This is how the world
seems from where I see it. I have posted some of my recent writings, both published
and unpublished. They cover a range of issues, mainly of current interest, and
arising mainly in the areas of politics and economics.
Your own contributions would be welcome.
CONTENTS
Implications of the Euro Political Rumours Tony Blair's Easy Options Rates
Reform Political Cross-Dressing How Has Labour Done? Global Warming and Market
Failure
Implications of the
Euro
The subtitle of “Implications
of the Euro’ (edited by Philip Wyman, Mark Baimbridge and Brian Burkitt and published by Routledge, 2006) is “A
critical perspective from the left”, and that is exactly what it provides. With
a foreword by David Owen, and essays from academics like the editors and Jonathan Michie, politicians like Austin Mitchell
and Tony Benn, and journalists like Larry Elliott, it is a long overdue and valuable exploration of the political and economic
aspects of the euro from a left perspective.
Bryan Gould provides a preface
which summarises the issues in these terms:
“This book is long overdue. The
debate about Britain and the euro – so far as there has been
a debate at all - has been largely the preserve of the right, and has been pretty much dominated by simplistic posturing. On the one hand, those in favour of British adoption of the euro have stressed the
lower transaction costs and the convenience to travellers, and – if they are a little more knowledgeable – the
familiar argument that to stay out would be to threaten trade and investment.
The opponents, on the other hand,
go for the nationalistic pitch, stressing the importance of national symbols like the pound and the Queen’s head on
our currency. Neither side seems greatly interested in exploring the fundamental
issues of economic and political significance that could help shape both Britain’s and Europe’s future.
The left has hardly entered the
debate, reflecting an unwillingness to be identified with either position adopted by the right, a broad but rather fuzzy commitment
to internationalism, and an unthinking suspicion that exchange rates and currencies are properly the concerns of right-wing
businessmen and technicians. Some – like the commentators – prefer
to see the issues in terms of domestic and especially personality politics. Could
Tony win a referendum? Or will Gordon use opposition to the euro to open
the door to Number Ten?
All of this misses the point
– or rather several points. As a policy issue, the euro poses real challenges,
and real opportunities, to the left. The careful exploration and successful resolution
of these issues could determine the prospects of Labour governments for years to come.
The economic consequences of
embracing the euro can hardly be overstated. A single currency inevitably requires
and dictates a single set of monetary conditions brought about by a single monetary policy.
In an economic zone as large as the current European Union, it is inherently unlikely that a single monetary policy
could conceivably meet the interests of all the diverse parts of that economic zone.
A monetary policy that suits the stronger countries (who have the major say in what that policy should be) will harm
the interests of the weaker, reinforcing the natural tendency in any economy for productive capacity to concentrate in the
stronger parts.
A single currency means the renunciation
of one of the major (and potentially beneficial) instruments for dealing with this misalignment. Correctly aligned exchange rates allow differently developed economies to interact with each other to mutual
advantage, encouraging each to move resources to the potential growth points where they enjoy a comparative advantage. With a correctly aligned exchange rate, a weaker economy can trade productively with
a stronger one, with both concentrating on the things they do best.
In the absence of that possibility
of adjustment, inequalities do not disappear. They simply re-emerge in other
forms. Those parts of the wider economy that find the going tough will experience
a further loss of economic activity, investment and employment. The consequent
fall in demand will in turn depress the wider economy, affecting even the stronger parts who were the initial beneficiaries
of the single monetary policy.
It is for these reasons that
the United Kingdom’s
decision on the euro is important for Europe as well
as for the United Kingdom. A decision to stay out of the euro zone could be argued not only
to be in the United Kingdom’s interests but to point the way to a better economic future for the European Union as a whole. The European economy would function better if component parts had the freedom to set their own monetary
conditions and exchange rates so that they can trade with each other in optimal conditions.
These arguments are not purely
theoretical. The experience of European countries over the last twenty years
(bearing in mind that the Exchange Rate Mechanism gave us an early test of the economic consequences of currency union) testifies
to the damaging effects of compressing diverse economies into a single monetary and currency zone. It is no accident that the European Union continues to struggle while the United Kingdom has, by comparison and since leaving the
ERM, prospered.
In the absence of any possibility
of exchange rate adjustment, there are only two escape routes for depressed parts of a wider currency zone. First, they can wait until a lower level of economic activity so depresses comparative living standards
and wage rates that investment is attracted by those lower labour costs. The
problem with this is that it takes a long time and that the loss of output while this slow and painful adjustment takes place
will harm both the particular component part and the wider economy. This is,
nevertheless, where the euro zone now is.
Secondly, the depressed area
can throw itself on the mercy of the wider entity, arguing that it is making a sacrifice of its own economic prospects for
the sake of some wider goal, and that it is therefore entitled to all the benefits (such as they are) of the wider entity’s
regional policy and, ultimately, social security largesse, in order to offset the loss of economic welfare.
The wider goal for which this
sacrifice is made is presumably a degree of political integration which is also the necessary pre-condition for the assumption
of regional policy and social security responsibilities by the wider entity. It
is only in a political union (and even then the strains are immense) that the parties recognise such a community of interest
as to make possible both the sacrifice on the one hand and the assumption of responsibility on the other.
The economic aspects of a single
currency, in other words, inevitably elide into the political aspects. The deleterious
economic effects of an inappropriately wide currency union can only be made tolerable – so it is calculated –
if the parties agree to throw in their lots with each other to the point where the value they place on their common political
identity outweighs the economic sacrifice. Those who do not dare propose such
a step in its own right calculate that it can be achieved by a detour.
Such a step remains, however,
fraught with difficulty. We know from our own experience in the United Kingdom that even a long-established political
union suffers huge strains that are only exacerbated by economic divergence. Major
questions of concern to any democrat arise – issues of self-determination and accountability, representation and identity. Democracy is, after all, about more than voting.
It means being governed by those by whom we choose to be governed.
The price we are asked to pay
for a less than optimal economic performance is, in other words, a political step which we might be prepared to take one day,
but which even its proponents do not dare to describe openly right now. This
should be of real concern to the left – indeed, to any democrat - and this book is a valuable step towards a proper exploration of that concern.”
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Tuesday, October 31, 2006
Global Warming and Market FailureThe Stern Report draws some alarming conclusions from the growing scientific consensus that global warming is a fact and is
caused by greenhouse gas emissions arising as a result of industrial and other man-made processes. The Report demands an immediate
and effective response from governments around the world.
It also prompts a prior question. Why has the free market - so
often hymned as infallible by right-wing economists - allowed this situation to arise? And why have governments not intervened
before now to protect us against this extreme example of market failure?
As I point out in The Democracy Sham, the world
economy is now controlled by a small number of highly ideological and self-interested power players who are prefectly prepared
to put that self-interest ahead of the health of the planet itself. They are able to treat any cost that does not arise directly
- in terms of the bottom line - as "externalised" - that is, to be borne by someone else or, in many cases, by no
one at all. Environmental costs fall clearly into this category. Their existence is either denied altogether, as in the case
of global warming, or lip service is paid to dealing with them. Governments, other agencies and individuals who dare to take
a different view are told that if they do not like it, the economic activity at issue will simply be moved somewhere else.
A
prime example of the impotence of governments, when faced with this kind of blackmail in the global economy, arose recently
in New Zealand. The New Zealand government has signed the Kyoto Protocol and proposed a carbon tax as a means of helping to
meet its Kyoto commitments. They were promptly told by Alcan, the multinational aluminium smelters, who are major users of
electricity, that a carbon tax would mean that they would move their plant elsewhere. The government abandoned the carbon
tax and is left for the time being without any credible means of bringing about a significant reduction in emissions.
Global
warming, in other words, is just the latest and highest-profile example of the heavy price we pay for conceding control of
the world economy to a "free market" in which a handful of operators can hold the rest of the world to ransom. It
is time, in the interests of us all and of the planet, to re-establish political and democratic control over the economic
process.
Bryan Gould
5:36 pm est
Monday, October 23, 2006
Bryan Gould Speaks at Labour Party ConferenceThe New Zealand Labour Party has invited Bryan Gould to speak at their Annual Conference in Rotorua on 28 October. Bryan
Gould will give two presentations on the theme of his book The Democracy Sham and will discuss the impact of globalisation
on the New Zealand economy and society.
5:10 pm edt
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Political Cross-Dressing
In his speech at News
Corp’s celebrations in California on 30 July, Tony Blair said that the old divisions between left and right were no
longer relevant and that the modern political debate was “no longer between socialists and capitalists but instead between
the globalisers and the advocates of protectionism, isolationism and nativism.”
Let us accept his analysis
for a moment and his contention that one of the protagonists in the debate could be characterised as the globalisers (including,
of course, his host and friend Rupert Murdoch). His description of those on the
other side of the debate as protectionists, isolationists, and “nativists” is, however, less easily accepted or
even understood. Those who want to oppose or at least criticise some aspects
of globalisation do not necessarily do so on the basis of isolationism. Many
of us would see our positions as consistent with openness, freedom and internationalism.
We just happen to have some regard as well for democracy, self-determination and values other than those of the market.
It is a common trick,
error and in some cases self-deception to attach unflattering but inaccurate labels to one’s opponents so that their
arguments can be more easily dismissed. It is perhaps not surprising that Tony
Blair should have descended to this kind of puerile argumentation.
What is a little more
surprising, however, is the firmness with which he identifies himself as a globaliser.
What a reversal of normal expectations it is that the leader of a Labour party should so happily align himself with
the big battalions. Little wonder that voters are confused and apathetic. Not for nothing did I call my book on globalisation – to be published this month
- “The Democracy Sham: How Globalisation Devalues Your Vote.”
Bryan Gould
1 August 2006
How Has
Labour Done?
My friend and colleague,
Austin Mitchell MP, asked me a month or two ago to write a short piece for the House Magazine on the state of the Labour government. He
was kind enough to publish it on his own website but I reproduce it here for visitors to this site.
"What is the role
of the Left in an advanced democracy like Britain? What can reasonably be expected of a Labour Government? And
these two questions prompt a third. Does the Labour Party still represent the
Left in British politics?
My answer to these
questions (which were often raised with me by Labour Party members on my recent visit to Britain) is a personal one and starts with a proposition. In every society, power – unless checked – tends to concentrate in fewer
and fewer hands. Britain is no exception. The powerful will always use their power to make
themselves more powerful. The role of the Left in a properly functioning democracy
is, surely, to counteract that concentration of power. The true business of Left
politics, in other words, is (pace Mrs Thatcher) the diffusion of power throughout
society.
If that is to be achieved,
the less-than-powerful majority must use their democratic political power to put in place a government that will achieve that
purpose. That is what they think they are doing – even if not articulated
- when they elect a Labour government.
The expectation of a Labour
government is, therefore, that it will restrict the growth of untrammelled economic power, especially in sensitive areas like
the media. It will ensure that political power is equally shared – that
the democratic process is maintained in good shape and that human and civil rights are protected. It will allow less powerful people to organise themselves so that their collective strength can protect
them against the economic force of powerful individuals and groupings. It will
guarantee the basic decencies of life to all in society, irrespective of their power or lack of it in the market-place, so
that their life-chances are not arbitrarily restricted. It will develop the cohesion
of society so that communities as well as individuals have a role to play and enjoy a stake in its success.
None of this means that
Left politics must always act against the powerful. Nor does it mean that the
undoubted and unique benefits of market operations must be eschewed. It
takes no account of other important requirements of good government, of which basic competence and good sense would rank high
on the list and where the Labour government has, arguably, scored well. But it
does mean that Left politics, and a government of the Left, should be distinguished by their willingness to restrain the powerful
and to ensure that the less powerful are not overlooked or ground down and are, on the contrary, encouraged and liberated.
This is not, it should
be noted, a revolutionary agenda. It owes little or nothing to Marxism. It is, on the contrary, a sober, careful and non-ideological statement of what might
reasonably be expected to distinguish a government of the Left from that of any other persuasion.
So, how much of this can
we see in today’s politics? And how does the Labour government measure
up?
The answers are - not
much and not well. We see a Labour government which pays excessive attention
to the powerful, both internationally and domestically, and which apparently believes that nothing can or should be done without
their support. We see a Labour government that is prepared to endanger the democratic
process and civil liberties by placing the interests of government and other big players ahead of those of ordinary people. We see a Labour government that has pursued an economic policy that favours asset-holders
but jeopardises the jobs of those who make and sell things, a government that has – in areas like education –
re-introduced unwelcome and unnecessary divisions, a government that apparently distrusts the idea of community and collective
organisation, and prefers to entrust the functioning of society to the unchallenged market-place.
If I am right in identifying
a gap between what a Left government might reasonably be expected to do and what a Labour government has actually done, we
might begin to make sense of the current political landscape. That gap
means that there is a void in British politics – a hugely significant part of the political spectrum is no longer represented
in the politics of power. This is more than just a deficiency, or an absence. The democratic Left, which has been the wellspring of so much that is progressive,
innovative and reforming in Britain, finds that it is not only unrepresented but has actually been supplanted by what it thought
was its own instrument – that, instead of what should be its voice, a different and contrary voice is heard.
This in turn explains
the sense of disappointment, even of betrayal, that I found so often expressed. Left
activists and supporters are at best bewildered and apathetic, at worst angry but impotent, at what has happened. There is a powerful sense of lost opportunity. The thoughtful
realise that the opportunity presented by an overwhelming popular mandate for change, the intellectual bankruptcy and debilitating
divisions of the Right, and a consequent period of virtually unchallenged power in government, is unlikely to be repeated.
They know that, while
the Tory party may still – under an unproven leader who has yet to demonstrate any substance – lose the next election,
there is a palpable sense that the balance of political advantage is shifting. David
Cameron is at least succeeding in drawing a line under the disintegration of the past fifteen years and signalling that a
new Tory Party is ready to contest for power. The risk to Labour is compounded
not only by the cumulative failures that attend the progress of any government but by the loss of trust and sense of disappointment
on the part of its own natural supporters.
As the Blair period draws
to an end, and an unparalleled window of opportunity closes, an alleged government of the Left will not only have wasted a
unique chance of promoting real change. They will have achieved the reverse of
what many of its supporters expected. They will have presided over, even engineered,
an entrenchment of power for the powerful. Gordon Brown may well find that his
inheritance is worth little more than a mess of pottage."
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