Policy can trump unpopularity - A way to solve the EU crises

By Martin Hutchinson

As is well known to readers of this column, it is my considered opinion that economic policy and management reached a global all-time apogee (so far - one can always hope) under the British prime ministership of Robert Banks Jenkinson, Lord Liverpool (prime minister, 1812-27). However Liverpool is generally thought to have had one enormous advantage over modern policymakers in not having to deal with a modern democracy. Unlike modern democratic leaders, he was thus only moderately constrained by his policies' temporary unpopularity.

The Greek crisis has however graphically illustrated that popular resentment at unpalatable economic change is very much as it was in 1812-20, and that policymakers responding to that resentment are at least as insulated from popular feeling as were Liverpool and his government. Unfortunately, unlike Liverpool, they are not using that insulation to good effect.

If the European Union's policy elite had possessed Liverpool's depth of economic understanding, the crisis would have been easily solved, and indeed would not have arisen in the first place. Liverpool would have put Europe onto a gold standard; if he had been thwarted in that he might well have supported the euro but would certainly not have admitted Greece into its membership.

He would immediately have spotted the disgraceful discrimination against the private sector involved in the Basel Committee's zero rating of government debt, a principal cause of the crisis because it has favored bank funding of excessive government deficits over productive lending to the private sector. He would have opposed root and branch governments increasing their deficits through "stimulus" spending, pointing out the superior recession-fighting record produced by his own 1816-19 austerity.

Once the crisis had arisen, Liverpool's solution would have been simple and complete. He would have perceived by a simple analysis of relative productivity that Greece had no hope of solving its problems while it remained a member of the euro. He would thus have forced it to readopt the drachma when the crisis first arose, in spring 2010. Following such re-adoption the drachma would have immediately devalued by about two thirds, taking Greek per capita income down to about $11,000 from the $32,000 at which it stood in 2008.

Naturally a further result would have been a Greek debt default, from which Liverpool would have stood back entirely. If the Greek government wished to bail out its banking system with drachma paper (thereby weakening the drachma further) that would be its choice, but not one cent of German and Swedish taxpayer money would be provided to facilitate this process.

Similarly, Liverpool would have allowed the Irish government to default, as a result of its foolish 2008 attempt to bail out its banking system, and would have given Spain, Italy and Portugal the alternative of leaving the euro or adopting austerity programs rigorous enough to keep them members (those austerity programs would have needed to be less rigorous than Latvia's, but in any case their adoption would have been a matter for the national governments themselves, with neither coercion nor extra resources provided by the EU.)

Should Liverpool's rigorous policies have caused problems in Europe's overleveraged and badly managed banks, Liverpool would not have stopped the European Central Bank from providing resources to eurozone banks, but only on the terms eventually prescribed by Walter Bagehot - short-term loans against first-class security at punitively high interest rates. There would have been no bailouts, as Liverpool, with his knowledge of the 1720 Mississippi and South Sea crashes, would have regarded "too big to fail" as being equivalent to "too big to be allowed to live".

Liverpool's policies would thus have been dictated neither by sentimentality about the inevitable short-term pain his policies would cause, nor by political considerations of their probable unpopularity, but simply by their likelihood of solving the problem in a market-friendly way and thereby allowing economic growth to resume in the Eurozone as a whole. They would have been basically free-market oriented, but not dictated by free trade or other dogma, as were the policies of the free traders a generation later.

By their apparent harshness, they would have made him highly unpopular, yet they would have stopped economic decay in its tracks and would have allowed Europe to rise above the problems of its periphery, while that periphery led productive existences at the lower living standards justified by their modest output potential.

The Liverpool government's attitude to popularity was best expressed not by Liverpool himself but by his colleague Robert Stewart, Lord Castlereagh, who as leader of the House of Commons bore much of the opprobrium for Liverpool's policies. In 1821, after the 1816-19 "double-dip" recession had lifted, he remarked "I am as popular now as I was unpopular formerly, and of the two, unpopularity is the more convenient and gentlemanlike."

Some years ago I wrote a piece quoting Castlereagh and extolling the virtues of unpopular economic policies. The piece was picked up by the Almaty Herald - it was doubtless to the taste of Kazakhstan president (since 1991) Nursultan Nazarbayev, who felt it proved that his economic policies, being unpopular, must therefore be beneficial. I would like to correct any misapprehension: my extolment of unpopularity was not intended to justify every action of Central Asian dictators by suggesting their economic policies must be superior. The unhappy fact that good economic policies are often unpopular does not imply that unpopular economic policies are ipso facto good.

Liverpool would have understood the EU bureaucracy's desire to insulate itself from populism, and would have been intrigued by the ingenuity of some of the mechanisms by which it achieves this insulation. The idea of a permanent appointed secretariat that was only distantly accountable to the electorate would have seemed to him a plausible alternative to the pre-1832 franchise of rotten boroughs, open vote purchase and limited voting rights.

However, he would have scoffed at claims by the EU leaders that their supposed democratic antecedents gave them a moral superiority and would have correctly pointed out that his pre-1832 franchise was far more accountable than the EU bureaucracy, in that it gave considerable weight to public opinion when broadly held over a prolonged period.

In any case, Liverpool would have had no time at all for the policies the insulated EU bureaucracy pursues. He would have regarded its economics as riddled with error, and the mantra that "economists never agree" as a mere excuse to justify that error - he would have pointed out that the members of the average high school algebra class don't agree on the solution to the week's problems, either, but that's because half of them have bungled their calculations.

He would have regarded EU attempts to impose their lifestyle and ideology choices on the people of Europe as appalling tyranny, which would have reminded him most of the fanatical and cruel Jacobins of Maximilien Robespierre, a movement with which he was very familiar. As I remarked above and Liverpool was well aware, insulation from democratic accountability does not necessarily produce good policies, and in the case of the EU apparatchiks it has bred arrogance and corruption.

Whereas the policies and desires of the EU bureaucracy would have appeared strange and repellent to Liverpool, those of the Greek rioters would have been completely recognizable. His ascent to power, after all, coincided with the Luddite anti-machinery riots. The fury of a populace finding unpalatable change imposed on it by economic forces outside its control would have been entirely explicable, as would the even greater fury of a people losing economically unjustified comforts to which they had become accustomed.

Greek prime minister George Papandreou's claim on Thursday that "We are bearing a cross and we are being stoned", with its extreme biblical overtones, would have appeared very similar indeed to the rantings of "Orator" Hunt and his peers.

Perceiving the Greek problem and anticipating the Greek reaction to policies imposed by the EU bureaucracy, Liverpool would have rightly informed German Chancellor Angela Merkel and French President Nicolas Sarkozy that the correct response to such rhetoric and disturbances is firmness, not handouts.

In the Greek case, firmness, ie forcibly restoring the drachma, is perfectly feasible, since the EU authorities are not in reality subject to significant democratic control. Moreover, the economically superior outcome of a firm policy, as with Liverpool's own firmness in 1816-19, would restore tranquility even to the aggrieved Greek populace within a very few years and would preserve economic stability and growth elsewhere.

In this crisis, there is thus no excuse for Europe's leaders not pursuing policies that actually work.

Martin Hutchinson is the author of Great Conservatives (Academica Press, 2005) - details can be found on the website www.greatconservatives.com - and co-author with Professor Kevin Dowd of Alchemists of Loss (Wiley, 2010). Both are now available on Amazon.com, Great Conservatives only in a Kindle edition, Alchemists of Loss in both Kindle and print editions. 

Fundamental point of cricket

Isolated to its most fundamental point, cricket could be described as the duel between a bowler tempting a batsman to drive and a batsman trying to ignore that temptation.

The short, sharp life of 'Chinese century'

By Nick Ottens

If there is to be an Asian century, it won't be China's alone. While it still has hundreds of millions of people living in poverty, the country is losing its cheap labor advantage to East Asian competitors while more industrialized nations in the region are far more receptive to international trade.

The Chinese economy is expected to overtake the United States as the world's largest in sheer size by the middle of this decade but the ruling Communist Party has ample reason to be worried about perpetuating China's impressive growth rates for another generation.

As China's middle class expands in the urban east, it is expecting more than just growth but in the western hinterland, a lack of development and, perhaps even more frustrating to the people there, a lack of political accountability fuels unrest and discontent. The party will be increasingly hard pressed to meet the aspirations of both these peoples. Economic and political openness, as desired in the coastal provinces, would weaken the state's grip on industrial development, which could exacerbate the existing imbalance between cities and countryside.

Chinese labor is already becoming too expensive for some manufacturers who are taking their business to countries as Indonesia and Vietnam while Malaysia, Thailand and Taiwan are more attractive for technology companies that require an educated workforce and a business climate that isn't too burdened by regulatory restrictions and corruption.

Labor laws and tax regimes in the rest of South and Southeast Asia are generally more flexible. These countries welcome international trade and investment whereas China seeks to protect its "infant industries" from free and fair competition on the global market. This policy enables the ruling class in Beijing to build high-speed railways across China but the cost, which is less clear, could be hugely detrimental to its economy in the future.

Foreign investors in China have to cope with laws and regulations that are inconsistently enforced - sometimes arbitrary. The Chinese legal system cannot guarantee the sanctity of contracts, which is vital to a market economy. Capital account transactions are tightly regulated.

This is a system that thrives on cronyism where businesses that are connected with local and state officials prosper and companies that aren't could see their investment go up in smoke when a magistrate determines that factory wages should increase by a third, overnight.

China does attract huge amounts of foreign direct investment. In fact, it takes in every month what India assumes in a year. Yet China grows at a rate just two percentage points faster than India. And even there, corruption is endemic.

At its most recent congress in March of this year, the Communist Party affirmed the need to improve "balanced growth", which should translate into increased welfare spending, including subsidies for farmers and the urban underclass. Western stereotypes notwithstanding, the Chinese state is not sitting on an infinite amount of cash however. It cannot simultaneously build a proper welfare state and allow the subsidizing of companies, especially in real estate, to continue unabated. If it wants to expand social programs and thus prevent civil unrest, it has to challenge vested interest with allies in the party.

With major changes in political leadership expected next year, it may not be until 2013 before a comprehensive social agenda is implemented. That could be two years wasted while necessary economic reforms to further open up China to world markets are delayed.

There is another, less immediate concern that could put a stop to this Chinese century before the world has a chance to recognize that it's living in one.

By the middle of the 21st century, 400 million Chinese will have retired. That's more than America's total projected population by that time. India, which is set to overtake China as the world's most populous nation by 2030, is expected to have nearly 400 million people more in 2050 than China.

How is China going to pay for all these old people? China doesn't have an expansive public pension system, which means that many Chinese in their prime, often without siblings because of their government's "one child" policy, will have to provide not only for their parents but, as life expectancy rises, their grandparents as well. Naturally, wages will have to rise to accommodate this unprecedented level of dependency which can only happen if Chinese labor becomes much more productive and skilled - fast.

The party has to manage this while not only dealing with internal pressure to democratize; it is also expected to finance American and European deficit spending when these continents blame China for its "colonialist" scramble for resources, including water, in Africa and Central Asia - resources it desperately needs to continue to grow; to invest in its future industrial base and to alleviate hundreds of millions of people out of poverty.

If despite this all, China somehow ends as tomorrow's superpower, "owning" the 21st century, that will be quite a feat.

Nick Ottens is an historian from the Netherlands and editor of the transatlantic news and commentary website Atlantic Sentinel. He is also a contributing analyst with the geopolitical and strategic consultancy firm Wikistrat.

The 1% are the very best destroyers of wealth the world has ever seen

Our common treasury in the last 30 years has been captured by industrial psychopaths. That's why we're nearly bankrupt

• 
• • George Monbiot
  • guardian.co.uk, Monday 7 November 2011 20.30 GMT
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Illustration by Daniel Pudles

If wealth was the inevitable result of hard work and enterprise, every woman in Africa would be a millionaire. The claims that the ultra-rich 1% make for themselves – that they are possessed of unique intelligence or creativity or drive – are examples of the self-attribution fallacy. This means crediting yourself with outcomes for which you weren't responsible. Many of those who are rich today got there because they were able to capture certain jobs. This capture owes less to talent and intelligence than to a combination of the ruthless exploitation of others and accidents of birth, as such jobs are taken disproportionately by people born in certain places and into certain classes.

The findings of the psychologist Daniel Kahneman, winner of a Nobel economics prize, are devastating to the beliefs that financial high-fliers entertain about themselves. He discovered that their apparent success is a cognitive illusion. For example, he studied the results achieved by 25 wealth advisers across eight years. He found that the consistency of their performance was zero. "The results resembled what you would expect from a dice-rolling contest, not a game of skill." Those who received the biggest bonuses had simply got lucky.

Such results have been widely replicated. They show that traders and fund managers throughout Wall Street receive their massive remuneration for doing no better than would a chimpanzee flipping a coin. When Kahneman tried to point this out, they blanked him. "The illusion of skill … is deeply ingrained in their culture."

So much for the financial sector and its super-educated analysts. As for other kinds of business, you tell me. Is your boss possessed of judgment, vision and management skills superior to those of anyone else in the firm, or did he or she get there through bluff, bullshit and bullying?

In a study published by the journal Psychology, Crime and Law, Belinda Board and Katarina Fritzon tested 39 senior managers and chief executives from leading British businesses. They compared the results to the same tests on patients at Broadmoor special hospital, where people who have been convicted of serious crimes are incarcerated. On certain indicators of psychopathy, the bosses's scores either matched or exceeded those of the patients. In fact, on these criteria, they beat even the subset of patients who had been diagnosed with psychopathic personality disorders.

The psychopathic traits on which the bosses scored so highly, Board and Fritzon point out, closely resemble the characteristics that companies look for. Those who have these traits often possess great skill in flattering and manipulating powerful people. Egocentricity, a strong sense of entitlement, a readiness to exploit others and a lack of empathy and conscience are also unlikely to damage their prospects in many corporations.

In their book Snakes in Suits, Paul Babiak and Robert Hare point out that as the old corporate bureaucracies have been replaced by flexible, ever-changing structures, and as team players are deemed less valuable than competitive risk-takers, psychopathic traits are more likely to be selected and rewarded. Reading their work, it seems to me that if you have psychopathic tendencies and are born to a poor family, you're likely to go to prison. If you have psychopathic tendencies and are born to a rich family, you're likely to go to business school.

This is not to suggest that all executives are psychopaths. It is to suggest that the economy has been rewarding the wrong skills. As the bosses have shaken off the trade unions and captured both regulators and tax authorities, the distinction between the productive and rentier upper classes has broken down. Chief executives now behave like dukes, extracting from their financial estates sums out of all proportion to the work they do or the value they generate, sums that sometimes exhaust the businesses they parasitise. They are no more deserving of the share of wealth they've captured than oil sheikhs.

The rest of us are invited, by governments and by fawning interviews in the press, to subscribe to their myth of election: the belief that they are possessed of superhuman talents. The very rich are often described as wealth creators. But they have preyed on the earth's natural wealth and their workers' labour and creativity, impoverishing both people and planet. Now they have almost bankrupted us. The wealth creators of neoliberal mythology are some of the most effective wealth destroyers the world has ever seen.

What has happened over the past 30 years is the capture of the world's common treasury by a handful of people, assisted by neoliberal policies which were first imposed on rich nations by Margaret Thatcher and Ronald Reagan. I am now going to bombard you with figures. I'm sorry about that, but these numbers need to be tattooed on our minds. Between 1947 and 1979, productivity in the US rose by 119%, while the income of the bottom fifth of the population rose by 122%. But from 1979 to 2009, productivity rose by 80%, while the income of the bottom fifth fell by 4%. In roughly the same period, the income of the top 1% rose by 270%.

In the UK, the money earned by the poorest tenth fell by 12% between 1999 and 2009, while the money made by the richest 10th rose by 37%. The Gini coefficient, which measures income inequality, climbed in this country from 26 in 1979 to 40 in 2009.

In his book The Haves and the Have Nots, Branko Milanovic tries to discover who was the richest person who has ever lived. Beginning with the loaded Roman triumvir Marcus Crassus, he measures wealth according to the quantity of his compatriots' labour a rich man could buy. It appears that the richest man to have lived in the past 2,000 years is alive today. Carlos Slim could buy the labour of 440,000 average Mexicans. This makes him 14 times as rich as Crassus, nine times as rich as Carnegie and four times as rich as Rockefeller.

Until recently, we were mesmerised by the bosses' self-attribution. Their acolytes, in academia, the media, thinktanks and government, created an extensive infrastructure of junk economics and flattery to justify their seizure of other people's wealth. So immersed in this nonsense did we become that we seldom challenged its veracity.

This is now changing. On Sunday evening I witnessed a remarkable thing: a debate on the steps of St Paul's Cathedral between Stuart Fraser, chairman of the Corporation of the City of London, another official from the corporation, the turbulent priest Father William Taylor, John Christensen of the Tax Justice Network and the people of Occupy London. It had something of the flavour of the Putney debates of 1647. For the first time in decades – and all credit to the corporation officials for turning up – financial power was obliged to answer directly to the people.
It felt like history being made. The undeserving rich are now in the frame, and the rest of us want our money back.

Financial fascism

By Chan Akya

If politics were just war by another name, then economics would be the favored armory of both sides. Europe has gone one step further last week, almost unimaginably bringing back the era of fascism as it contends with the unwieldy agglomeration of financial contradictions that the euro project has now become.

The birthplace of democracy, Greece, has gone back to a managed dictatorship after the collapse of the democratically elected George Papandreou government on Sunday, to be replaced by a national unity government with a technocrat at its helm. Reading between the lines, the idea isn't hard to understand: a pliant government in Athens that is helmed by a

 
eurocrat, unable to ask any questions of Brussels and unwilling to concede over any objections from the population of Greece.

The apparent crime of the Greeks was to ask their prime minister for a referendum on the latest series of proposals from European authorities on a new bailout for their country (see The men without qualities, Asia Times Online, October 29, 2011). This set off panic in stock and bond markets mid-week and prepared the stage for an ugly showdown as well as unprecedented developments.

For the European governments, this level of panic in the markets was simply unacceptable as it showed deep "ingratitude" on the part of the Greeks; that view of course conveniently ignores ground realities of austerity that the Greeks would endure on their own so that bankers in Paris and Frankfurt wouldn't face job or pay cuts.

Greece's prime minister was invited to the Group of 20 (G-20) meeting in Cannes, making the confab G-21 for a while according to wags, although I maintain that the "G" in G-20 stood for Greece all along. After receiving suitably strong tongue-lashings from German leader Angela Merkel and French President Nicholas Sarkozy, a suitably chastened Papandreou dropped plans for a referendum and instead started work on a national unity government that would have the implementation of the eurozone bailout plan as its major (and perhaps only) policy point.

G-20 released an insipid statement that went nowhere in terms of helping the Europeans. All the fond expectations of the Europeans were dashed to the ground - be it the increased role of the European Financial Stability Facility (EFSF) to which various countries would contribute (no contributions were forthcoming in the end), or expanded powers for the International Monetary Fund (IMF) to help manage the crisis (ditto).

Poorer countries objected to the very notion of further contributions to bail out rich European countries, particularly when the Europeans apparently couldn't agree on priorities. While the statement describes lofty ideals of growth globally, it does little to actually suggest ways and means of reversing the problems with countries and zones in recession: in particular, Europe.

To cut the eurozone's structural drag, countries will have to improve competitiveness. This can only be done if structural constraints on growth are removed, the main one of which is the overly generous social programs. Alternatively, Europe can choose to maintain social safeguards but will have to forsake a strong currency. Inflation would then do to the European lifestyles what common sense alone couldn't establish.

This is the meta context under which the European crisis resolution is being fought. Countries with savings - like Germany - do not wish to suffer from inflation but want instead that their southern neighbors simply destroy structural benefits instead. Southern countries would rather keep their benefit systems, but try to depreciate their currencies to a growth path.

Another issue and perhaps the core one is that the elite want one thing, and have decided to pursue that solution - written by bankers - without heeding the legitimate demands of those ostensibly being bailed out.

It gets worse. Not content with one unwieldy object, the G-20 also had to contend with a second one, namely Italy, wherein the government rejected calls for IMF aid while calling for "increased surveillance" and a formalization of the troika (European Union, IMF and European Central Bank) in case Italy needed funds later. Market observers who had to sit through months of uncertainty waiting for the Europeans to get their act together over a 100 billion euro (US$137 billion) bailout package for Greece will now have to do the same for a 1 trillion euro package for Italy.

Italian bonds crossed the magic level of 450 basis points (bps) in spread over Germany last week even as the EFSF failed in its attempted 13 billion euro funding deal. The level of 450 basis points is important because that sets rules with respect to collateral posting against global banks, and essentially puts a sovereign "in play" ie enhances volatility expectations in markets, with unspecified market demands for resolution driving sentiment.

It fell to the French president to tell off the Greeks in the end: plainly, he stated, that the Greeks could have any referendum they wanted, but would have to leave the euro if they went ahead with this particular one. Germany's most popular newspaper, the Bild, called last week for a referendum in Germany on whether Greece could stay in the single currency or not.

So it has come to this, that the French who started the era of modern European democracies with their storming of the Bastille and a cry of "liberty, equality and fraternity" essentially devalued their own history by telling the Greeks not to have inconvenient opinions. I can spy the ghost of Marie Antoinette demanding her head back.

The message from eurocrats couldn't have been more unequivocal if they had spelled it all out: democracy was an unnecessary complication in the grand European project.

Elsewhere, the new resident of the European Central Bank, Mario Draghi, conducted his first full meeting and started with an auspicious (I am being sarcastic) rate cut to get things going. The idea that the new ECB president would be populist and swing the monetary institution somewhat further on loose monetary policy than his predecessor ever managed was immediately (of course) played up in the popular media.

Think about it like this - the ECB has been criticized for inflicting greater pain on the highly indebted countries by raising rates and failing to do more towards monetary easing. The incoming head of the ECB likely has very similar inclinations to his predecessor (he announced, for example, that there was no mechanism for any country to leave the euro) but has decided to have a stronger public relations battle by starting off with a small rate cut that would do absolutely nothing to resolve the core issues because high interest rates are not the issue while wide credit spreads very much are.

It has been clear with every new European approach to the crisis that the primary objective of any grouping is to save the European financial system at all costs. This system includes within it a unwieldy common currency that has simply failed to meet its objectives for the 11 years of its existence. Rather than consigning the project to the dustbin of history, the elite of Europe choose to perpetuate the currency's existence at the expense of the people.

This is what fascism is all about at the end - an overwhelming subjugation of the individual at the altar of nationalism, the authoritarian rule of a financial system that disallows countries from following their own courses.

Between them, it is difficult to read too much into the events; even allowing for a fair bit of doubt to gather in one's mind the unshakable end result is a feeling of deja vu as it appears that the fascist past echoed by the likes of Mussolini, Franco and Hitler has come back to roost.

Advice to cricketers: get a life

Having a pastime outside the game - say, writing a diary - can set you free from the tyranny of results and often make you a better player

Ed Smith

November 7, 2011

I'd like to tell you a story about two cricketers preparing for a new season. It's a true story, but it's also a parable about success and failure. 

The first player gives up almost everything outside cricket. There will be no distractions, he has told himself. He has decided that this will be his breakthrough season; everything else must be relegated to the status of an irrelevant distraction. Cricket is not just the main thing, it is the only thing. He becomes fitter than ever, he spends all his days in the nets and studying televised cricket matches; he even obsesses about the bowlers he will face in the first match, weeks before the game arrives. His quest is to become a machine-like player. He is so eager to learn that he soaks up every piece of advice he can find. Everyone praises his "professionalism".

The second player approaches the season in a more shambolic, human state. He moves house just before the season begins, and spends the first night in his new home without even a lightbulb to help him find his toothbrush. He breaks up with his girlfriend and finds for the first time that he is relying on the warmth of the team life, with its mischief and mickey-taking. Previously he has always been very self-contained; strangely, he is happy to find himself less so. Off the field, he is busy and engaged, having agreed to write a book. The arrival of the season - what season? - comes almost as a surprise, before he is quite in control of his life. He finds that uncertainty - am I ready or not? - energising rather than depressing. Above all, he knows that a life fully lived will make for a good book. He desperately wants to succeed, but he knows that even failure will have its uses.

The first player scores 415 first-class runs at an average of 23. The second player scores 1534 runs at 53. That doesn't prove anything, I hear you say. But what if I told you that they were the same player? It was me - first in 2000, when I dropped off the map as a promising player, then in 2003, when I scored seven hundreds in nine innings and played for England. I learnt my lesson the hard way. I had to feel alive to play cricket properly. I needed a life outside the game to play at my best. The player derives from the man; the man does not emerge from the player.

I am not the only cricketer to have had a purple patch while engaging with life beyond the boundary. Steve Waugh told me that writing a diary coincided with his best seasons. Peter Roebuck produced his best season (1702 runs with seven hundreds) in the year he wrote It Never Rains. Mark Wagh was one of only five Englishmen to score 1000 runs in the first division in 2008, while he was writing Pavilion to Crease… and Back.

And now, best of all, the Tasmania and Australia A opening batsman Ed Cowan has produced a happy ending to top the lot. He kept a diary of his 2010-11 season for Tasmania, now published as In the Firing Line. I'm not spoiling the ending (the scorecard is just a click away on ESPNcricinfo) when I let on that the last page of the book describes Tasmania winning the Shield final. Man of the Match? EJM Cowan, with 133. Both Cowan and his publishers would have settled for that narrative arc when they agreed the deal.

It's also a very good book - honest, analytical, perceptive and brave. You get to know the author and you come to like him. He is not falsely modest, but he looks for the good in others. In years to come, when he reopens his own book, he may find he was a little too generous - but that is all part of the book's warmth and spirit.

	What is it about writing a diary that helps cricketers play at their best? You might expect it to lead to over-analysis and too much self-absorption. Paradoxically, writing a diary has the opposite effect: it seems to set cricketers free. Instead of a burden, writing becomes an exorcism

He embraces the tensions that every reflective sportsman must face - between growing up and staying immature, between self-obsession and team-spiritedness, between honesty and denial, between clear-eyed analysis and the wilful illusion of mastery and control.

I couldn't resist a smile of recognition at one inconsistency. Cowan describes his admiration for Nassim Taleb's books on randomness and the power of forces outside our control. Then he goes out to bat in his lucky socks, having had a lucky haircut, eaten at his lucky Italian restaurant, drunk lucky coffee made for him by his wife (did he choose the wife on the grounds that she was lucky, one wonders!). Analytically Cowan understands randomness. In practice, he clings to superstition. Madness? Maybe. Perhaps we all need to be a little bit crazy, especially if you are an opening batsman.

What is it about writing a diary that helps cricketers play at their best? You might expect it to lead to over-analysis and too much self-absorption. Paradoxically, writing a diary has the opposite effect: it seems to set cricketers free. Instead of a burden, writing becomes an exorcism.

There is an even broader point. Every sportsman lives on the knife-edge of outcomes. He either wins or loses, on a daily basis. For the writer, it is very different. All experience, however uncomfortable, contributes to the well of his material. A writer is necessarily an alchemist, and no metal is too dull for him to turn into gold.

Here's a radical thought. Perhaps every sportsman should try to find the pastime that releases him from the tyranny of results. Writing will only work for very few. But almost every athlete, I suspect, would benefit from a complementary challenge of some kind. Michael Bevan told me that once you are a seasoned cricketer, poor form is almost never caused by technical failings. Instead, the root cause is always emotional. So you've got to sort out how you are feeling before the backswing can be corrected.

Professionalism, when it is properly understood, is having the discipline to attend to your whole personality as well as your game. They are, after all, inextricably intertwined - as Ed Cowan has shown us once again.

Former England, Kent and Middlesex batsman Ed Smith is a writer with the Times.

Howard Zinn Memorial Lecture

That 70s Show

'The 1970s set off a kind of a vicious cycle that led to a concentration of wealth increasingly in the hands of the financial sector, which doesn’t benefit the economy... What’s being played out for the last 30 years is actually a kind of a nightmare that was anticipated by the classical economists'

Noam Chomsky

 It's a little hard to give a Howard Zinn Memorial Lecture at an Occupy meeting. There are mixed feelings that go along with it.

First of all, regret that Howard is not here to take part and invigorate it in his particular way, something that would have been the dream of his life, and secondly, excitement that the dream is actually being fulfilled. It’s a dream for which he laid a lot of the groundwork. It would have been the fulfilment of a dream for him to be here with you.

The Occupy movement really is an exciting development. In fact, it's spectacular. It's unprecedented; there's never been anything like it that I can think of. If the bonds and associations that are being established at these remarkable events can be sustained through a long, hard period ahead— because victories don't come quickly— this could turn out to be a very significant moment in American history.

The fact that the demonstrations are unprecedented is quite appropriate. It is an unprecedented era— not just this moment— but actually since the 1970s. The 1970s began a major turning point in American history. For centuries, since the country began, it had been a developing society with ups and downs. But the general progress was toward wealth and industrialization and development— even in dark and hope— there was a pretty constant expectation that it's going to go on like this. That was true even in very dark times.

I'm just old enough to remember the Great Depression. After the first few years, by the mid-1930s, although the situation was objectively much harsher than it is today, the spirit was quite different. There was a sense that we're going to get out of it, even among unemployed people. It'll get better. There was a militant labour movement organizing, CIO was organizing. It was getting to the point of sit-down strikes, which are very frightening to the business world. You could see it in the business press at the time. A sit-down strike was just a step before taking over the factory and running it yourself. Also, the New Deal legislations were beginning to come under popular pressure. There was just a sense that somehow we're going to get out of it.

It’s quite different now. Now there’s kind of a pervasive sense of hopeless, or, I think, despair. I think it’s quite new in American history and it has an objective basis. In the 1930s unemployed “working people” could anticipate realistically that the jobs are going to come back. If you’re a worker in manufacturing today— and the unemployment level in manufacturing today is approximately like the Depression— if current tendencies persist, then those jobs aren’t going to come back. The change took place in the '70s. There are a lot of reasons for it. One of the underlying reasons, discussed mainly by economic historian Robert Bernard, who has done a lot of work on it, is a falling rate of profit. That, with other factors, led to major changes in the economy— a reversal of the 700 years of progress towards industrialization and development. We turned to a process of deindustrialization and de-development. Of course, manufacturing production continued, but overseas (it’s very profitable, but no good for the workforce). Along with that came a significant shift of the economy from productive enterprise, producing things people need, to financial manipulation. Financialization of the economy really took off at that time.

Before the 70s, banks were banks. They did what banks are supposed to do in a capitalist economy: take unused funds, like, say, your bank account, and transfer them to some potentially useful purpose, like buying a home or sending your kid to college. There were no financial crises. It was a period of enormous growth; the largest period of growth in American history, or maybe in economic history. It was sustained growth in the 50s and 60s and it was egalitarian. So the lowest percentile did as well as the highest percentile. A lot of people moved into reasonable lifestyles— what’s called here “middle class” (working class is what it’s called in other countries).

It was real. The 60s accelerated it. The activism of the 60s, after a pretty dismal decade, really civilized the country in lots of ways that are permanent. They’re not changing. The 70s came along and suddenly there’s sharp change to industrialization and the offshoring of production. The shifting to financial institutions, which grew enormously. Also in the 50s and 60s there was the development of what became several decades later the high-tech economy. Computers, Internet, the IT revolution was mostly developed in the 50 and the 60s, and substantially in the state sector. It took a couple of decades before it took off, but it was developed then.

The 1970s set off a kind of a vicious cycle that led to a concentration of wealth increasingly in the hands of the financial sector, which doesn’t benefit the economy. Concentration of wealth yields concentration of political power, which, in turn, arrives to legislation that increases and accelerates the cycle. The physical policies such as tax changes, rules of corporate governance, deregulation were essentially bipartisan. Alongside of this began a very sharp rise in the costs of elections, which drives the political parties even deeper than before into the pockets of the corporate sector.

A couple years later started a different process. The parties dissolved, essentially. It used to be if you were a person in Congress and hoped for a position of committee chair or a position of responsibility, you got it mainly through seniority and service. Within a couple of years, you started to have to put money into the party coffers in order to get ahead. That just drove the whole system even deeper into the pockets of the corporate sector and increasingly the financial sector--a tremendous concentration of wealth, mainly in the literally top 1/10th of 1 percent of the population.

Meanwhile, for the general population it began an open period of pretty much stagnation, or decline for the majority. People got by through pretty artificial means— like borrowing, so a lot of debt. Longer working hours for many. There was a period of stagnation and a higher concentration of wealth. The political system began to dissolve. There’s always been a gap between public policy and the public will, but it just grew kind of astronomically. You can see it right now, in fact.

Take a look at what’s happening right now. The big topic in Washington that everyone concentrates on is the deficit. For the public, correctly, the deficit is not much of an issue. The issue is joblessness, not a deficit. Now there’s a deficit commission but no joblessness commission. As far as the deficit is concerned, if you want to pay attention to it, the public has opinions. Take a look at the polls and the public overwhelmingly supports higher taxes on the wealthy, which have declined sharply during this stagnation period, this period of decline. The public wants higher taxes on the wealthy and to preserve the limited social benefits. The outcome of the deficit commission is probably going to be the opposite. Either they’ll reach an agreement, which will be the opposite of what the public wants, or else it will go into kind of an automatic procedure which is going to have those effects. Actually that’s something that’s going to happen very quickly. The deficit commission is going to come up with its decision in a couple of weeks. The Occupy movements could provide a mass base for trying to avert what amounts to a dagger in the heart of the country, and having negative effects.

Without going on with details, what’s being played out for the last 30 years is actually a kind of a nightmare that was anticipated by the classical economists. If you take an Adam Smith, and bother to read Wealth of Nations, you see that he considered the possibility that the merchants and manufacturers in England might decide to do their business abroad, invest abroad and import from abroad. He said they would profit but England would be harmed. He went on to say that the merchants and manufacturers would prefer to operate in their own country, what’s sometimes called a “home bias.” So, as if by an invisible hand, England would be saved the ravage of what’s called “neoliberal globalization.”

That’s a pretty hard passage to miss. In his classic Wealth of Nations, that’s the only occurrence of the phrase “invisible hand.” Maybe England would be saved from neoliberal globalization by an invisible hand. The other great classical economist David Ricardo recognized the same thing and hoped it wouldn’t happen. Kind of a sentimental hope. It didn’t happen for a long time, but it’s happening now. Over the last 30 years that’s exactly what’s underway. For the general population— the 99 percent in the imagery of the Occupy movement—it’s really harsh and it could get worse. This could be a period of irreversible decline. For the 1 percent, or furthermore 1/10th of 1 percent, it’s just fine. They’re at the top, richer and more powerful than ever in controlling the political system and disregarding the public, and if it can continue, then sure why not? This is just what Smith and Ricardo warned about.

So pick Citigroup, for decades one of the most corrupt of the major investment banking corporations. It was repeatedly bailed out by the taxpayer over and over again starting in the early Reagan years and now once again. I won’t run through all the corruption. You probably know it, and it’s astonishing. A couple of years ago they came out with a brochure for investors. They urged investors to put their money in what they call the “plutonomy index.” The world is dividing into a plutonomy, the rich and so on. That’s where the action is. They said their plutonomy index is way outperforming the stock market, so put your money into it. And as for the rest? We set them adrift. We don’t really care about them and we don’t need them. They have to be around to provide a powerful state to protect us and bail us out when we get into trouble, but they essentially have no function. It’s sometimes called these days the “precariat,” people who live a precarious existence at the periphery of society. It’s not the periphery anymore; it’s becoming a very substantial part of the society in the United States and indeed elsewhere.

This is considered a good thing. For example, when Alan Greenspan was still “St. Alan” hailed by the economics profession as one of the greatest economists of all time (this is before the crash for which he is substantially responsible for), he was testifying to Congress in the Clinton years explaining the wonders of the great economy. He said much of this economy was based on what he called “growing worker insecurity.” If working people are insecure, if they’re “precariat” and living precarious existences, then they’re not going to make demands, they won’t make wages, they won’t get benefits and we can kick them out if we don’t like them, and that’s good for the health of the economy. That’s what’s called a healthy economy technically and he was highly praised for this.

Well, now the world is indeed splitting into a plutonomy and a precariat, again in the imagery of the Occupy movement, the 1 percent and the 99 percent. The plutonomy is where the action is. It could continue like this, and if it does, then this historic reversal that began in the 1970s could become irreversible. That’s where we’re heading. The Occupy movements are the first major popular reaction which could avert this. It’s going to be necessary to face the fact that it’s a long hard struggle. You don’t win victories tomorrow. You have to go on and form structures that will be sustained through hard times and can win major victories. There are a lot of things that can be done.

I mentioned before that in the 1930s one of the most effective actions was a sit-down strike. The reason was very simple: it’s just a step below a takeover of the industry. Through the '70s, as the decline was setting in, there were some very important events that took place. One was in the late '70s. In 1977, US Steel decided to close one of its major facilities, Youngstown, Ohio, and instead of just walking away, the workforce and the community decided to get together and buy it from US Steel and hand it over to the workforce to run and turn it into a worker-owned, worker-managed facility. They didn’t win, but with enough popular support they could have won. It was a partial victory because even though they lost it set off other efforts now throughout Ohio and other places.

There’s a scattering of hundreds, maybe thousands, of not-so-small worker owned or partially worker-owned industries which could become worker-managed. That’s the basis for a real revolution. That’s how it takes place. It’s happening here, too. In one of the suburbs of Boston something similar happened. A multi-national decided to shut down a productive, functioning and profitable manufacturing company because it was not profitable enough for them. The workforce and union offered to buy it and take it over and run it themselves, but the multi-national decided to close it down instead probably for reasons of class consciousness. I think they want things like this to happen. If there had been enough popular support, if there had been something like this movement that could have gotten involved, they might have succeeded.

There are other things going on like that. In fact, some of them were major. Not long ago, Obama took over the auto industry. It’s basically owned by the public. There were a number of things that could have been done. One was what was done. It could be reconstituted so it could be handed back to the ownership, or very similar ownership and continue on its traditional path. The other possibility was they could have handed it over to the workforce and turned it into worker-owned, worker-managed major industrial system that’s a major part of the economy and have it produce things that people need. And there’s a lot that we need. We all know or should know that the US is extremely backward globally in high-speed transportation. That’s very serious. It affects people’s lives and it affects the economy. It’s a very serious business.

I have a personal story. I happened to be giving talks in France a couple months ago and ended up in southern France and had to take a train from Avignon in southern France to the airport in Paris and it took two hours. That’s the same distance as Washington to Boston. It’s a scandal. It could be done; we have the capacity to do it, like a skilled workforce. It would have taken a little popular support. That could have been a major change in the economy. Just to make it more surreal, while this option was being avoided, the Obama administration was sending its transportation secretary to Spain to get contracts for developing high-speed rails for the United States. This could have been done right in the Rust Belt, which is being closed down. There’s no economic reason this can’t happen. These are class reasons and the lack of political mobilization.

There are very dangerous developments in the international arena, including two of them which are kind of a shadow that hangs over almost everything we discuss. There are, for the first time to human history, real threats to peace and survival of the species. One has been hanging around since 1945 and it’s kind of a miracle we’ve escaped it and that’s the threat of nuclear weapons. That’s a threat that’s being escalated by the administration and its allies. Something has to be done about that or we’re in real trouble. The other, of course, is environmental catastrophe. Every country in the world is taking at least halting steps toward trying to do something about it. The US is also taking steps, namely to accelerate the threat. The US is now the only country that’s not only not doing something constructive…it’s not climbing on the train. It’s pulling it backwards.

Congress is right now reversing legislation instituted by the Nixon administration. (Nixon was really the last liberal president of the United States, and literally, this shows you what’s been going on!) They’re dismantling the limited measures the Nixon administration took to try to do something about what’s a growing and emerging catastrophe. This is connected with a huge propaganda system, perfectly openly declared by the business world, that it’s all just a liberal hoax. Why pay attention to these scientists? We’re really regressing back to the Medieval period. It’s not a joke. If that’s happening to the most powerful and richest country in history then this crisis is not going to be averted and all of this we’re talking about won’t matter in a generation or two. All of that’s going on right now and something has to be done about it very soon and in a dedicated and sustained way. It’s not going to be easy to succeed. There are going to be barriers, hardships and failures along the way. Unless the process that’s taking place here and around the world, unless that continues to grow and kind of becomes a major social force in the world, the chances for a decent future are not very high.

Q&A

What about corporate personhood and getting the money out of that stream of politics?

These are very good things to do, but you can’t do any of these things or anything else unless there’s a very large and active base. If the Occupy movement was the leading force in the country then you could move it forward. Most people don’t know that this is happening or they may know about it and not know what it is. Among those who do know, the polls show there’s a lot of support. But that assigns a task. It’s necessary to get out into the country and get people to understand what this is about and what they can do about and what the consequences are of not doing anything about it.

Corporate personhood is a good point, but pay attention to what it is. We’re supposed to worship the Constitution these days, but the 5th Amendment of the Constitution says no person shall be deprived of rights without due process of law. The founding fathers didn’t mean “person” when they said “person.” For example there were a lot of creatures of flesh and blood who were not persons. The entire indigenous population was not considered persons. They didn’t have any rights. There was a category of creatures called 3/5 human— they weren’t persons and didn’t have rights. Women were not entirely persons, so they didn’t have full rights. A lot of this was somewhat rectified over the years. During the Civil War, the 14th amendment raised the 3/5 to full humans at least in principle, but that was only in principle.

Now over the following years the concept of person was changed by the courts in two ways. One way was to broaden it to include corporations, legal fictions established by the courts and the state. These “persons” later became the management of corporations; the management of corporations became “persons.” Of course, that’s not what the 14th amendment says. It’s also narrowed to undocumented workers. They had to be excluded from the category of persons. That’s happening right now. So legislation like this goes two ways. They defined persons to include corporate persons, which by now have rights beyond human beings, given by the trade agreements and others. They exclude people who flee from Central America where the US devastated their homelands, flee from Mexico because they can’t compete with the US’s highly subsidized agro-business. When NAFTA was passed in 1994, the Clinton administration understood pretty well that it was going to devastate the Mexican economy, so they started militarizing the border. So we’re seeing the consequences. So these people have to be excluded from the category of persons.

So when you talk about personhood, that’s right, but there’s more than one aspect to it. It ought to be pushed forward and it ought to be understood, but that requires a mass base. It requires that the population understands this and is committed to it. It’s easy to think of a lot of things that should be done, but they all have a prerequisite— namely a mass popular base that’s there that’s committed to implementing them.

What about the ruling class in America? How likely is it that they’ll have an open fascist system here?

I think it’s very unlikely frankly. They don’t have the force. About a century ago, in the freest countries in the world, Britain and the United Sates at the time, the dominant classes came to understand that they can’t control the population by force any longer. Too much freedom had been won by struggles like these, and they realized it. It’s discussed in their literature. They recognize that they’re going to have to shift their tactics to control of attitudes and beliefs instead of just the cudgel. It can’t do what it used to do. You have to control attitudes and beliefs. In fact that’s when the public relations industry began. It began in the United States and England. The free countries where you had to control beliefs and attitudes, to induce consumerism, to induce passivity, apathy and distraction. It’s a barrier, but it’s a lot easier to overcome than torture and the Gestapo. I don’t think the circumstances are any longer there to institute anything like what we call fascism.

You mentioned earlier that sit-down protests are just a precursor to a takeover of industry. Would you advocate a general strike as a tactic moving forward? Would you ever if asked allow for your voice to relay the democratically chosen will of our nation?

You don’t want leaders; you want to do it yourself. We need representation and you should pick it yourselves. It should be recallable representation.

The question of a general strike is like the others. You can think of it as a possible idea at a time when the population is ready for it. We can’t sit here and declare a general strike, obviously. There has to be approval and a willingness to take the risks on the part of a large mass of the population. That takes organization, education and activism. Education doesn’t just mean telling people what to believe. It means learning yourself. There’s a Karl Marx quote: “The task is not just to understand the world but to change it.” There’s a variant of that which should be kept in mind, “If you want to change the world in a certain direction you better try to understand it first.”

Understanding it doesn’t mean listening to a talk or reading a book, though that is helpful. It comes through learning. Learning comes from participation. You learn from others. You learn from the people you’re trying to organize. You have to gain the experience and understanding which will make it possible to maybe implement ideas as a tactic. There’s a long way to go. This doesn’t happen by the flick of a wrist. It happens from a long, dedicated work. I think in many ways the most exciting aspect of the Occupy movements is just the construction of these associations and bonds that are taking place all over. Out of that if they can be sustained can come expansion to a large part of the population that doesn’t know what’s going on. If that can happen, then you can raise questions about tactics like this, which could very well at some point be appropriate.