phase. Gold, which now functions as a de facto currency, has risen in value anticipating the currency crisis which appears increasingly unavoidable.

Japan and Europe are likely to further ease monetary policy weakening their currencies to address the lack of growth and low inflation. For Europe, the immediate effect of the Brexit decision and the depreciation of the pound is an additional consideration. China needs to devalue to help manage a slowing economy, property bubble, industrial overcapacity, fragile banking system and export-dependent, debt-based economic model.

Policy makers risk losing control. A falling Yen or Euro could force China to retaliate by devaluing the Yuan significantly. Other countries, especially in Asia where currencies are directly or indirectly pegged to the dollar, are likely to be forced to take measures to counter the effects of the stronger US dollar and a loss of competitiveness against the Euro, Yen or Yuan.

The currency wars will spill over into interest rate markets. Central banks globally will be forced into accommodative monetary policies to avoid large capital inflows seeking higher returns pushing up the currency. Sharp falls in interest rates anticipates this trajectory.

Low rates will increase risk in already over-valued asset markets. They will be reinforced by deflationary pressures as countries, such as China, with excess production capacity undercut competitors. Political responses, such as a declaration by the US of Europe, Japan and China as currency manipulators or reporting countries to the WTO for violation of dumping rules, will add a geo-political dimension.

In foreign exchange wars as in military versions, there are no winners. A weaker dollar means that the rest of the world loses. Japan and the Euro zone benefit from a stronger dollar but the US loses. At the same time if the Euro and Yen weaken, then as the dollar rises China loses because the Yuan appreciates. If a country lowers rates to weaken their currency to improve export competitiveness, there is a risk of capital flight, which may weaken the domestic economy. If a country takes no action and their currency appreciates due to aggressive measures from competing nations, then exports suffer as competitors gain market share. It will end, as it does always, in stalemate with major casualties on all sides.

Sunday 4 September 2016

The BBC’s fixation on ‘balance’ skews the truth

Catherine Bennett in The Guardian

As any young Earth creationist will confirm, the BBC occasionally fails in its objective of due impartiality. Only last week, it reported on a fossil find in Greenland, without bothering to balance this with a contribution from a fundamentalist Christian, such as Trump’s running mate, Mike Pence.

If the US might seem like a long way to go for comment, the BBC’s referendum coverage demonstrated that, when balance is at stake, a contributor’s passion can be quite as compelling a qualification as his or her expertise, reputation or, even, connection with the subject under discussion. Moreover, Pence has a long acquaintance with creationism.

It was never clear, at least to this listener, why Steve Hilton, a US resident who once fell out with the last prime minister, became one of the anti-EU stars of the BBC’s Brexit coverage, to the point of assisting with analysis on referendum night. But in line with BBC impartiality guidelines that are enforced, arguably to the point of misrepresentation, when the corporation feels threatened, he was no doubt balanced by a yet more embittered – but pro-Remain – ex-Cameron adviser with a similarly touristic stake in the outcome.

To be fair to Mr Hilton, he could hardly be blamed for embracing a dazzling career in EU punditry when the BBC pressed it upon him, nor was his inexplicable prominence the most bizarre or regrettable aspect of the coverage which, according to polling by the Electoral Reform Society (ERS), played the biggest part in the referendum in keeping the British public informed. Throughout a debate the ERS describes as “dire”, the BBC was the source of information most commonly cited as important. The final level of public understanding, after a four-month campaign, is well illustrated, says its new report, by the great spike on 24 June in the number of people googling “What is the EU?” “We would argue,” say the authors, “that the levels of knowledge reported by members of the public were too low throughout.” This, despite demonstrably high levels of public interest and lavish airtime for the individuals they describe as “big beasts”.

Among their recommendations for better informed plebiscites, as referendums become more commonplace, are longer campaign periods and an independent body empowered to correct misleading statements such as the untruth – holy writ according to Gisela Stuart, Michael Gove and Boris Johnson – that Britain sends a weekly £350m to the EU. Further public understanding might be achieved, it says, if broadcasters attempted more “deliberative” as opposed to tit-for-tat coverage of the type that infuriated complainants to the BBC’s Feedback programme long before they could be written off as sore losers.

If there are pointed lessons here for some BBC programme-makers, who must bear partial responsibility for the final level of public bafflement, maybe they shouldn’t be blamed for submitting to management orders, issued when the now forgotten escort fan and culture secretary, John Whittingdale, was emitting worrying noises. The EU referendum guidelines effectively ordained that BBC coverage would adhere, in the aim of impartiality, to traditional, binary practices, despite this being a non-party political debate to which any number of non-affiliated, non big beasts might have more insights to contribute than Westminster’s in-fighters. In Johnson’s case, these amounted to: “We export French knickers to France... Are the French really going to put tariffs on our French knickers when we buy so much of their cheese and their champagne? Of course they’re not!”

Questioned about the many, normally respected authorities whose research indicated more problematic economic outcomes, Johnson’s ally, Gove, urged voters to shun the Nobel laureates’ paperwork. “We have to be careful about historical comparisons, but Albert Einstein during the 1930s was denounced by the German authorities for being wrong and his theories were denounced and one of the reasons of course he was denounced was because he was Jewish. They got 100 German scientists in the pay of the government to say that he was wrong and Einstein said, ‘Look, if I was wrong, one would have been enough.’”

“For me,” writes Professor John van Reenen, formerly of the LSE, now at MIT and one of the economists thus likened by Gove to an antisemitic, government-owned Nazi, “it simply capped off a frankly disgusting campaign, one where the Leave side simply impugned the motives of ‘the experts’ rather than seriously engaging with the substance of the economic debate.”

But the Leave side might not have got away with this ugliness, nor Remain with prattling about imminent apocalypse, had not the BBC, as well as enabling an often asinine level of argument, allowed its obsession with balance to dictate that any carefully argued observation on Brexit, deserving of analysis, be promptly followed by its formal opponent’s unsubstantiated bluster.
Similarly, no more attention would be devoted to a striking near-consensus of economic opinion than to its negation by a speaker representing a groupuscule of eight. Admittedly, this was tough on the eight. Professor Patrick Minford was working hours to which no elderly economist should be subjected. But that’s just one of the costs of the BBC’s “regulated equivocation”, as its critics call a habit that has previously embarrassed the corporation when applied to climate change and the MMR. Until recently, it considered the climate change denier Nigel Lawson as fine a match for peer-reviewed research as it now believes him a trusted guarantor of post-Brexit glories, possibly forgetting his earlier history of shadowing the deutschmark.

In his 2011 report on BBC science coverage, the geneticist Professor Steve Jones criticised the “over-rigid” insistence on due impartiality that could give “undue attention to marginal opinion”. But once again, in referendum coverage, the corporation actively required its journalists to supply this phony balance, even when that meant, as Jones put it on science, allowing rhetoric – say Gove’s “hostages” in a car – “to give the appearance of debate”.

As with climate change, implicit in extreme BBC impartiality is a distinctly un-BBC like, post-truth proposal that, since all opinions merit equal coverage, the public might as well give up on evidence-based argument. So much was plainly stated by Today’s Nick Robinson when he assured voters who were, in huge numbers, seeking information from the BBC that the debate was all “claims and counterclaims”, “guesswork”. “No journalist,” he declared, “no pundit, no expert can resolve these questions for you.” Whether the imaginary £350m claimed by Johnson and Gove would ever be imaginarily spent on the NHS was not, it presumably followed, a lie for the BBC to repeatedly expose, but “a matter of judgment”.

Whichever side you were on, the BBC’s coverage was not, as the ERS is not the first to point out, such as to create unalloyed confidence in the outcome. Even the winners would discover, shortly after voting, that one big beast (Gove) had never meant it about the NHS’s £350m; that another (Hannan) saw no connection with reduced immigration. That ERS idea, the official fact checker, has already been derided as a “stuck-up quango”. But would the ERS be asking if the BBC had done its job?

Friday 2 September 2016

The trouble with philanthropy is that money can't buy equality

Courtney Martin in The Guardian

I spent Saturday morning at the public library with my 2.5-year-old daughter. She sat in the centre of a multi-racial, multi-lingual group of toddlers, spread her arms out as wide as they would go, and screamed: “He turned into a beautiful butterfly!” at the end of the consummate classic, The Very Hungry Caterpillar. The parents and grandparents giggled at the collective exuberance of little ones. The kids’ insanely spongy brains soaked up the sea of words surrounding them.

This may sound like a mundane scene, but it’s a surprising triumph for philanthropic equity – one of the few that exists at a meaningful, functional scale in our increasingly unequal country. At a time when early childhood has exploded as a lucrative market opportunity, no money is exchanged at the nation’s public libraries.

Why? Because in the 1850s, a wealthy guy invited a poor, 13-year-old immigrant boy to spend Saturday afternoons at his private library in Pittsburgh.

That boy grew up to be steel magnate Andrew Carnegie. Carnegie rememberedthat, as a child, “I resolved, if wealth ever came to me, that it should be used to establish free libraries.” True to his word, Carnegie’s funding built about half of the 3,500 public libraries that existed by 1920.

Philanthropy has come a long way since the “Patron Saint of Libraries” took a childhood experience and turned it into a national legacy. Too often, it feels like we’ve lost our core wisdom about how change actually happens.

As they say, money can’t buy love. It can’t, ultimately, buy equity either. Both start with the seed of relationship.

There would be no three-year-old black kid in Oakland screaming hungry caterpillar exuberance without Andrew Carnegie. And there would no Andrew Carnegie without that Pittsburgh bibliophile.

So what does this mean for philanthropy? It means that the only philanthropy worth engaging in – both ethically and strategically speaking – is the kind that honours the wisdom of relationships and the power of money.

In what organiser and human rights activist Ella Baker deemed the “foundation complex” in 1963, those with money usually call the shots. Typically, a foundation positions itself as the expert and judges the merits of a nonprofit to solve a particular problem, whether it’s childhood hunger, or deforestation, or homelessness.



A girl stamping her own book at the old Aberystwyth Carnegie-funded public library, Wales. Photograph: Keith Morris/Alamy

I’ve been on the phone myself, scrambling to feel worthy of a foundation officer’s attention and money; nothing has inflicted me with a more toxic form of impostor syndrome. The questions foundation representatives ask, like those little bubbles on a standardised test, seem to pop up one after the other. With each one, I feel my breath get shallow. I’m feverishly tap-dancing when what I want to be doing is have good faith, meaningful conversation.

With individual donors, the hierarchy is often softened with social graces – a cup of coffee, a chat about shared passions, the scent of camaraderie – but ultimately the power dynamic is no different. One of us has the means and therefore is in the position of judging the other’s “good works”. In some ways, these interactions can be even more demoralising because they are deeply confusing; sometimes it can feel like you are performing friendship.

In the midst of particularly demoralising experiences with wealthy philanthropists, I have often reminded myself of my own privilege – a white woman from an upper-middle-class background with an Ivy League degree. If these interactions make me feel this way, imagine how confusing and alienating they likely are for people even further afield of the social class of most philanthropists.

A note about philanthropists’ demographics: three-fourths of foundations’ full-time staff are white and nearly 90% are over 30. Women flourish at smaller foundations – about three of four fundraisers are female – but at those with assets of more than $750m, women comprise only 28.9% of CEOs and CGOs (chief growth officers).

Board leadership is even more demographically starved. “Fully 85% of foundation board members are white, while just 7% are African American and only 4% are Hispanic,” said Gara LaMarche, president of the Democracy Alliance. “Nearly three-quarters of foundations have no written policy on board diversity, and fewer than 10% of board members are under 40.”

This means a lot of people who are not white, male and older are hustling their asses off to understand the sensibility of those who are. They are spending energy being tactical about how they talk about their work and build relationships, however transactional or tokenising. I admire their commitment and acuity, but even if some get good at translating and tap-dancing for dollars, that should not comfort the philanthropic world about its own inclusivity or transparency.

It only means that some people are willing to put in the work to get good at the game, not that the game isn’t profoundly rigged or that it doesn’t distract from getting real work done.

And the truth is, I imagine it’s a disconcerting experience for most philanthropists, too. On some level, they must know that they’re not the wisest authorities on the issues they’re seeking to effect. Money doesn’t make you an expert on poverty alleviation; in fact, it can make you dumber with distance. And yet, traditional philanthropy is set up to put you – the one with financial wealth – in the position of playing god with something you deeply care about. Even if it strokes your ego to be the decider, it’s got to erode your sense of integrity.

How can we reinvent philanthropy with an eye toward true equity? How can we create new cultures and structures that allow resources – financial, experiential, energetic – to flow in ways that feel dignifying? How do we create paradigm-shifting shit together, not just send LinkedIn requests and push money and paper around?

One obvious thing we can do is work to change the demographics of those giving away money and sitting on boards. But even that isn’t a fix; it’s a good bet to slowly shift culture, but not a promise of radical restructuring. There has been a slight uptick in black executives at foundations, for example, but as soon as they arrive, many are looking for an out, according to the Association of Black Foundation Executives. They overwhelmingly cite as their reason for fleeing that they want to be “more directly engaged in creating community change.” Duh.

If we really want to reinvent philanthropy then we are going to have to look at the underlying historic and structural causes of poverty and work to dismantle them and put new systems in their place. It’s also about culture – intentionally creating boundary-bashing friendships, learning to ask better, more generous questions, taking up less space.

It’s about what we are willing to acknowledge about the origins of our own wealth and privilege. It’s about reclaiming values that privilege often robs us of: first and foremost, humility. But also trust in the ingenuity and goodness of other people, particularly those without financial wealth. And a more accurate sense of proportion – where and how are philanthropists really most crucial in the fight for a more just society?

Several groups are working to show us what this kind of giving might look like. An example: a group of trust fund kids, calling themselves the Gulf South Allied Funders, took their own inheritances, raised even more money from their own networks and then donated the sum to the Twenty-First Century Foundation, which has a long-standing presence in New Orleans. In the wake of Hurricane Katrina, they acknowledged their unfamiliarity with the community, and decided to funnel their resources to someone who could make a bigger difference.


Emergency response team volunteers clean up debris from a home destroyed by Hurricane Katrina. Photograph: Mark Humphrey/AP

Another: poor families in Boston and Detroit and Fresno track data about their own strengths and goals and then come together on a regular basis to talk about what they’re learning and the kinds of support they need. The families provide the moral support, while Family Independence Initiative provides the financial support in the form of scholarships, small business grants and other capital, on an as-needed basis.

And another: Self-Help, a family of nonprofit credit unions in North Carolina, California, and Florida, counter predatory lenders and high-fee check cashers in underserved communities by providing low-interest banking and loan services, financing community development projects and rehabilitating historic buildings with local partners. They celebrate the ways in which their current banking structure is significantly imprinted with the historic intelligence of African-American credit unions so critical during the Jim Crow era.

What makes these different than the average “foundation complex” experience? They have authentic, trusting relationships at the centre. They acknowledge history and local context. They walk their talk – moving beyond radical theory to radical practice.

To their credit, many of the world’s most powerful donors have begun to question the ethical underpinnings and best practicesof status quo philanthropy. In 2013,Peter Buffett, chairman of the NoVo Foundation, wrote a manifesto that, at its essence, was a call for more structural consciousness and less cognitive dissonance among wealthy altruists: “Because of who my father is, I’ve been able to occupy some seats I never expected to sit in. Inside any important philanthropy meeting, you witness heads of state meeting with investment managers and corporate leaders. All are searching for answers with their right hand to problems that others in the room have created with their left.”

More recently, Darren Walker, the President of the Ford Foundation, has called fora “new ‘gospel of wealth’ for the 21st century” – one that addresses “the underlying causes that perpetuate human suffering. In other words, philanthropy can no longer grapple simply with what is happening in the world, but also withhow and why.”

The shift in zeitgeist is promising. A critical mass of people working within philanthropy is hungry to do work with more ethical rigor; more systemic, cultural, and emotional intelligence; less bureaucracy and hubris. There is a growing conversation about these shifts. On paper, the will is there.

But philanthropists need more than “big ideas” about how their profession could and should change. They need radically new habits or these ideas just become bold in theory.

As Vu Le, the Executive Director of Rainier Valley Corps, points out: “True Equity takes time, energy, and thoughtfulness. It requires us to reexamine everything we know and change systems and practices that we have been using for hundreds of years. This is often painful and uncomfortable.”

In part, this is about scale. Philanthropists must push themselves to give more, and in particular, give more to address American poverty. Only 12% of total giving in 2015 went to “human services,” according to Giving USA. Wealthy donors are more likely to support the arts and higher education and less likely to give to social service charities, according to the Chronicle of Philanthropy. And they’re not as generous as those with less income: “The wealthiest Americans – those who earned $200,000 or more – reduced the share of income they gave to charity by 4.6% from 2006 to 2012. Meanwhile, Americans who earned less than $100,000 chipped in 4.5% more of their income during the same time period.”


In 2014, the poverty rate in the US reached 15%. Photograph: Spencer Platt/Getty Images



How and where do you meet potential grantees?

If you don’t have genuine relationships with those outside of your racial or class category, you’re going to have a hell of a time finding out about the most interesting, powerful work going on to tackle poverty.

How do you approach general operating funds or capital campaigns?

Have you ever noticed that foundations feel justified in spending millions on beautifully designed headquarters, but frown on nonprofits using money to spend a fraction of that on dignifying spaces of their own? Poor people, and those that partner with them, deserve fair salaries and beauty, too.

How can grant reporting be redesigned so it doesn’t create such huge frustration and a misuse of time and energy on the part of grantee organisations?

Human-centered design is so often heralded by foundations these days, but too often their own bureaucracies are filled with soul-deadening detail that is anything but humanising.

Do you build relationships for the long, systemic haul?


Funding also shapes and dictates our work by forcing us to conceptualise our communities as victimsAdjoa Florência Jones de Almeida, The Revolution Will Not Be Funded

Gara LaMarche takes his peers to task for talking big game about sustainability, but then essentially treating grantees like “the right wing would treat single mothers on welfare, imposing strict time limits and cutoffs – the fact is that most sustainability strategies are aimed at helping grantees move from dependency on one foundation to another.”

This may all seem “in the weeds”, but it has a huge impact of the daily lives of those tackling poverty on the ground. How we treat one another every day, as cliched as it may sound, becomes the nature of our relationships, and the nature of our relationships, becomes the nature of our institutions and, ultimately, systems.

Perhaps the most profound question that philanthropists can ask themselves at this ripe time for reinvention is this: what stories do you want or expect grantees to tell you? What stories do you tell about yourself?

Adjoa Florência Jones de Almeida of the Sista II Sista Collective in Brooklyn, NY,wrote in the groundbreaking anthology, The Revolution will not be Funded:

In theory, foundation funding provides us with the ability to do the work – it is supposed to facilitate what we do. But funding also shapes and dictates our work by forcing us to conceptualise our communities as victims. We are forced to talk about our members as being “disadvantaged” and “at risk”, and to highlight what we are doing to prevent them from getting pregnant or taking drugs – even when this is not, in essence, how we see them or the priority for our work.

Six years later, organiser and activist Mia Birdsong, took the TED stage and furthered the paradigm-shifting narrative: “The quarter-truths and limited plot lines have us convinced that poor people are a problem that needs fixing. What if we recognised that what’s working is the people and what’s broken is our approach?”






The story we’ve told about the poor in America, the story that we continue to ask them to tell in order to get funding, is that they’re broken. In fact, we are.

The ultimate irony of the way the philanthropic sector is structured is that it is actually the recipients – people of colour, the working class, women – that may be the most masterful at creating and maintaining long-lasting, catalytic relationships. They are disproportionately poor in terms of dollars and cents, but rich with experience of making a way out of no way and persevering in the face of huge, intractable, sometimes downright exploitative systems. This usually involves relying on friends and extended family, nurturing people’s gifts for the betterment of whole communities and having grace through challenge.

We have an ethical imperative to acknowledge and build new systems around that intelligence. Carnegie’s one ask of the public libraries that he funded, to be built in communities across the country, was that they each be engraved with an image of a rising sun and the words: “Let there be light.”

That light, for him, was present in books, but in truth, it was sparked by an unlikely relationship. Long-lasting change so often is.