Trump says what no other candidate will: the US is no longer exceptional

With his slogan ‘Make America Great Again’, Trump is the first leader of recent times to attack American exceptionalism. In fact, he claims it is the opposite

 

The slogan that changed the trajectory of American political discourse? Only time will tell. Photograph: Matt York/AP


Tom Engelhardt for Tom Dispatch


“Low-energy Jeb”. “Little Marco”. “Lyin’ Ted”. “Crooked Hillary”. Give Donald Trump credit: he has a memorable way with insults. His have a way of etching themselves on the brain. And they’ve garnered media coverage, analysis and commentary almost beyond imagining.

Memorable as they might be however, they won’t be what lasts of Trump’s 2016 election run. That’s surely reserved for a single slogan that will sum up his candidacy when it’s all over (no matter how it ends). He arrived with it on that Trump Tower escalator in the first moments of his campaign, and it now headlines his website, where it’s also emblazoned on an array of products from hats to T-shirts.

President Trump fills world leaders with fear: 'It's gone from funny to really scary'



You already know which line I mean: “Make America Great Again!”

That exclamation point ensures you won’t miss the hyperbolic, Trumpian nature of its promise to return the country to its former glory days. In it lies the essence of his campaign, of what he’s promising his followers and Americans generally – and yet, strangely enough, of all his lines it’s the one most taken for granted, the one that’s been given the least thought and analysis. And that’s a shame, because it represents something new in our American age. The problem, I suspect, is that what first catches the eye is the phrase “make America great” and then, of course, the exclamation point, while the single most important word in the slogan, historically speaking, is barely noted: again.

With that word, Trump crossed a line in American politics that until his escalator moment represented a kind of psychological taboo for politicians of any stripe and of either party, including presidents and potential candidates for that position. He is the first American leader or potential leader of recent times not to feel the need or obligation to insist that the US, the “sole” superpower of Planet Earth, is an “exceptional” nation, an “indispensable” country, or even in an unqualified sense a “great” one. His claim is the opposite: that, at present, America is anything but exceptional, indispensable or great, though he alone could make it “great again”.

In that claim lies a curiosity that, in a court of law, might be considered an admission of guilt. Yes, it says, if one man is allowed to enter the White House in January 2017, this could be a different country, but – and herein lies the originality of the slogan – it is not great now.

Trump, in other words, is the first person to run openly and without apology on a platform of American decline. Think about that for a moment. “Make America Great Again!” is indeed an admission, in the form of a boast.

As he tells his audiences repeatedly, America, the formerly great, is today a punching bag for China, Mexico ... well, you know the pitch. You don’t have to agree with him on the specifics. What’s interesting is the overall vision of a country lacking in its former greatness.

Perhaps a little history of American greatness and presidents (as well as presidential candidates) is in order here.

‘City upon a hill’

John F Kennedy simply assumed America was great. Photograph: Paul Schutzer/Time & Life Pictures/Getty Image

Once upon a time, in a distant America, the words “greatest”, “exceptional” and “indispensable” weren’t part of the political vocabulary.

American presidents didn’t bother to claim any of them for this country, largely because American wealth and global preeminence were so indisputable. We’re talking about the 1950s and early 1960s, the post-second world war and pre-Vietnam “golden” years of American power. Despite a certain hysteria about the supposed dangers of domestic communists, few Americans then doubted the singularly unchallengeable power and greatness of the country. It was such a given, in fact, that it was simply too self-evident for presidents to cite, hail or praise.

So if you look, for instance, at the speeches of John F Kennedy, you won’t find them littered with exceptionals, indispensables or their equivalents.

In a pre-inaugural speech he gave in January 1961 on the kind of government he planned to bring to Washington, for instance, he did cite the birth of a “great republic” and quoted Puritan John Winthrop on the desirability of creating a country that would be “a city upon a hill” to the rest of the world, with all of humanity’s eyes upon us.

In his inaugural address (“Ask not what your country can do for you”) he invoked a kind of unspoken greatness, saying: “We shall pay any price, bear any burden, meet any hardship, support any friend, oppose any foe to assure the survival and the success of liberty.”

It was then common to speak of the US with pride as a “free nation” (as opposed to the “enslaved” ones of the communist bloc) rather than an exceptional one. His only use of “great” was to invoke the US-led and Soviet Union-led blocs as “two great and powerful groups of nations”.

Kennedy could even fall back on a certain modesty in describing the US role in the world (which in those years, from Guatemala to Iran to Cuba, all too often did not carry over into actual policy), saying in one speech: “We must face the fact that the United States is neither omnipotent or omniscient – that we are only 6% of the world’s population – that we cannot impose our will upon the other 94% of mankind – that we cannot right every wrong or reverse each adversity – and that therefore there cannot be an American solution to every world problem.” In that same speech, he typically spoke of America as “a great power” – but not “the greatest power”.

If you didn’t grow up in that era, you may not grasp that none of this in any way implied a lack of national self-esteem. Quite the opposite: it implied a deep and abiding confidence in the overwhelming power and presence of this country, a confidence so unshakeable that there was no need to speak of it.

If you want a pop cultural equivalent for this, consider America’s movie heroes of that time, actors such as John Wayne and Gary Cooper, whose westerns and, in the case of Wayne, war movies were iconic. What’s striking when you look back at them from the present moment is this: while neither of those actors was anything but an imposing figure, they were also remarkably ordinary looking. They were in no way over-muscled, nor were they over-armed in the modern fashion. It was only in the years after the Vietnam war, when the country had absorbed what felt like a grim defeat, been wracked by oppositional movements, riots and assassinations, when a general sense of loss had swept over the polity, that the over-muscled hero, the exceptional killing machine, made the scene. (Think:Rambo.)

Consider this then if you want a definition of decline: when you have to state openly (and repeatedly) what previously had been too obvious to say, you’re heading, as the opinion polls always like to phrase it, in the wrong direction; in other words, once you have to say it, especially in an overemphatic way, you no longer have it.

The Reagan reboot

What better way to attest to America’s greatness than its military might? Photograph: Scott Stewart/AP

That note of defensiveness first crept into the American political lexicon with the unlikeliest of politicians: Ronald Reagan, the man who seemed like the least defensive, most genial guy on the planet. On this subject at least, think of him as Trumpian before the advent of the Donald, or at least as the man who (thanks to his ad writers) invented the political use of the word “again”. It was, after all, employed in 1984 in the seminal ad of his political run for a second term in office. While that bucolic-looking TV commercial was titled “Prouder, Stronger, Better”, its first line ever so memorably went: “It’s morning again in America.” (“Why would we ever want to return to where we were less than four short years ago?”)

Think of this as part of a post-Vietnam Reagan reboot, a time when the US in Rambo-esque fashion was quite literally muscling up and over-arming in a major way. Reagan presided over “the biggest peacetime defense build-up in history” against what, referencing Star Wars, he called an “evil empire” – the Soviet Union. In those years he also worked to rid the country of what was then termed “the Vietnam syndrome” in part by rebranding that war a “noble cause”.

In a time when loss and decline were much on American minds, he dismissed them both, even as he set the country on a path toward the present moment of 1% dysfunction in a country that no longer invests fully in its own infrastructure, whose wages are stagnant, whose poor are a growth industry, whose wealth now flows eternally upward in a political environment awash in the money of the ultra-wealthy, and whose over-armed military continues to pursue a path of endless failure in the greater Middle East.

Reagan, who spoke directly about American declinist thinking in his time – “Let’s reject the nonsense that America is doomed to decline” – was hardly shy about his superlatives when it came to this country. He didn’t hesitate to re-channel classic American rhetoric, ranging from Winthop’s “shining city upon a hill” (perhaps cribbed from Kennedy) in his farewell address to Lincoln-esque (“the last best hope of man on Earth”) invocations such as “here in the heartland of America lives the hope of the world” or “in a world wracked by hatred, economic crisis and political tension, America remains mankind’s best hope”.

And yet in the 1980s there were still limits to what needed to be said about America. Surveying the planet, you didn’t yet have to refer to us as the “greatest” country of all or as the planet’s sole truly “exceptional” country. Think of such repeated superlatives of our own moment as defensive markers on the declinist slope. The now commonplace adjective “indispensable” as a stand-in for American greatness globally, for instance, didn’t even arrive until Bill Clinton’s secretary of state, Madeleine Albright, began using it in 1996.

It only became an indispensable part of the rhetorical arsenal of American politicians, from Barack Obama on down, a decade into the 21st century, when the country’s eerie dispensability (unless you were a junkie for failed states and regional chaos) became ever more apparent.

As for the US being the planet’s “exceptional” nation, a phrase that now seems indelibly part of the American grain and that no president or presidential candidate avoids, it’s surprising how late it entered the lexicon.

As John Gans Jr wrote in the Atlantic in 2011: “Obama has talked more about American exceptionalism than Presidents Reagan, George HW Bush, Bill Clinton, and George W Bush combined: a search on UC Santa Barbara’s exhaustive presidential records library finds that no president from 1981 to today uttered the phrase ‘American exceptionalism’ except Obama.”

Barack Obama: the only president to use the term ‘American exceptionalism’, according to research. Photograph: Rex Features

As US News’s Robert Schlesinger has also noted, “American exceptionalism” is not a traditional part of the presidential vocabulary. According to his search of public records, Obama is the only president in 82 years to use the term.

And yet in recent years it has become a commonplace of Republicans and Democrats alike. As the country has become politically shakier, the rhetoric about its greatness has only escalated in an American version of “the lady doth protest too much”. Such descriptors have become the political equivalent of litmus tests: you couldn’t be president or much of anything else without eternally testifying to your unwavering belief in American greatness.

This, of course, is the line that Trump crossed in a curiously unnoticed fashion in this election campaign. He did so by initially upping the rhetorical ante, adding that exclamation point (which even Reagan avoided). Yet in the process of being more patriotically correct than thou, he somehow also waded straight into American decline so bluntly that his own audience could hardly miss it – even if his critics did.

Think of it as an irony, if you wish, but in promoting his own rise the ultimate American narcissist has also openly promoted a version of decline to striking numbers of Americans. For his followers, a major political figure has quit with the defensive BS and started saying it the way it is.

Of course, don’t furl the flag or shut down those offshore accounts or start writing the complete history of American decline quite yet. After all, the US still looms “lone” on an ever more chaotic planet. Its wealth remains stunning, its economic clout something to behold, its tycoons the envy of the world, and its military beyond compare when it comes to how much and how destructive, even if not how successful. Still, make no mistake about it – Trump is a harbinger, however bizarre, of a new American century in which this country will indeed no longer be “the greatest” or, for all but a shrinking crew, exceptional.

Mark your calendars: 2016 is the year the US first went public as a declinist power, and for that you can thank Donald (or rather Donald!) Trump.

The magic of Leicester City goes well beyond football

Ed Smith in The Guardian

The Premier League has become a case study in capitalism – which is why this underdog team’s success matters

 

Leicester’s manager Claudio Ranieri celebrates with players at the end of the Premier League game with Swansea City on 24 April. Photograph: Rui Vieira/AP

Saturday 30 April 2016 09.00 BST


Great sport strikes an optimal compromise between excellence and surprise. The pure randomness of throwing dice is never going to draw a crowd. But if the “best” team wins every time, and there is no room for luck and uncertainty, then the drama becomes both boring and depressing. We turn to sport for inspiration and reassurance as well as virtuosity.

Football is inherently good at surprise – one reason it’s the world’s favourite sport. Because the value of an individual goal is so huge (even a run in baseball isn’t as important) luck and unpredictability are hardwired. A shot hitting the post, a single refereeing decision, a goal against the run of play: these allow football to sustain justified faith among underdogs, both on the pitch and in the stands. On any given Saturday, the favourite is less likely to win at football than in any other sport.

The problem, however, is that over the course of a long season, this unpredictability disappears. The same teams keep winning. The rich ones. That’s why the success of Leicester City, who could win the Premier League title this weekend, has breathed fresh life into football.

One telling tribute has come from a segment of principled Arsenal followers. I know several who transferred their allegiance to Leicester, even when their own team still had a shot at the title. Madness? Perhaps. But their logic was in the spirit of Arsenal’s manager, Arsène Wenger. The phrase “financial doping” – the idea that sporting success that has been bought by a super-rich owner is at best semi-legitimate – was first attributed to Wenger in 2005. Leicester stand 17th in the league in terms of wage spending, first by points ranking. By Wenger’s own logic, a Leicester triumph would be more virtuous than victory for his Arsenal.

Not everyone has joined the party. Successes such as Leicester’s, gift-wrapped for screenwriters, inevitably inspire a rationalist backlash. “Debunking” the Leicester miracle has now become a popular intellectual counter-rhythm, as though the romantic bandwagon needs to be kept in check.

The revisionists have proposed that Leicester’s success is about systems, not romance. Leicester have invested in marginal gains, ranging from a pioneering scouting system to rotational fouling, aimed at reducing yellow cards. This savviness, however, doesn’t undermine the story at all: doubtless David had a very elastic sling when he felled Goliath. Besides, we do not have to turn Leicester into saints to marvel at their success.

The Premier League has an especially bad track record at producing improbable title winners. In its 23 seasons, it has coughed up only five champions – with the four giants of Arsenal, Manchester United, Chelsea and Manchester City sharing 22 titles, and a single triumph for Blackburn Rovers (even that victory was powered by an injection of cash).

The league’s first two decades were dominated by successive duopolies (Manchester United and Arsenal, then Manchester United and Chelsea), so much so that England’s top tier was less like a sports league and more like the Oxford-Cambridge boat race. Once, while I was giving a speech about competitive equipoise in sport, I read out the successive winners of the Premier League: one, then the other, then the first one again, then the other one. It became so repetitive that it felt only marginally different from saying “Oxford, Cambridge, Cambridge, Oxford.” So while improbable things certainly do happen, they have proved remarkably reluctant to happen inside English football.

The idea of an establishment, or at least the dominance of entrenched interests, has become the prevailing theme of our times. It is a slippery concept and often mishandled, but sport has done little to undercut the gloomy narrative of the top 1% greedily carving up the booty. There is an 89% correlation between wage spending and league position, as Simon Kuper and Stefan Szymanski identified. Put differently: financial doping works.

A connected point is the burgeoning influence of possessing a glamorous sporting history. It is reputation that drives the club’s brand, magnifying its financial clout. Super-clubs such as the New York Yankees or Manchester United support Thomas Piketty’s theory of capital: they are able to exploit past successes to ensure they keep a grip on present advantages. The sale of Yankees baseball caps is remarkably resilient, even when the team is having a bad season – which inevitably reduces the probability of bad seasons happening. Owning history in sport is like owning London property: you’re pretty much made.

Sport’s embrace of ultra-professionalism has created new ways for money to express an advantage. In the late 1970s Brian Clough’s tactical and psychological skills made Nottingham Forest champions of Europe. Since then, rich teams have benefited from the new layers of professionalism – physiotherapy, prehab and all the rest – making it harder for the enlightened maverick to stand out.

Elite football, in fact, could almost be a case study in late capitalism. The game as now played (loosely analogous with absolute standards of living) has undeniably improved at dizzying speed. In terms of skill, speed and attacking flair, is it easy to forget how much the game has evolved. The greatest leap forward was the proliferation of the yellow card, which gave the attacker the advantage, not the thug in long spikes. A leading commentator told me that when he watches archives of 1970s football, he estimates that half the players would today be sent off for violent fouls.

Yet while the game itself dazzles, the top flight has become an increasingly closed shop. One former footballer, now a leading figure in the sports industry, confided recently: “Each season, I am 1% more in awe of what happens on the pitch. And 1% more disgusted by the industry behind it.” Football has delivered magnificently as a spectacle, but failed at sport’s version of social mobility. Until now, that is.

And that’s why Leicester’s success matters beyond the game itself. Sport has never been a level playing field, but it does rely on an essential splash of surprise. There is room for some dynastic continuity, but not a rigid caste system. And every now and then in life, just as in football, an outsider has to steal the show.

What actually is antisemitism?

Leftist antisemitism tends not to be about treacherous genes, but the treacherous heart. It links Judaism to Zionism, Zionism to imperialism, and imperialism to global control.


Eric Heinz in The Independent


Simmering tension within the British Labour Party over claims of antisemitism has boiled over. First MP Naz Shah was suspended; now theparty’s former London mayor, Ken Livingstone has joined her. It’s an ideal moment to consider what antisemitism actually is.

Many probably – perhaps secretly – gave up puzzling over antisemitism long ago. They’ve moved on to some other issue, like battery hens, where the oppressors are shamefaced and the victims can’t speak.

The first step towards conquering antisemitism fatigue is to admit that you have the problem. I need to do it every day. Perhaps Shah and Livingstone, and a few others, might do so too. Allow me, if I may, to return to a few basics for deciphering our perennial “Jewish problem”.

Semitic cultures and languages, largely traceable to the Middle East, include both Arabs and Jews. Unsurprisingly, people often bristle at the very phrase “antisemitic”: how dare the Jews act as if they’re the only Semites, let alone accuse Arabs of antisemitism?

Indeed, how dare the Jews even pose as victims of racism, detracting attention from victims of “real” racism? After all, the average European Jew often physically and socially resembles the average indigenous European. So problems with Jews are simply “white on white”.

For more than a millennium a term such as “anti-Jewish” would have made more sense than “antisemitism”. Some Jewish writers still believe it better captures the earlier source of the hostilities, which were often justified in theological terms. The term “antisemitic” kicks in with the Enlightenment, through the rise of race theory and the concomitant racialisation of Jews.

Heart of the matter

By the 19th century, rapidly growing upheavals wrought by market forces propelled the association of Jews with finance and behind-the-scenes control. Of course, Jews had over centuries turned to finance in part due to their rigorous exclusion from other economic activity, and, far more importantly, despite the fact that the overwhelming majority lived in poverty.

Leftist antisemitism tends not to be about treacherous genes, but the treacherous heart. It links Judaism to Zionism, Zionism to imperialism, and imperialism to global control. Of course, many Jews have long pioneered leftist and anti-imperialist politics. When they criticise Israel with fervour, they all too easily become the voice of authenticity, the pure hearts.

Resentment is also commonly expressed at the particular association of the Holocaust with Jews. The death camps, after all, claimed other victims, such as communists, Roma, homosexuals, the disabled, and Christian clergy. Millions of people were slaughtered by Nazi forces throughout Europe.

Of course, anyone who seriously follows Holocaust remembrance knows that Jews have never claimed to be the only victims, and recall others in their commemorations. Nor, contrary to ubiquitous opinion, do Jews “use” the Holocaust to justify their presence in Israel or that state’s controversial military and security measures. To reduce the intricacies of the Arab-Israeli conflict to such a simplistic formula is an act of epic reductionism.

Still, the distinctness of a particularly Jewish Holocaust runs far deeper.

Nazi doctrine of course vilified many humans they deemed to fall short of some fantasy Aryan ideal. Other groups were at times portrayed as useless or defective, but Jews were singled out as the signal enemy of all humanity – ironically, the hidden force behind both imperial capitalism and Soviet Bolshevism.

That image of Jews not merely as less-than-human but as the opposite of human, merely racialised, hence modernised, the age-old equating of Judaism with Satan. Even secular Europeans continue to believe de-contextualised appropriations of the maxims “eye for an eye” or “chosen people”. These are turned into opposites of what they originally meant: that Jews ought not to seek justice out of proportion to any wrongdoing done to them, and that God bestows not particular privileges but rather particular duties upon Jews.

Hate crimes

So yes, others were unquestionably brutalised in the Holocaust. But when the citizens of Vienna chose to force a group to its knees to clean the streets it was not any of those other groups. It was Jews. When shop windows were systematically painted in a boycott campaign and then later destroyed, they belonged to Jews. When towns boasted their compliance with Aryanisation, they erected signs advertising themselves “Free of Jews” (Judenrein).

Hitler, in countless speeches and writings rehearsed gripes against any number of groups, but when he dug to the “root” of all those problems he found not them, but Jews. When Nazi tabloid Der Stürmer adopted front-page slogans about Germans’ misfortune, the group causing it was none of those others, but Jews. When a German film about treating cancer included an “educational” animation, it displayed SS-men exterminating not members of any other group, but a tight cluster of grotesequely caricatured Jews.

No apologies

Anyone who denies the outright racialisation of Jews, and antisemitism as full-blown racism, perpetrated not only by Nazis but throughout Europe over centuries, reveals a frightful ignorance about the histories, meanings, and consequences of racism.

When invective like “Nazi” or “apartheid” is then hurled at Jews, often with breathtakingly myopic readings of colonial and post-colonial histories – and yes, even when dissident Jews dramatise their views with such language, however well-meaning may be their intentions – then don’t be surprised that it comes across as antisemitism. Because it is.

When we read daily reports revealing massive new waves of antisemitism by educated and influential people, tidied up with “apologies” (quite frankly, open and candid admissions about what they really do think would serve us all far better than the endless train of “Oops, I didn’t really mean it” fudges), then don’t be surprised that it comes across as antisemitism. Because it is.

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Rs. 29,000Cr Coal Scam: Who are the Real Culprits?

An Economist's Guide to Debating Bhakts

A cheat-sheet for an intellectual argument with the Right. Warning—it's not pithy or witty enough for social media

SHAILESH CHITNIS in Outlook India

 

June 2004, deep in the heart of George Bush's presidency, the Onion, a satirical magazine, ran a story on how America's liberals were suffering from outrage fatigue. The article explained that liberals were overwhelmed with stories of abuses of civil liberties, unchecked military aggression and policies that ran roughshod over the environment. Most liberals were just exhausted from protesting and had decided to take a break. They couldn't sustain their anger anymore. 

Like any good satire, it was funny because it was close to the truth.

India's liberals probably feel the same today. From the mundane to the sublime, every facet of our society is now a cultural battleground. Each week is a new fight, from the meat we eat to the size of our nationalism. The prevalence of social media has only served to amplify differences and harden opinions. If you can't say it in a witty sentence that neatly fits in a Tweet or a Facebook post, it's probably not worth saying.

I've frequently thought of engaging with people who are ardent BJP supporters. But the thought of defending against charges of being a Congress agent or a closet Pakistan supporter (the horror!) makes me keep my opinions to myself.

But what if there was a genuine discussion? What if you were able to get more than 140 characters across? Here's an attempt at imagining an intellectual argument to four assertions frequently trotted out by the right.

(BS = Bhakt says)

[BS]: India needs a strong, authoritarian leader to develop faster. Look at what Singapore and China has achieved.

The idea that a benevolent autocrat can transform a chaotic country into a disciplined economic engine is very seductive. Unfortunately it has no basis in fact. Data shows that autocracy is a gamble, the country could be governed by a Lee Kuan Yew or a Mugabe.

The economist William Easterly has shown that the chances for the latter scenario are much higher. He measured countries that had experienced big growth success and failure over a forty year period. Easterly found that the probability of sustained high growth under an autocracy are only 10 per cent, it's more likely that the country implodes or experiences sluggish growth. Democracy doesn't yield spectacular gains either, but it does limit the chances of total failures. Human fallibility assures that more centralised societies will have more volatile performances.

Given our history with leaders who experienced total power, we are better-off taking our chances in an imperfect democracy than a perfect autocracy.

[BS]: The minorities (i.e. Muslims) have been coddled for too long

This is an easy claim to refute. Successive government and independent agencies have found that the socio-economic indicators of Muslims are the lowest among all groups, only marginally better than SC/STs. The poverty rate among urban Muslims is 38 per cent compared to national average of 23 per cent. Only 24 per cent of Muslims complete high school, against a national average of 43 per cent.

It's not just human development indicators. A recent study found that even though Muslims constitute 13 per cent of the population, only 2.6 per
cent are senior executives at BSE 500 companies. And in the last 2 years, Muslims got only 2 per cent of the priority loans from public sector banks. What the statistics mask is that the dismal state of Muslims in India isn't a recent phenomenon. It reflects a steady decline since the country's independence relative to all other groups.

In light of these numbers, it's entirely fair to ask why aren't the country's Muslims angrier?

[BS]: Why can't they just respect the wishes of the majority?

This argument rests on the utilitarian idea of the greatest good for the greatest number of people. If a certain policy brings happiness to 80 per cent of the population, but leaves the rest 20 per cent worse-off, surely the society as a whole is better off. But this view isn't compatible with protecting everyone's rights.

The philosopher John Rawls proposed a fairer way to decide on justice and rights. He suggested that before deciding any rules, members of a society stand behind a veil of ignorance. Behind this veil no one knows their class, gender, race, wealth, religion or any other detail that gives them a hint of their place in society. The laws that this group decides will, by its very nature, be just and equal. Since no one knows their position in society once the veil is lifted, they'd want to make sure they were protected.

Rawls' veil is a thought experiment of course, but it does seek to illustrate the fallacy of using majority to determine rights.

[BS]: Reform takes time; it'll take time to see the results

On this issue, the Bhakt has a point. The pass-through benefits from structural reforms take time. India's growth rate surged in the 80s, with the loosening of a few regulations. But the big reforms of the 90s didn't lead to a corresponding burst of growth in that decade.

The economist, Arvind Virmani, has found a J-shaped growth curve. Following structural reforms, growth initially falls and then begins to rise. In the 90s, the removal of import restrictions and currency volatility were a shock to the protected industries, resulting in lower productivity. As firms learned to cope and then benefit from the new technologies, output improved dramatically from the 2000s.

But as we complete two years of the Modi government, we have yet to witness any meaningful reforms — no GST bill, no significant disinvestment of PSUs and no major labour market reforms. We aren't at the bottom of any J-curve, nor should we expect a growth spurt a few years later.

[You ask] While on the economy, it's a good idea to pose the paradox of BJPs economic ideology. Narendra Modi is a self-professed free-marketer, who believes in less government. Free markets are open; open to capital, open to ideas. And yet, the RSS continues to espouse the glories of Swadeshi economics that seeks Indian solutions to Indian problems. How can Mr. Modi reconcile such opposing views?
Now observe how the BJP defenders try to square their love of the "Gujarat model" with their fealty to the RSS.

If you have made it this far without being called sickular, AAP-tard or any such pejorative, stop and congratulate your Bhakt. You are speaking with a right-wing supporter who is respectful and is confident in their views. A rare species. May their tribe grow.

Next, pinch yourself to interrupt your musings. A discussion like this can only happen in your imagination.

Tony Blair: the former PM for hire

Randeep Ramesh in The Guardian


Emails show oil firm questioned complex structure of Blair’s company, and reveal his closeness to Chinese leadership


 

Tony Blair meets China’s then vice-premier, now premier, Li Keqiang in Beijing in 2011. Photograph: Rex/Shutterstock



When Jonathan Powell, the gatekeeper to the corporate empire of Tony Blair, sat down to lunch with the former Saudi intelligence chief Prince Faisal Al Turki in June 2010 he could not have known how lucrative it would turn out to be for the former British prime minister.

As the high-profile mediator of the stuttering peace process in the Israeli-Palestinian conflict, Blair had to be careful not to mix business with pleasure. However, one of those lunching with Powell at the annual “global mediator’s retreat”, organised by the Norwegian Ministry of Foreign Affairs, was looking to make a deal.
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Bird and Fortune on Blair's socialism

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Nawaf Obaid, a security analyst who accompanied Prince Faisal, emailed Powell a week later, according to documents seen by the Guardian, with a suggestion to work with his brother Tarek’s company, PetroSaudi, which he “co-founded and co-owns with Prince Turki bin Abdullah, son of King Abdullah”.

“They have several projects that [they] are working [on] and I think it would [give] a very interesting perspective to see if we could establish a strategic partnership with former PM Tony Blair and yourself,” he wrote.

 

Tarek Obaid

Tarek Obaid was a former banker who styled himself as an adviser to members of the Saudi royal family and a director of a joint venture with Malaysia’s multibillion-dollar development fund, 1MDB. This fund had put $300m through PetroSaudi and as the latter’s chief executive, Obaid was on the lookout for deals.

On paper PetroSaudi looked impressive: its chief investment officer was a former Goldman Sachs banker, Patrick Mahony. The chief operating officer was listed as Rick Haythornthwaite, a City insider who was also chairman of Network Rail and MasterCard.

Blair’s team sold the former prime minister as someone who could help “unlock situations which might otherwise be blocked by political factors” in places such as China and Africa. PetroSaudi was interested in Beijing’s appetite for oil and how Blair’s firm could help.

The role assumed by Blair shows his influence in one of the most important areas of global economic cooperation this century: between the oil sands of the Middle East and hydrocarbon-hungry China.

While in office, Blair oversaw the handover of Hong Kong to China, but visited the latter just five times. His sixth visit in 2007 – when he earned £200,000 for a speech in the industrial city of Dongguan – marked a turning point in how he viewed the rising power.

Since then Blair has been back two dozen times and has built a reputation for befriending the rising stars of Chinese politics. In March 2010 he secured a meeting with Li Keqiang, now China’s premier.

PetroSaudi signed up Blair’s team to lobby Beijing in the summer of 2010 and internal PetroSaudi correspondence reveals there were questions raised about the apparently opaque nature of Blair’s businesses and the role he could play.

Tony Blair courted Chinese leaders for Saudi prince's oil firm



PetroSaudi executives warned in early September 2010 that they had “no contractual nexus with TB” and were anxious about “the lack of apparent employment or other involvement of TB in the corporate structure”.

To convince PetroSaudi that if it paid it would get Blair, his executives revealed for the first time how his complex web of companies worked. Blair’s businesses are split into two wings: Firerush, which was governed by the then City regulator the Financial Services Authority, and Windrush, which was not.

What bothered PetroSaudi was that it was paying roughly $55,000 to Firerush and about $10,000 to Windrush. Both firms trade as Tony Blair Associates (TBA).

From early on in their relationship PetroSaudi executives admitted they knew “very little” about Blair’s firms. In an email in August 2010, the company’s executives said they “would like to understand more about the structure and the relationship between Firerush, TB Associates and TB. In particular, the engagement letter mentions the provision of services by employees of Firerush which seems, like a number of concepts in the engagement letter, inappropriate given we are only looking to engage with TB.”

To allay concerns in November 2010, Varun Chandra, a former Lehman Brothers banker and director of TBA, told PetroSaudi that Blair was the “ultimate owner of all this and owns all the share capital” of all the companies. He told PetroSaudi it was not relevant which company got paid “given where the cash ultimately ends up”.
Chandra explained that Firerush executives handled the day-to-day conversations about “specific opportunities and making the arrangements to drive negotiations forward. Tony, procured by Windrush, is involved at higher level but on an ongoing basis, meeting with senior political leadership and business heads in order to discuss PetroSaudi at a strategic level and to speak highly of your management.”

PetroSaudi, he said, had already seen the benefit as “the man in charge of China’s economic policy is now supportive of working with PetroSaudi, and … he has spoken with CNPC [China National Petroleum Corporation] to ensure a proper working dialogue”.

By November 2010 TBA was hired and, according to the documents, Blair had found time to put PetroSaudi’s case to Lou Jiwei, the then chairman of the China Investment Corporation and now the nation’s finance minister.

 Lou Jiwei, centre, arrives for a G20 finance ministers’ and central bank governors’ meeting at the IMF on 15 April. Photograph: Mandel Ngan/AFP/Getty Images

Questions could be raised about why Blair was allowed to promote the interests of the son of the then ruler of Saudi Arabia in China while also working as the Middle East peace envoy for the Quartet – the US, UN, EU and Russia. Blair had also faced criticism for halting a Serious Fraud Office inquiry in 2006, while prime minister, into alleged corruption over a multibillion-pound arms deal with Saudi Arabia. He denies any conflict of interest.

PetroSaudi had made it clear it wanted to hire Blair. In an internal 2010 document entitled “story for Blair”, PetroSaudi sold itself as a “vehicle of the Saudi royal family” that could count on the “full support from the kingdom’s diplomatic corps” and was set up by Prince Turki bin Abdullah and Obaid, who hailed from a “prominent business family”.

PetroSaudi’s pitch in the document was that it claimed “many countries will get a company in but then bully it around once it is there and has sunk billions of dollars in the ground. This will not happen with [PetroSaudi] because these nations do not want to get on the wrong side of the Saudi royal family.”

But access to the legendary Blair contacts book does not come cheap. In July TBA’s then chief operating officer, Mark Labovitch, emailed Mahony to say he had “discussed your strategy and objectives with Tony and believe strongly that we can add value to PetroSaudi’s business development … We would propose a retainer fee of $100,000 per month.”

The documents reveal that even before Blair’s company was hired, he was already promoting the oil firm. In late July 2010 Blair was in Shanghai to celebrate the planting of 1m trees in north-west China to combat climate change. A few days later, Labovitch emailed the London-based oil firm to say: “Tony has just been in China and informally sounded out a number of people.”

Tarek Obaid and Blair did meet privately in early July 2010, and apparently discussed a working relationship. A month later Blair’s company was on a retainer fee of $65,000 and a “success fee equal to 2%” of any deal that TBA brought to the company – which PetroSaudi admitted could “potentially be a very large sum”.

In the following months a picture emerges of corporate bonhomie underwritten by spiky internal exchanges over the cost of hiring the former prime minister, his apparent obsession with privacy and a whirl of phone calls with global leaders.

By August 2010, according to documents, PetroSaudi raised concerns internally that TBA’s proposed contract was “more appropriate to an investment bank (eg they can record our phone calls)”. In an email, Mahony described the contract offered by Blair’s lieutenants as “a very aggressive first draft with almost total limitation of liability for TB”. He wrote: “I should note that the aggressive starting position of his engagement letter most probably is cynically reliant on counterparties taking a passive approach to secure his services.”

But at the end of the month Blair was in the Chinese capital for the signing of a partnership agreement between Peking University and his Faith Foundation, and managed to squeeze in some time with the Chinese oil giants CNPC and China National Offshore Oil Corporation, as well as China’s supreme economic council, the National Development and Reform Commission.

Tony Blair gives a speech at Peking University in Beijing in 2012. Photograph: China Daily/Reuters

“The latter effectively ‘blessed’ your engagement with Chinese companies, and the former were both very keen to meet you and work out how you might collaborate,” Blair’s then chief operating officer told PetroSaudi. “We clearly articulated the benefits of partnership with you to them, which they grasped immediately.”

In November, Blair was back in Beijing to give a speech for his Faith Foundation. He also had a meeting with China’s vice-premier, Wang Qishan, who Blair’s firm told PetroSaudi was “crucial – inter alia in order to highlight the wider benefits of a partnership with PetroSaudi in terms of putting Chinese companies in pole position for Saudi infrastructure tenders”. Wang is now a member of the Chinese Communist party’s politbureau, the country’s highest decision-making body.

Blair’s relationship with PetroSaudi appeared to give him access to the Saudi elite. In December 2010 an executive of PetroSaudi said the company could arrange a dinner for Blair with Prince Turki. Blair’s office say this never took place.

The next month Blair’s office emailed PetroSaudi because he was keen to meet the King of Saudi Arabia and Prince Bandar, the secretary general of the country’s national security council, before the February 2011 Quartet meeting to discuss Middle East peace after the Egyptian revolution.

Jeremy Hunt doesn’t understand junior doctors. He co-wrote a book on how to dismantle the NHS

Frankie Boyle in The Guardian


The health secretary’s name is so redolent of upper-class brutality he belongs in a Martin Amis book where working-class people are called Dave Rubbish

 

Jeremy Hunt: overtly ridiculous. Photograph: Mark Thomas/Rex Shutterstock




One of the worst things for doctors must be that, after seven years of study and then another decade of continuing professional exams, patients come in telling them they’re wrong after spending 20 minutes on Google. So imagine how doctors must feel about Jeremy Hunt, who hasn’t even had the decency to go on the internet.

Consider how desperate these doctors are: so desperate that they want to talk to Jeremy Hunt. Surely even Hunt’s wife would rather spend a sleepless 72 hours gazing into a cracked open ribcage than talk to him. Hunt won’t speak to the doctors, even though doctors are the people who know how hospitals work. Hunt’s only other job was founding Hotcourses magazine: his areas of expertise are how to bulletpoint a list and make dog grooming look like a viable career change.

Of course, the strikers are saying this is about safety, not pay, as expecting to be paid a decent wage for a difficult and highly skilled job is now considered selfish. Surely expecting someone to work for free while people all around them are dying of cancer is only appropriate for the early stages of The X Factor. Sadly, Tories don’t understand why someone would stay in a job for decency and love when their mother was never around long enough to find out what language the nanny spoke.

The fact that Hunt co-wrote a book about how to dismantle the NHS makes him feel like a broad stroke in a heavy-handed satire. Even the name Jeremy Hunt is so redolent of upper-class brutality that it feels like he belongs in one of those Martin Amis books where working-class people are called things like Dave Rubbish and Billy Darts (No shade, Martin – I’m just a joke writer: I envy real writers, their metaphors and similes taking off into the imagination sky like big birds or something). Indeed, Jeremy Hunt is so overtly ridiculous that he might be best thought of as a sort of rodeo clown, put there simply there to distract the enraged public.

I sympathise a little with Hunt – he was born into military aristocracy, a cousin of the Queen, went to Charterhouse, then Oxford, then into PR: trying to get him to understand the life of an overworked student nurse is like trying to get an Amazonian tree frog to understand the plot of Blade Runner. Hunt doesn’t understand the need to pay doctors – he’s part of a ruling class that doesn’t understand that the desire to cut someone open and rearrange their internal organs can come from a desire to help others, and not just because of insanity caused by hereditary syphilis.

The government believes that death rates are going up because doctors are lazy, rather than because we’ve started making disabled people work on building sites. Indeed, death rates in the NHS are going up, albeit largely among doctors. From the steel mines where child slaves gather surgical steel, all the way up to senior doctors working 36 hours on no sleep, the most healthy people in the NHS are actually the patients. This is before we get to plans for bursaries to be withdrawn from student nurses, so that we’re now essentially asking them to pay to work. Student nurses are essential; not only are they a vital part of staffing hospitals, they’re usually the only people there able to smile at a dying patient without screaming: “TAKE ME WITH YOU!”

The real reason more people die at weekends is that British people have to be really sick to stay in hospital at the weekend, as hospitals tend not to have a bar. We have a fairly low proportion of people who are doctors, don’t plan to invest in training any more, and are too racist to import them. So we’re shuffling around the doctors we do have to the weekend, when not a lot of people are admitted, from the week, when it’s busy. This is part of a conscious strategy to run the service down to a point where privatisation can be sold to the public as a way of improving things.

Naturally, things won’t actually be improved; they’ll be sold to something like Virgin Health. Virgin can’t get the toilets to work on a train from Glasgow to London, so it’s time we encouraged it to branch out into something less challenging like transplant surgery. With the rate the NHS is being privatised, it won’t be long before consultations will be done via Skype with a doctor in Bangalore. Thank God we’re raising a generation who are so comfortable getting naked online. “I’m afraid it looks like you’ve had a stroke. No, my mistake – you’re just buffering.”

When I was little, I was in hospital for a few days. The boy in the next bed was an officious little guy who took me on a tour of the ward. He’d sort of appointed himself as an auxiliary nurse and would help out around the place, tidying up the toys in the playroom, and giving all the nurses a very formal “Good Morning”, which always made me laugh. I got jelly and ice-cream one evening (I’d had my tonsils out) and they brought him some, too. Afterwards, he threw his spoon triumphantly into his plate and laughed till there were tears in his eyes. Then he tidied up and took our plates back to the trolley. What he meant by all this (we’d sit up at night talking and waiting for trains to go by in the distance) is that this was the first place he’d known any real kindness and he wished to return it. For most of us it will be the last place we know kindness. How sad that we have allowed it to fall into the hands of dreadful people who know no compassion at all, not even for themselves.

Jeremy Hunt is a hero for standing up to the BMA bullies

Leo McKinstry in The Telegraph

Today, junior doctors are staging the first ever all-out strike in the history of the NHS. Never can a stoppage have been less justified than this one. In their irresponsible greed and puerile militancy, the strikers are making a complete mockery of the Hippocratic Oath to do no harm. 

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With spectacular double standards, they claim that they oppose the new contract because it is “unsafe for patients”, yet their own selfish industrial action is putting the lives of vulnerable people at risk. They profess their devotion to the publicly funded NHS, then threaten to work in the private sector overseas if the Government refuses their pay demands.
Their sense of entitlement is repugnant. They enjoy salaries, pensions and job security far beyond the dreams of most professionals, while they have been offered an excellent new deal in return for the removal of outdated weekend practices. Yet, suffused with victimhood, they act like oppressed members of the proletariat.

They are only able to get away with this hypocrisy because of their exploitation of public sentimentality towards the NHS. The former Chancellor Nigel Lawson once famously said that the health service is “the nearest thing the English have to a religion.” By cynically posing as the keepers of the holy faith and presenting every attempt at reform as wicked heresy, they have been able to protect their privileges and ruthlessly advance their own interests.

But now they have met a stumbling block in the form of Health Secretary Jeremy Hunt. With his air of reasonableness and quiet, almost deferential manner, Hunt may seem an unlikely figure to challenge union blackmail. But his willingness to take on the reactionary bullies of the BMA shows that he has an inner steel similar to that displayed by Margaret Thatcher when she took on the unions in the 1980s.

In the process, Hunt has taken a tremendous amount of increasingly hysterical abuse. He has been vilified as the enemy of the NHS, a Right-wing extremist, a Nazi and a potential killer. But alongside these savage personal insults, there has also been the persistent complaint that he has somehow “mishandled” the dispute. It is a refrain that is heard not just from Labour politicians and Left-wing commentators, but even, privately, from some of his own MPs and fellow Ministers.

Yet the charge is absurd, for Hunt has shown remarkable patience in his negotiations with the unions. The term “mishandled” is really code for his refusal to surrender to the unions. Effectively, his critics are arguing that he should have caved in at the first sign of trouble from the BMA. That is how most of his predecessors have acted, always desperate to avoid confrontation. So the NHS remains hopelessly unreformed, a gigantic bureaucratic monolith operating more for the convenience of its staff than the real needs of its patients.

No one elected the BMA to decide how the NHS should be run. That should be the job of our democratic politicians. Hunt has a clear mandate from the Conservative victory in 2015 to introduce a proper 7-day-a-week health service, which can only be done through a new contract. If the NHS is to improve, the privileged, picket-line poseurs have to be defeated. Hunt should be praised, not demonised, for taking his heroic stand in this battle. Even if they dislike him now, the British public will ultimately benefit from his courage.

Pakistan Army Accounts - No Audit permitted

 

Accountability without exception Friday Night with Hamid Bashani Ep48 (in Urdu)




History of Pakistan's Foreign Policy - AApas ki Baat with Najam Sethi and Muneeb Farooq

Politician & Military in Pakistan Part II

TTIP is a very bad excuse to vote for Brexit

Nick Dearden in The Guardian

Barack Obama gave TTIP the hard sell, but leaving the EU would only make the controversial trade deal more likely – and possibly worse
 

‘In Berlin, 250,000 people took to the streets last October to protest about TTIP.’ Photograph: Axel Schmidt/Getty Images



Barack Obama’s key message to Europe’s leaders last week was “let’s speed up TTIP”. The US-EU trade deal, formally called the Transatlantic Trade and Investment Partnership, has been mired in controversy on both sides of the Atlantic. The “free trade” agenda has become poison in the US primaries, forcing even pro-trade Hillary Clinton to re-examine TTIP.

The next round of talks begin on Monday in New York and Obama is worried – unless serious progress is made in coming months, his trade legacy may be doomed. The problem for the US president is selling TTIP at the same time as trying to warn against the dangers of Brexit. This is a tough ask because TTIP has been a godsend for Brexit campaigners, who argue that the deal is a major reason to cut loose from Brussels.

It’s true that TTIP is a symbol of all that’s wrong with Europe: dreamed up by corporate lobbyists, TTIP is less about trade and more about giving big business sweeping new powers over our society. It is a blueprint for deregulation and privatisation. As such it makes a good case for Brexit.

Until you remember that the British government has done everything possible to push the most extreme version of TTIP, just as they’ve fought against pretty much every financial regulation, from bankers bonuses to a financial transaction tax. While Germany and France were concerned about TTIP’s corporate court system – which allows foreign business to sue governments for “unfair” laws like putting cigarettes in plain packets – the UK secretly wrote to the European commission president demanding he retain it.

At the heart of TTIP is a radical agenda of deregulation. The ambition is that everything from food standards to financial policies are “standardised” in the US and EU, with big business gaining new powers over the process. This could have been inspired by David Cameron’s own programme of stripping away laws that annoy big business, no matter how important they are for people and the environment.

Cameron’s policy means scrapping two laws for every one brought in and giving every regulatory body the duty to have regard to the desirability of “promoting economic growth”. That could include the equality and human rights commission and the health and safety executive. The TUC described Britain as “exporting their anti-worker position into Europe and it is spreading like a bad outbreak of gastric flu”.

Brexit wouldn’t necessarily stop TTIP anyway – that’s all down to the transition process. At the very least, Britain would need to adopt many of TTIP’s provisions in order to remain in the single market.

But it gets worse: every scenario for Brexit is premised on extreme free trade agreements coupled with looser regulation to make us more competitive. “Outcompeting” the EU through lower standards is the strategy. High-profile supporters of the Brexit campaign have repeatedly said that they believe the UK would be able to realise a more “ambitious” and faster free trade deal if we stood alone. There’s every reason to think that Brexit will turn the UK into a paradise for free market capitalism: a TTIP on steroids.

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What is TTIP and why should we be angry about it?
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Is there any hope? Yes – the movement to defeat TTIP received the support of well over 3 million Europeans in a little over a year. In Berlin, 250,000 people took to the streets last October. The deal was meant to be signed by now – but together, Europe’s people have seriously stalled things. Would it really be possible to stop such a move if we couldn’t link up with campaigners across Europe? If being in the EU has brought us TTIP, it has also brought us the means to stop it.

Europe also allows the potential to take on the corporate power which TTIP symbolises: the biggest threat to our sovereignty. Even in the best of circumstances, there is only so much a small nation state can do against the size and power of global big business. But through being in Europe we could stop tax avoidance, introduce a financial transactions tax, hold corporations legally responsible for their human rights abuses, enforce world-leading climate targets, develop new forms of public ownership of key resources. At least, we could if Britain stopped standing in the way.

Obama’s rationale for avoiding Brexit is quite different. The US establishment has always been interested in Britain’s role as a fifth column in Europe, undermining a social Europe on behalf of global (read US) corporations. Reclaiming our sovereignty means not playing this role, and instead working with those in Europe who want to build a different world. Another Europe is possible.

The things economists know. . . and don’t know about Brexit

Roger Bootle in The Telegraph

Last week we were treated to a fine exhibition of the economist’s art. I refer to the Treasury study of the economic impact of Brexit, which told us that in 15 years’ time, on a central view, the average British household would be worse off by £4,300 a year. This episode has prompted me to think about what it is that economists know – and what they don’t.

It is clear that economists’ prognostications have, at best, a mixed record. Not only can economists not reliably tell you what GDP is going to be in two or three years’ time but, as a group, they seem pretty bad at anticipating major developments.

Although some economists did foresee the financial crisis, as a whole they did not. Nor did most foresee the emergence of a zero inflation/deflation world.

Let me say, though, that of its type, last week’s Treasury document was a fine specimen. A large team of economists has been working on it for the best part of a year, and these are good, professional people who have not simply been doing what they were told by their political bosses. Nevertheless, that doesn’t mean that what they have produced is of serious value. 

The problem with much of economics is that what we can readily measure, even when it is tendentious, is often the minor part of the question. Yet there is a natural tendency to measure what is measurable and to leave to one side, or to downplay, the things that are not.
The Treasury study concentrated on the effects of a Brexit on UK trade and the consequences for GDP and investment on a static “other things equal” basis. It assumed that we would be unable to secure any more favourable trade agreements with non-EU countries.

Interestingly, it did not begin to quantify the possible economic gains from a policy of radical deregulation. The reason is apparently that it is not clear that we would repeal and rescind EU legislation and directives and, in any case, the UK is a relatively lightly-regulated economy. The implication is that there is next to nothing to be gained from deregulation.

This is, to put it mildly, a rather odd stance to take – certainly if you were trying to be fair across all sides of the debate. After all, those economists who think that there is much to be gained economically from leaving the EU tend to rest their case mainly on large potential gains from EU deregulation.

Moreover, umpteen businesses across the country bemoan the costs of regulation on their operations. It is not that their case has been disproved by last week’s study; it has simply been ignored. 

The study, in accordance with convention, took a static approach to how the EU might evolve. True, this excluded some of the potential benefits of remaining in the EU from the extension of the single market. But it also excluded some of the most important negative possibilities.

Once the UK referendum is out of the way, if we vote to stay in, it is likely that the EU will turn quite nasty towards us. This will not only be because the EU’s leaders will be cheesed off with us, although they most certainly will be.

More importantly, they will think that we have shot our bolt. In particular, we would probably find that, far from rejoicing in the City’s role as Europe’s financial centre, the EU would renew its attempts to undermine it.

Meanwhile, the EU would have to embark on truly momentous changes in order to make the eurozone work. Banking union, fiscal union and political union must be put in place for the euro to survive.

We don’t know what effects this cocktail of changes will have upon European politics and economic performance – and hence on us.

The overwhelming majority of the EU will be inside the euro, and what needs to be done to make the euro work would be the EU’s leading concern.

We do not know what things will be forced upon us by qualified majority voting. Moreover, with the referendum behind us, there is a good chance of a renewed push to get the UK into the euro. What have the calculations that produce the figure £4,300 a year got to say about this? The answer, of course, is precisely nothing.

And all this is before we take account of the dynamic effects and their political consequences. Perhaps after a Brexit our leaders would become enmeshed in rivalrous infighting and it would be impossible to put together an economic programme for national renewal.

But there is surely a good chance, as Michael Gove suggested last week, that by contrast EU departure would be the equivalent of a shot in the arm.

Nor did the study have anything to say about the congestion and social costs implied by uncontrolled immigration, which are at the heart of so many people’s concerns about the EU.

Although the future is beset with uncertainty, about this issue we do know some things. We know that over recent decades the EU has been a comparative economic failure.

We know that unless something really radical happens, it is set to fall sharply in relative economic performance over the decades to come. We know that the EU is set to embark on a course of integration from which we aim to stand aside. We know that inside the EU we do not have full control of our destiny.

We know that inside the EU but outside the eurozone we will be marginalised.

I cannot say what all this means in terms of pounds per annum for the UK average household in 15 years’ time. But I can recognise the difference between a situation of opportunity and a pig in a poke.

Stunted growth: the mystery of the UK’s productivity crisis

Duncan Weldon in The Guardian

Without it the future is bleak, but despite a bewildering array of theories for why this key economic driver has dropped there is no clear answer

 

Illustration: Robert G Fresson




Our economic future isn’t what it used to be. In March the Office for Budget Responsibility (OBR) revised down its growth estimates for each of the next five years. The chancellor was quick to blame a weakening world economy but the true driver lies closer to home. The problem isn’t a loud global economic crash but something much quieter: engine trouble. Productivity growth, the long-term motor of rising living standards, is slowing. The fact that this appears to be happening across the globe offers scant consolation.

What’s worse is that no one is entirely sure what is causing the problem or how to fix it. And it is coming at about the worst time imaginable: global demographics are changing, with the supply of new workers set to slow and the older share of the population rising. The future is of course inherently unknowable, but the reasons for longer-term pessimism on economic growth are starting to stack up.

Productivity – the amount of output produced for each hour worked – rose at a fairly steady annual rate of about 2.2% in the UK for decades before the recession. Since the crisis though, that annual growth rate has collapsed to under 0.5%. The OBR has decided to revise down its future assumption on productivity from that pre-crisis 2.2% to a lower 2%. That small revision was enough to give the chancellor a large fiscal headache in his latest budget, but it still assumes a big rebound in productivity growth from its current level. What if that rebound doesn’t come?

The near death of the British steel industry is a tragedy. But for all the political heat it has generated, its long-term consequences wouldn’t be as serious as the wider crisis. For while closing mills are highly visible, slipping productivity is not.

Looking at the global picture shows that while there are of course national nuances, the overall impression is grim and dates back to before the 2008 crash. Everywhere from the “dynamic” United States to “sclerotic” France, productivity growth has dropped considerably in recent years. The UK is an outlier with a bigger fall than many, but not by much.

Some of this could be explained by measurement issues. To use every economist’s favourite example, it is straightforward to measure the inputs, the outputs – and hence the productivity – of a widget factory, even if no one is really sure what a widget is. It is harder to do the same with an online widget brand manager. But the mismeasurement would have to be on an unprecedented scale to explain away the problem.

What we are left with is a bewildering array of theories as to what has driven the fall but no clear answer. We know the productivity slowdown is broad based and happening across most sectors of the economy. Lower corporate and public investment than in the past almost certainly explains some of the shortfall. Weaker labour bargaining power than in previous decades might also be playing a role. Low wages are allowing low-skill, low-productivity business models to expand and deincentivising corporate spending on new kit. Why spend on expensive labour-saving technology when labour itself is cheap?

But if you think you’ve found the full answer, you probably need to read more. There almost certainly isn’t a single explanation. It’s still perfectly possible to argue that productivity pessimism is overdone, that we are still suffering the lingering after-effects of the financial crisis that will eventually end. But with each passing year that becomes more difficult. A good strategy is to hope for the best but prepare for the worst. And the worst is pretty bad.

George Osborne at the Airbus factory in Filton, Bristol. Photograph: Andrew Matthews/PA

Productivity growth is more than just a financial concept, it’s a balm that can soothe class conflicts and take some of the sting out of distributional politics. If a worker’s output rises by 2% without an increase in their hours, then giving that worker a 2% pay rise is relatively straightforward. If their productivity is flat then a 2% pay rise results in either a fall in profits or a rise in prices. A world of lower productivity is a world of more intense fighting over the more meagre divisions of economic growth.

Productivity is one of two key factors determining the trend growth rate of an economy; the speed limit at which a country can expand without pushing up prices. The other is population. Falling birth rates across the advanced economies created a demographic “sweet spot” that lasted from the late 70s until fairly recently. Fewer children meant a rising share of the population was of working age. But fewer children in the past means fewer workers today and rising longevity means a rising share of the population who are retired. Across the west, the amount of workers for each retired person is heading in the wrong direction. Increasing the retirement age and more immigration are both theoretical fixes, but the scale of both required to fundamentally change the picture is almost certainly politically impossible.

Slowing population growth and weaker expected productivity growth have led the US Congressional Budget Office to revise down its estimate of US trend growth from north of 3% in the 1990s and 2000s to closer to 2%. In the UK, policymakers once thought trend growth was 2.75% and have now cut that to 2.2%. Without a productivity bounce that could fall to closer to 1-1.5% in the coming years.

UK's productivity plan is ‘vague collection of existing policies’


Japan is the usual cautionary tale of what happens when growth slows. A country that had a financial bust, made policy mistakes in the aftermath and then experienced an ageing society. But at least productivity growth didn’t collapse. Headline economic growth was weak and the government’s debt burden has soared, but real incomes and employment held up well. Japanese demographic transition at the same time as a productivity crunch is the worrying possibility facing the west.

So what are policymakers to do? They could accept lower growth and concentrate on distribution. Of course the politics of redistribution are much easier when resources are growing. Lower growth also means that the public and private debt piles built up across the west in anticipation of a brighter future would be much harder to deal with. The obvious answer is to increase public investment. This alone wouldn’t solve the productivity crisis but it could help, and certainly wouldn’t hurt. At a time when government borrowing costs are near historical lows this is about as close to a free lunch as economic policy ever gets.

Finding ways to boost corporate investment is trickier, as there isn’t much in the way of direct policy levers open to government. Reforming corporate governance to encourage more long-term decision-making could help. And while economists tend to assume that productivity growth leads to wage growth, there could be circumstances in which the relationship is inverted. The government’s new national living wage may act as a spur to improve productivity as businesses see their cost-base rise.

But if productivity remains low then difficult choices lie ahead. We’ll need either a substantially smaller state with less generous social security, or higher tax revenues as a share of the economy. That means raising the kind of taxes that bring in substantial sums – VAT, national insurance and income tax.

Neither a smaller state nor higher taxes are likely to prove popular. But governing in a lower-growth world was never going to be easy.