Saturday, September 24, 2005

The importance of being Vivian

In 1889, Oscar Wilde published the Decay of Lying, a dialogue between Cyril and Vivian. Cyril is given the earnest lines, like the cutout in a Socratic dialogue, and Vivian is given the witty and visionary ones. The theme of the dialogue attaches, at points, to the very old theme of mimesis in art. Is an art to be judged on how well it copies reality? And what would it mean for a fiction to copy reality? Vivian explores the problems of mimesis from an angle taken from everyday life: the lie. The lie, after all, is a lie insofar as it doesn’t copy reality. However, it works as a lie insofar as it seems to copy reality. Thus, in the successful lie there must reside some special genius, and for that genius to work, we must look at another standard than that of truth or falsity. We must shift to the field defined by intensity:

“One of the chief causes that can be assigned for the curiously commonplace character of most of the literature of our age is undoubtedly the decay of Lying as an art, a science, and a social pleasure. The ancient historians gave us delightful fiction in the form of fact; the modem novelist presents us with dull facts under the guise of fiction.”

There is one modern novelist whose dull facts particularly get under Vivian’s skin: Zola. At first glance, one would have thought that Zola would be on Vivian’s side, or at least on Wilde’s side. Zola was, after all, a scandal and a stumbling block to Victorian proprieties. Since Wilde aspired to be a scandal himself, one looks for some solidarity. Instead, Vivian remarks:

“M. Zola, true to the lofty principle that he lays down in one of his pronunciamientos on literature, "L'homme de genie n'a jamais d'esprit," is determined to show that, if he has
not got genius, he can at least be dull. And how well he succeeds! He is not without power. Indeed at times, as in Germinal, there is something almost epic in his work. But his work is entirely wrong from beginning to end, and wrong not on the ground of morals, but on the ground of art. From any ethical standpoint it is just what it should be. The author is perfectly truthful, and describes things exactly as they happen. What more can any moralist desire? We have no sympathy at all with the moral indignation of our time against M. Zola. It is simply the indignation of Tartuffe on being exposed. But from the standpoint of art, what can be said in favour of the author of L'Assommoir, Nana and Pot-Bouille? Nothing. Mr. Ruskin once described the characters in George Eliot's novels as being like the sweepings of a Pentonville omnibus, but M. Zola's characters are much worse. They have their dreary vices, and their drearier virtues. The record of their lives is absolutely without interest.”

This rings changes on an old trick in the game of scandal – one trumps the shock of scandal by being resolutely unshocked. In this way, one denies the initial, visceral moment that scandal depends on. The double movement of Vivian’s rhetoric conforms to an old routine: first comes the denigration of the shocked. Thus Zola’s work exposes the Tartuffe, and by implication the Tartuffe are the shocked. Second comes the denigration of the shock. Zola’s characters are dreary in their vices and their virtues. It is dreariness, not purity, that we must judge by. Wrenching the standard by which the copy is judged from the frame defined by veracity to the frame defined by intensity, Vivian finds a new angle from which to disarm Zola’s shock. Since one end of the mimetic spectrum is about sexual arousal, a continually deferred moment that defines art against its erotic use, its pornographic potential, this is a particularly good routine to top Zola. And once Zola is separated from his shock, we see -- or Vivian sees -- that he is without interest.

To Vivian’s remarks, Cyril responds by noting that that Vivian’s two favorite novelists Meredith and Balzac, have reputations for being realists.

Vivian replies by making two epigrams. About Meredith he says,

“Somebody in Shakespeare - Touchstone, I think – talks about a man who is always breaking his shins over his own wit, and it seems to me that this might serve as the basis for a criticism of Meredith's method.”

But it is about Balzac that the more famous phrases are leveled.

“A steady course of Balzac reduces our living friends to shadows, and our acquaintances to the shadows of shades. His characters have a kind of fervent fiery-coloured existence. They dominate us, and defy scepticism. One of the greatest tragedies of my life is the death of Lucien de Rubempre. It is a grief from which I have never been able completely to rid myself. It haunts me in my moments of pleasure. I remember it when I laugh.”

This post is about that phrase – or rather, it follows the history of the reputation of that phrase in the footsteps of A.S. Byatt’s brilliant essay about Splendeurs et miseres de Courtisanes – the Balzac novel in which Lucien de Rubempre’s suicide gets played out – in the Winter 2005 Kenyon. Which we urge all LI’s readers to read – it is well worth the price of the magazine.

LI wouldn’t be LI if we didn’t throw in some deconstructive cautions now and then, so we should preface what follows with a little disclaimer. The reputation of these remarks depends on collapsing the distinction between Wilde and Vivian. That Wilde put these remarks in the mouth of a character who is defending a thesis before another character is obliterated in the rush to make these Wilde’s remarks – a rush that is not repeated in, say, making Cyril’s remarks Wilde’s remarks. A philosopher might say that we know, intuitively, that Vivian represents Wilde and Cyril doesn’t. But a philosopher who had read The Importance of Being Earnest would be wise to treat the theme of pseudonyms with some respect. After all the play revolves around Jack Worthing’s habit of assuming the name Earnest in the city and Jack in the country. This becomes evident when Algernon – who we also instinctively identify with Wilde because his opinions are like those of Vivian, who we have assumed represents Wilde – finds Earnest’s cigarette case with a note addressed to Jack:

Algernon. … Besides, your name isn't Jack at all; it is Ernest.

Jack. It isn't Ernest; it's Jack.

Algernon. You have always told me it was Ernest. I have introduced you to every one as Ernest. You answer to the name of Ernest. You look as if your name was Ernest. You are the most earnest-looking person I ever saw in my life. It is perfectly absurd your saying that your name isn't Ernest. It's on your cards. Here is one of them. [Taking it from case.] 'Mr. Ernest Worthing, B. 4, The Albany.' I'll keep this as a proof that your name is Ernest if ever you attempt to deny it to me, or to Gwendolen, or to any one else.
[Puts the card in his pocket.]

Jack. Well, my name is Ernest in town and Jack in the country, and the cigarette case was given to me in the country.”

Bertrand Russell’s example for the description theory of names, you’ll remember, was the identity between Walter Scott and the Author of Waverly – an identity that could not substitute in all instances. If Russell had wanted to, he could have used the Importance of Being Earnest as the artistic working out of the consequences of his theory. Pity he didn’t. In any case, the deconstructive point is that the chain of instinct that leads us to believe that Vivian is Wilde depends upon substitutions that themselves depend upon our instinct that Wilde is Vivian. So note, before we set off on our chase, that the conditions of the hunt are dodgy to begin with.

The next post will be about Proust.

Thursday, September 22, 2005

LI hearts hindsight

Every once in a while, one should engage in the bitterest hindsight. Hindsight is always something that the powers that be disparage, since the critical analysis of the past lays bare the lineaments of present oppressions.

In the week that the President of Afghanistan, Karzai, called for radical American troop retrenchment, that Sheehan’s caravan is stopping in D.C. for an anti-war protest that the mainstream media will ignore and distort in various tired ways, that Basra is revealing the extent to which the “peacefully” occupied areas are peaceful in the sense that Afghanistan in 2000 was peaceful – it might be a good idea to ask about what alternative there was to this particular occupation.

This question is, of course, bound up with the question of the reasons for invasion itself, but there is only one strand of that question that will concern me here: the lack of any counter-force to the Americans in the invading “coalition.”

That lack was designed by the Department of War. It allowed unilateral American control. The Americans, of course, have turned out to be corrupt, on the one hand, and incapable of even achieving their minimal colonialist goals, on the other hand. There’s a nice editorial in Azzaman this week about the billion plus stolen under Allawi:

“As the authorities prepare to issue an arrest warrant against a former defense minister for the alleged theft of $1 billion, the parliament is reported to have been debating embezzlement issues that surpass that figure.

Instead of basking in prosperity, Iraqis are now sunk in an abyss of poverty, organized theft and crime under the banner of an ‘elected’ and ‘legitimate’ system of government.

The theft of public money on such unprecedented scale puts the onus for the suffering of Iraqi people in the shortages of electricity and other amenities squarely on government officials who instead of serving the impoverished country chose to plunder it.”

The writer, Fatih Abdulsalam, makes an important point about the timing of the recent revelations:

“Whenever conditions worsen in the country, those in power and authority report scandals that took place in eras other than their own.”

Money has an attractive quality for hindsight: tracing us give us a good sense of the past's secret patterns.

What did Iraq need after the invasion? Two things were necessary: to confront the political legacy of Saddam, and to confront the economic legacy of Saddam. The former task consisted in reconfiguring the country in such a way that the mechanisms of Ba’athist tyranny would be permanently disabled. The latter task consisted, quite simply, in gaining a moratorium on the debt Saddam had piled up.

The former task could only be achieved by the Iraqis themselves, not the Americans. The latter task did require American cooperation. The tasks were coupled: a legitimate political establishment in Iraq needed to be unencumbered by Saddam’s debt in order to borrow money on Iraq’s vast potential wealth. In essence, this task was no different than the task of any other Middle Eastern nation – for instance, Kuwait at the end of the first Gulf War.

The tasks are such that the withdrawal of American troops should have been accomplished, max, by the end of 2003.

From the American anti-war perspective, that would have been unpleasant, since it would have generated the image of a successful intervention/invasion. But however unpleasant the invasion might have been as a precedent, there was, realistically, no need for the occupation and the American intervention in Iraq’s sovereign affairs whatsoever, beyond that minimal framework.

There are a lot of ironies here. Given the successful attainment of that framework, the Bush administration might well have gone on to their second goal, war with Iran. In this very unfunny sense, the occupation has had the funny effect of making that goal almost unimaginable. It was hard to see this in 2003, because it was hard to see that the Bush people were exactly the warmongering criminals the left made them out to be. Caricature has been vindicated by history. However, the Iraqis have borne the burden of averting the real disaster of a U.S.-Iran war. Lately, the media has decided to respond to the fact that the war is unpopular in this country (and will be extremely hard to finance, come the next supplemental) by posing the rhetorical question, don’t we have the moral responsibility to remain in Iraq? This is a sort of cruel joke question. It is as if Cortes were to justify the conquest of Mexico by saying, don’t we have a responsibility to the Aztecs to remain in Mexico? The answer to the media’s new concern with our moral obligation is that an occupying force that makes promiscuous use of air power on its occupied territory, razes cities Grozny style, and establishes interlocking groups with organized kleptocrats to pump money out of the occupied territory seems to have somehow misread the story of the Good Samaritan. I don’t know how much more American charity Iraq can take.

In hindsight, the most important thing was to give the Iraqi government back control over Iraq’s wealth. To do that required immediate elections, and the progressive withdrawal of American ‘supervision’ so that Iraq, in the summer of 2003, would essentially be in the same position of ownership it was pre-Saddam. Another irony is that if the Americans hadn’t been so greedy, they might actually have achieved one of their goals: Iraqi oil might be on the market today, sending oil prices down. As Michael Klare points out on Tomdispatch, the pooch is being screwed every day in the Iraqi oilfields as the Americans discover that the one reason that they are there requires more manpower than they will ever have. Klare points to the pre-war euphoria about Iraqi oil:

“This sense of optimism about Iraq's future oil output was palpable in Washington in the months leading up to the invasion. In its periodic reports on Iraqi petroleum, the Department of Energy (DoE), for example, confidently reported in late 2002 that, with sufficient outside investment, Iraq could quickly double its production from the then-daily level of 2.5 million barrels to 5 million barrels or more. At the State Department, the Future of Iraq Project set up a Working Group on Oil and Energy to plan the privatization of Iraqi oil assets and the rapid introduction of Western capital and expertise into the local industry. Meanwhile, Iraqi exile Ahmed Chalabi -- then the Pentagon's favored candidate to replace Saddam Hussein as suzerain of Iraq (and now Iraq's Deputy Prime Minister in charge of energy infrastructure) -- met with top executives of the major U.S. oil companies and promised them a significant role in developing Iraq's vast petroleum reserves. "American companies will have a big shot at Iraqi oil," he insisted in September 2002.”

Klare runs down the stats. Presently, Iraq is generating about 1.9 billion barrels. Moreover, the oil infrastructure has taken some 250 attacks. And there is the pervasive kleptocracy, which is stealing billions of dollars from the infrastructure. No doubt there are American firms that are profiting hugely from these thefts. But more interesting is that the current American urge to pump oil in spite of these problems is nursing future problems:

“The corruption and mismanagement has had another serious consequence for Iraq's long-term oil potential: in order to maximize output now, and thereby keep the dollars rolling in, Iraqi oil executives are employing faulty pumping methods, thus risking permanent damage to underground reservoirs. For example, managers are continuing to pump oil from Iraq's main Rumailia oilfield, one of the world's largest, even though water injection systems (used to maintain underground pressure) have failed; in so doing, they are thought by experts to be causing irreversible damage to the field. "The problem is that [underground] pressure problems could lead to a permanent decline in production," observed one European buyer of Iraqi oil quoted in the Financial Times last June. Even if U.S. companies later were to gain access to Iraqi fields, therefore, they might find yields to be disappointing.”

Hindsight should tell us this: Iraq was able, two years ago, to stand on its own two feet. The American occupation has been aimed at preventing an independent Iraq, not at creating one. The idea of indefinite occupation, ie colonizing Iraq, depended, however, on two factors: that Iraq would eventually be a cash cow, and that the American population would go along with Bush’s plan. The first pillar of the Bush plan has collapsed. The second is collapsing. Iraq is in the hands of Iran’s allies. The cost of continuing the war is unsustainable. Moreover (although the Americans still don’t know this), American has become irrelevant to the ultimate outcome in Iraq. Under the shadow of the American shock troops, the real political fight has been happening, in which the American side is represented by a Kurdish faction – and even that faction is becoming impatient with their ally.

Give me more hindsight is the LI slogan. Let's shed as much light as possible on the the monsters who rule us.

Wednesday, September 21, 2005

a rule for reading newspapers

David Mamet’s convoluted op ed in the LA Times makes the valid point that the Democratic Party is not only cowardly, but unlikely to benefit from its cowardice. But I think that the point is undermined by the assumption that, given different circumstances, we would have a different Democratic party, boldly bringing us peace and universal health care.

In LI’s opinion, this confusion of the Democratic Party with liberalism has no warrant. A far better way of examining both the Democratic and Republican parties is to view them as two factions of one Court – Court in the royal, Byzantine sense. To quote Warren Treadgold about factions in Constantinople:

“This lack of ideology has long been hard for modern scholars to grasp. For instance, most have looked for an ideological significance in the Byzantines' two factions, the Blues and the Greens, whose official function was to organize sports and theatrical events, mainly chariot races and performances in which women took off their clothes. The Blues and Greens also cheered on their own performers and teams, and sometimes fought each other in the stands or rioted in the streets. Persistent modern efforts to define the Blues and Greens as representatives of political, social, or religious groups have so conspicuously failed that they seem to have been abandoned. Now, however, without trying to distinguish Blues from Greens, Peter Brown has depicted their spectacles as solemn patriotic ceremonies. Yet such a generalization seems indefensible after Alan Cameron has shown in two meticulous and persuasive books, Porphyrius the Charioteer (1973) and Circus Factions (1976), that the Blues and Greens were interested primarily in sports and shows, secondarily in hooliganism, and not at all in ideology.”

The last sentence pretty much sums up the Republican and Democratic parties. They are parts of one thing, which I would call D.C. D.C. is concerned, above all other things, to service the industrial/service network through which politicians wash. That network has done well from the war, protects the caste system of health care in this country as one of the bigger moneymakers of all times, and is only really vivified by the idea of taking away some freedom from the average citizen in the name of morality or good nutrition. And we all know that steroids as used by ball players are much more interesting to Congress than who failed to help poor folks during Katrina.

Mamet’s notion that the Dems were all secretly against the Iraq war has to be the explanation for the persistent faith of anti-war proggish people in such party luminaries as Wesley Clark, whose doddering notions about remaining in Iraq until we are truly defeated there in 2020 are somehow read as withering critiques of the War. If you are really looking for a military general to get us out of Iraq, go for Colin Powell. If Hilary Clinton, by some quirk of fate, had been elected president in 2000, I am not confident that we wouldn’t be occupying Iraq right now. If Powell had been elected, I am pretty confident we would not be occupying Iraq right now. This isn’t to argue that Powell is a progressive. One has merely to look at his son’s rule at the F.C.C. to see what the father is about – Michael Powell’s rightwing deregulatory agenda was the most radical thing to be put in place in the D.C. sphere since, say, Clinton’s Commerce department was in town. Colin Powell is merely on that end of the D.C. Supreme Soviet that is more cautious about committing American troops.

The best metaphor for the Democratic party’s political behavior, to my mind, comes from the relation between the law and a corrupt policeman. The policeman’s perks depend upon a law that he is not enforcing – and to make the price of those perks higher, as well as to disguise his activity, the policeman will, sometimes, defend the law. In the same way, the Democrats, in order to get higher prices in the Lobby and Military industrial market for themselves and their friends and associates sometimes represent the generally progressive bent of their constituency. The effect of this is generally to put a premium on the two purposes that form legislative intention in D.C. – direct legalized bribery (coming in multitudinous forms, from the board seats scooped up by politicos after retirement or defeat to lobbying jobs, etc., etc.) to corruption (coming in the form of benefits for the associates of politicos).

Interestingly, the media has a name for legislative acts promoting bribery and corruption: they call it reform. If one remembers that simple rule, it makes it much easier to read newspapers.

PS – For a hilarious dose of DC-Thought, read today’s Washington Post editorial about flood insurance.

“LIKE A RICKETY house that was already falling down, the federal flood insurance program has been destroyed by Hurricane Katrina. The theory of the program is that people who choose to live in areas prone to flooding should pay for that risk by buying insurance; they should not expect taxpayers around the country to rescue them from their own recklessness. But the truth is that, after a disaster like Katrina, the federal government will bail everybody out whether they are insured or not; it's humanly and politically unthinkable to do otherwise. Because the likelihood of a federal rescue is so strong, there never was much incentive to buy insurance. The huge federal effort after Katrina will undermine the program further.”

This is from a paper located in a town that has diverted literally hundreds of billions of dollars to a useless and pernicious military industrial complex – a town that is a swollen parasite of federal money at every level – a town whose booms correspond on a one to one basis with federal spending levels. It is like Simon Legree lecturing about the evils of slavery. Only a clique as vainglorious as that represented on the Washington Post editorial page year after year would have the balls to lecture the rest of the country on sucking up federal dollars. Perhaps the editors should take a peak in the paper’s tech section, sometime, to see where Federal tax money is really going.

Although somehow I have my doubts that the irony will penetrate heads this fat.

Tuesday, September 20, 2005

notes on the continuing atrocity

There are so many reasons to be horrified at what is happening in Iraq that it shows a certain mad myopia to focus on last weeks Galloway/Hitchens debate. It rather irritates me to read so many blogs about the debate, since, in my opinion, the space taken up by commentary about the debate is space stolen from rational discussion about the war. That kind of burglary serves the pro-war forces.

That these two old troopers managed to network up a posse of publicity from their friends for the thing is depressing, in one way – the debate has the effect of giving us a very cockeyed view of the pro- and anti-war stakes – and in another way it quietly illuminates the irreality that infests discussion about the war in this country. Galloway, trailing a dubious past as a political jester who will say anything to make a name for himself, is disreputable and plain dumb enough that he seemingly can’t question Hitchens about his real role in the war. Since Galloway, on some accounts, was under the delusion that Saddam Hussein was a progressive, this shouldn't surprise anybody.

The Hitchens-ish role could start a real debate, since Hitchens, as a part of the D.C. media machine, has actively worked to delegitimate the opportunity for democratic secular rule in Iraq. How? When you put the faces of thieves and murderers on the supposedly “democratic secular” party, you delegitimate it. When you support ethnic cleansing and war crimes as they have been committed by the occupiers to the advantage of theocrats and puppets, you delegitimate secular democrats. This is pretty obvious stuff. In the same way, when you act as a conduit to lie brazenly to the public about the reasons for the war, you crack the facade of democratic governance at home, which depends on a maximum of good information. And when you work as an operative in the publicity machine that aimed at keeping a real coalition from forming (one of the great Bush-ite goals before the war being to appear to be trying to create a coalition while insuring that the invasion would be under unchallenged American supervision) by contributing to the mass hate sessions against old Europe, then you have an indisputable function in the war machine. Ironic how the success of the Bush people in destroying a real coalition has lead to the failure of the American enterprise in Iraq. Surely the French and the Germans would have blocked some of the more insane American ideas, like disbanding the Iraqi army without controling the Iraqi army.

Alas, the debate about that function will never be held. Just as nobody seems to want to investigate why, exactly, Chalabi came to hold the position he held in D.C. The G/H debate, instead, gave us a perfectly distorted perspective on the realities of the war, depressingly abetted by Democracy Now. Oh well.

The Independent’s story, Sunday, by Patrick Cockburn is starting the slow, slow movement across the Atlantic. Cockburn reported that a billion some dollars was stolen from Iraq under Bremer’s watch. It was siphoned off through the Iraq War Ministry – which is called, in conformity with the American Orwellism, the Ministry of Defense.

The billion in Cockburn’s story is turned into hundreds of millions in the Washington Post version – which isn’t an independent report, but a report on the Independent’s report.
“This story has been building for months. The Independent of London reported yesterday that U.S.-appointed officials in the country’s Ministry of Defense squandered hundreds of millions of dollars in Iraqi money on overpriced and outdated military equipment after the Bush administration transferred sovereignty to an Iraqi government in June 2004.

Patrick Cockburn’s dispatch adds some detail to the arms corruption scandal first reported in August by the Arab cable news site and the American newspaper chain Knight Ridder. Estimates of how much money has been wasted vary widely, but named sources in all three stories agree the amount was huge.
The reports underscore the continuing costs of the Bush administration’s failure to anticipate security problems after the overthrow of Saddam Hussein in 2003.”

The last sentence is a beautiful example of DC thinking. The reports underscore the corrupt nature of Bremer’s occupation, period. But no – Americans don’t do corruption, do we? Who could ever suspect the crew around Bremer or the Iraqis he associated with of wanting to profit off the Iraqis – especially when we have legalized so much corruption that DC is drowning in it? However, as soon as the for profit nature of the occupation arises, the American press has two responses. On the business page, they are all about eagerly making a killing on making a killing. On the editorial page, they are all about human rights. It is a nice, compartmentalized reflex, and it is meant to induce a nice, compartmentalized reflex.

The interesting politics in the story have to be inferred. An Allawi seems uncharacteristically voluble about the corrupt deal – the finance minister, Ali Allawi, Iyad’s cousin. When an Allawi is pointing fingers, it means something is up with his enemy, Chalabi. Much depends on an obscure man, Ziyad Cattan:
“, the Independent and Knight Ridder all reported that the auditors had found the dubious arms deals were arranged by the ministry's procurement chief, Ziyad Cattan. The three reports said he was fired in May.”

According to the Post report, Chalabi is vindicated by the current charges:

“The corruption reports, ironically, serve as a measure of vindication of Ahmed Chalabi, a onetime ally of the Bush administration who has faced corruption accusations himself. Last January, Chalabi invoked Shaalan’s ire by charging that the interim government had sent a plane laden with $300 million in U.S. currency to Lebanon to buy arms.

"Where did the money go? What was it used for? Who was it given to?" We don't know," Chalabi said in an interview with the New York Times.

Shalaan responded by announcing Chalabi would be arrested on corruption charges. But the arrest never happened.”

In the Independent today, Cockburn has further details about the corruption charges. Here’s an interesting tidbit:

“A further $600-800 million is also missing from the ministries of transport, electricity, interior and other ministries said Mr Allawi. In the case of the Electricity Ministry, which has notably failed to increase power supply to Baghdad, there has been heavy criticism of the way in which four or five contracts for power stations agreed under Saddam Hussein were cancelled. A new set of more costly contracts for natural gas or diesel powered stations were agreed. Unfortunately Iraq does not have adequate supplies of natural gas or diesel so this has to be bought at great expense from abroad. The new power plants have also been very slow to come on stream.

Laith Kubba, the spokesman for Ibrahim al-Jaafari, the prime minister, told The Independent that under the previous Iraqi government the special committee on contracts at the Electricity Ministry refused to sign off on the contract for one $750 million power station because it said information on the deal was inadequate. The committee was promptly dissolved by the minister and another one appointed which proved more willing to agree to the contract.”

Liberation has so many, many dimensions.

Now, we do wonder whether any American paper whatsoever will try to interview Bremer to find out what he knew, when he knew it, and who around him, if anyone, benefited. … Ah, let’s not kid ourselves. We know that no American paper will touch this scandal with a ten foot pole.


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Monday, September 19, 2005

The German election

It isn’t often that I agree with Anatole Kaletsky, the Thatcherite economist. But his column about the election in Germany is the best analysis I’ve seen so far.

As we have often said around here, the change in conservative doctrine post Thatcher is that it has merged with the radically Keynesian project of pumping up demand by all means possible. This means, in effect, liquidating savings to the extent that this is possible. The old fashioned Tories would be appalled to see what the new fangled Tories are up to.

In Germany, this hasn’t happened. The CDU has adopted those portions of the Thatcherite program that are straight out class warfare – making the template for all legislation the penalizing the poor and the rewarding the rich. However, while it is true that the Anglo-American rightwing penalizes the bottom economic percentile, the story is more complex as consumer power increases. Shifting the responsibility for welfare to the individual, that longterm, invisible project, would be roundly rejected if it wasn’t coupled with increasing the money supply and easing up credit markets – which directly effect even the lower middle income families. In the short term, then, the appearance of prosperity far down the line can be engineered, even as wealth shifts towards the top wealth percentiles. Health care, transportation and the rest of it can be put on the credit card; there are easy terms for buying houses; and while wages stagnate, two wage households disguise the real deflationary pressure on wages.

Kaletsky makes this point in another way:

“The whole eurozone, in fact, is in denial about one of the clearest lessons of modern economic experience, which is that tough structural reforms of the kind promoted by Germany’s new government will work only amid rapidly expanding demand. This was the lesson of the Thatcher and Reagan eras, when tough labour market policy began to be successful — and politically acceptable — only from 1985 onwards, when interest rates collapsed, the pound and dollar were devalued and economic growth and consumer spending moved from bust to boom.
However, the link between expansionary monetary management and structural reform was not just an isolated experience of the 1980s, as demonstrated by a fascinating study published in the summer by the OECD (The Effects of EMU on Structural Reforms, OECD Economics Department Working Paper No 438, July 2005). This study looked at more than 100 episodes of major economic reforms in OECD countries and tried to assess the interaction between reform processes and constraints on monetary policy independence. Although the econometric research could not, by its nature, be definitive, the balance of evidence suggested a clear conclusion: “The absence of monetary autonomy seems to be associated with lower reform activity.”
Writing from the perspective given by this mixture of an economic war against the working class and easy money policy, Kaletsky bemoans the economic proposals the CDU brought into the election and has a nicer view of the Lafontaine’s party than any other ‘respectable’ press commentator:
“Looking at the realistic options for political realignment, Germany’s economic performance seems bound to get worse, not better, in the year ahead. This is because the policies that all Germany’s establishment politicians seem most firmly to believe in are the ones that will do the greatest damage to economic activity, employment and consumer demand. The worst of these policies is the 2 per cent rise in VAT identified by Angela Merkel as her top economic priority. In a country suffering from the world’s slowest consumption growth, this is almost literally an insane proposal, hardly mitigated by the plan to spend half the proceeds on cuts in employers’ social security contributions, which are designed to lower labour costs. These social security reductions may be desirable in principle, but their first-round effect simply will be to increase already very ample profits and they will contribute nothing at all to the growth of demand.”

And this is what Kaletsky has to say about the Left party:
“Meanwhile, the outcasts of German politics, the post-communist Left Party, had a broadly sensible policy to boost the economy’s demand-side, but none at all to improve supply.”
Kaletsky is an enemy I respect.

Sunday, September 18, 2005

the Ampel election

PS -- The following was written before the results started coming in. Astonishing: the CDU actually managed to lower its percentage of the vote. We will see how the CDU godfathers treat Merkel; conservatives in Germany, as in the U.S. in 2000, are coming into power as the minority.

LI wanted to have its say on the Ampel [stoplight] election in Germany. The consensus view is that the worst thing of all would be a grand coalition between the CDU and the SPD. We think that, of all the grim options, it would be the best thing. In this, we disagree with figures we usually trust, like Claudia Roth, the Green candidate in Bavaria. Roth is a shrewd commentator. She is correct, we think, that Lafotaine’s supposed Linksopposition party is disturbingly reactionary. Her comment that “Lafontaine is operating on the lines of a graceless Right Populism” is essentially correct. And her concern about a coalition also makes sense. In Roth’s words:

“We remain by our clear position that the party of social coldness and of ecological madness is no partner for us. Therefore we are not going to cooperate in a stoplight coalition.”

Unfortunately, the Greens are a para-party – they have never had to confront the macro-economic issues, since they have grown up in the shadow of the SPD. This has encouraged their self-limiting tendencies.

In our opinion, the best thing would be a grand coalition. Drift is better, at the moment, then the loss of worker’s rights that are supposed to be traded for a supposed resurgence of entrepreneurial activity. Entrepreneurial activity, here, means a predators ball of mergers and acquisitions and hedge funds and the like, with only a small amount of that activity really going to the working class, and the large amount swallowed up by the already bloated upper class.

We are afraid of the chute effect from what we read in the press about the election. The Anglo-American press would dearly love to dump a mooing Germany down the free market chute, and watch the state strip workers of their rights while rewarding the parasitic upper ten percent class. You can feel that raw hunger – that contemporary entitled sensibility which combines the work of the butcher and the gourmand - in everything that is written about the German election in the NYT, or in, of all places, the Guardian (see James Meek’s incredibly stupid article ), or in the Times of London. As the Guardian leader put it, in the butter won’t melt in our mouth tones so beloved of the Blairites:

“There is little doubt that Mrs Merkel is better placed to bring about the kind of radical structural changes that Germany needs.”

Radical structural changes and reform are the words to watch out for whenever the governing class knocks you down and picks your pocket. You can see exactly the acids that stir in the guts of the mainstream press, which has been an important part of the machinery that has worked to make sure that the most prosperous time in history has mainly benefited a class that is now placed as far above the average worker as the great landholders in Roman times were above their agricultural slaves. The slaves had a bit more social mobility – lucky ones acquired more power and influence than any of the downtrodden in the 9th Ward are likely to get. According to the unanimous opinion of the bien pensants, we cannot afford a social welfare system in this most competitive of all worlds. And in the style section, we cannot afford to do without, say, the latest pair of 2,000 dollar shoes. It is odd, this social poverty on the global scale and the gilded age regilded on the private scale. It is odd that we can afford any number of wars and trillions of dollars of mortgages, but we can’t afford retirement. And to those who point to something out of wack, here, it is easy to write them off as anachronisms from another age. As though the other age were a richer one, instead of, as it really was, a vastly poorer one. Which is the paradox that the press is going to keep firmly mum about: the richer we are, the poorer we are.

However, an American sidelight has more to do with what should be, and is not, at stake in Germany than the sick “reformist” fantasies of Britain’s premier labour paper. There is an article about the new way to wealth for the old grabbers of semi-wrecked companies. These entrepreneurs are wringing wealth out of old steel companies, and old car parts manufacturing companies. And they are doing it not by the old fashioned way of productivity, or cutting upper management salaries, or anything stupid like that, but by the new and improved way of radical structural reform. They simply reform away the pension plan. Neat, isn’t it? You take a company like Bethlehem steel, and you take the contractually guaranteed pensions of the retired workers of Bethlehem steel, and you throw those benefits out – let the government take care of it! Is this reform at its most needed or what?

“ROBERT S. MILLER is a turnaround artist with a Dickensian twist. He unlocks hidden value in floundering Rust Belt companies by jettisoning their pension plans. His approach, copied by executives at airlines and other troubled companies, can make the people who rely on him very rich. But it may be creating a multibillion-dollar mess for taxpayers later.

As chief executive of Bethlehem Steel in 2002, Mr. Miller shut down the pension plan, leaving a federal program to meet the company's $3.7 billion in unfunded obligations to retirees. That turned the moribund company into a prime acquisition target. Wilbur L. Ross, a so-called vulture investor, snapped it up, combined it with four other dying steel makers he bought at about the same time, and sold the resulting company for $4.5 billion - a return of more than 1,000 percent in just three years on the $400 million he paid for all five companies.

Two years later, as the chief executive of Federal-Mogul, an auto parts maker in Southfield, Mich., Mr. Miller worked on winding up a pension plan for some 37,000 employees in England. The British authorities balked at the idea, fearing that such a move would swamp the pension insurance fund that Britain was creating; it began operations only last April. But the investor Carl C. Icahn has placed a big bet that Federal-Mogul will pay off after the pension plan is gone; he has bought its bonds at less than 20 cents on the dollar and is offering money to help the insurance fund. He, too, stands to make millions.”

As the Guardian noted about Schroeder:

“Schroeder has failed to bring down unemployment, now almost five million, and struggled to liberalise a social model that, like France's, seems a relic of an earlier time.”

Those relics of earlier times – why they are so dusty, so dirty, so full of, well, frankly people who you just can’t have a stimulating conversation with about democratization in the Middle East while forking up the camembert. What you have to do with relics is sell them off – and isn’t Mr. Miller doing a very fine job of that! You have to look at this model and ask: how could any nation resist?

As for the brave New World ahead of us, in which family togetherness is boldly encouraged, Grandpa having the choice of sleeping in the streets or being taken in by his entrepreneuring children living the two wage earner life style we all just love, it is all prepared for us from the relics of the ancient, bad times:

“James A. Wooten, a pension-law historian who is a professor at the University at Buffalo Law School, said that Congress knew it was creating an imperfect system when it established the pension corporation in 1974, and that it expected to make improvements later. The bill was highly contentious, and Congressional leaders struggled mightily to achieve compromise in the last chaotic months of the Nixon presidency, with the Watergate scandal roaring around them.

In the beginning, they set pension insurance premiums at a token $1 per employee. Today, the basic premium is up to $19 a head, but Congress has found it hard to raise the rates even remotely enough to cover growing claims. Some companies have warned that if they have to pay more for their pension insurance, they will stop offering pensions.

"They took cautious steps, and those cautious steps weren't enough to prevent the abuse of the insurance program," Mr. Wooten said. "Once there's insurance, you have an incentive to run up liabilities to get more out of the insurance."

MR. MILLER'S arrival at Delphi in July, and the intense labor negotiations that have followed, are signals that the auto parts industry may be in for a long cycle of bankruptcies and restructurings, like those that reshaped steelmakers and are beginning to transform airlines.”

Luckily the government’s spending now – which is, surprisingly, about the same amount of the GDP as it ever was – is being put to good use. Instead of those terrible social insurance guarantees, it is the ownership society that we are pouring our money into – or at least as much of it as we can borrow.

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