The Seditionist

There is an increasing anti-immigrant sentiment in most developed countries. Its effects range from far-right politicians winning elections and bans on minarets and burquas to the mob violence of Cronulla beach some years ago. There’s also a tendency for these sentiments to be expressed more vehemently, and for the called-for action to become more extreme.

I think the reasons are to be found in our self-destructive, fear-based, exploitative and commercialised life-styles that impress upon us every day that we are merely parts of a great Progress Machine to be disposed of without notice. But it’s not the reasons behind this wave of hatred towards impoverished countries I want to address in this post.

Rather, it’s the underlying justifications people give for their blatant antipathy towards foreigners (with the most fervent sentiments usually directed against people of darker skin tones or Muslim cultural backgrounds). We who inhabit developed nations say we don’t want any more uneducated migrants. We don’t know what to do with them. There aren’t any jobs. They’re culturally backwards and incabable of integrating. They’re prone to criminality and depravity.

All right, let’s take these things as given. While overblown, there is some truth to these accusations. The mass migration from the poorest parts of the world is unlikely to consist mainly of computer experts and medical doctors. Many of the migrants have had little or no schooling. Their trade, if they have one, is often irrelevant to a modern economy and thus they fall into the growing segement of the population described as ‘unskilled’.
Their cultural views on women’s rights are often outdated (strangely, many of those who complain the loudest are also against giving equal rights to gays).

But what’s the conclusion? That we have a right to keep poor migrants from our bountiful shores?

If we accept that all humans are essentially equal in their intellectual ability and their moral fibre, we cannot blame Africa’s or Asia’s millions of poor for their poverty. The usual derisive arguments directed against our own poor make no sense. If we have a poor country of x million and a rich country of x million, the cause of poverty cannot be found in the human building blocks of the poor country unless we accept some racial theory of white supremacy. No, the difference is historical and the inhabitants of the poor country are not to blame. Being human beings as valuable as those who inhabit the rich country, they deserve the same things. Anything else is unjust and inhumane.

Unless we want to subhumanize the developing world, we cannot escape our ultimate responsibility for the welfare for all of the world’s billions. To do so by one-sided anti-immigrantion rhethoric without a detailed plan of how to raise the developing world to our standard in the forseeable future is hypocritical and deserving only of contempt.

In Germany (my other country of citizenship) we’re currently being lead by a coalition of the centre-right Christian Democrats (CDU) and their minor coalition partner, the neo-liberal economic hard right FDP.

The FDP did very well in the last election and finished third with 14.6% of the popular vote (compared to the pitiful 23.0% for the Social Democrats (SPD) and the decent 33.8% for the CDU/CSU, which was still a worse result for them than in the last elections).  They maintained a tidy lead on their two competing minor parties, the left-wing Greens and the lefter-wing ‘Left’ party. And once it was all wrapped up in a tidy package, the average German seemed pretty content with getting on with it. After all, a Big Coalition government between the two major parties as had ruled during the previous electoral term is always a terse and strategic affair. Now the direction was set, and the direction was to the Right!

The only problem is that the current government seems more able at only two things:  becoming less popular and bitchfighting evarey day and evarey night. The question is, how could Germans lose their confidence in the new government this quickly? Didn’t anyone vote? Nope, the 70.8% participation rate was the lowest since the emergence of the German Federal Republic after WW2, but that was still higher than the 62% the U.S managed for their ‘historic’ election of Obama (and that was their highest turnout since 1968!!!) .

No, there’s something different going on. That something different is the FDP’s program. Everyone loved the talk of tax cuts, but it turns out that most Germans don’t favour U.S style economic shit-storm reform. To be fair to the FDP their leader was hardly coy about the insane highs to which he wants to drive the social-democratic regression in Germany, but it seems a positive bias went in his favour.

People voted for him because of tax promises, while ignoring the proposed extensions of a failed series of social spending cuts and market liberalisation that would slam the poor and endanger the comfortable safety in which Germany’s middle class wallows.

Now most Germans, including the FDP’s coalition partners at the CDU, have awoken to the implications. It all becomes so much clearer once one realises that the ‘lazy parasite’ to be impoverished for the sake of the economically fit could be oneself. But for the grace of good health and a good jobs market go even the well-educated to the dreaded strata of lower income.

Perhaps if I were riding the progressive wave of change that all these coming calamities must throw up I would thank the despicable Westerwelle for his hatred of the poor.  Perhaps then I could think “He was the last drop”.

As it is I can only scratch my head at a people’s ability to realise the blatant truth three seconds too late again.

A Free-market advocate response to the obvious problems in modern economies often boils down to government (how surprising). Government is corrupt, corporations purchase governments, governments use regulations to enforce monopolies. Let’s put aside the fact that this argument is rarely supported with solid evidence, and let’s suppose that it’s the government that makes us shop at Wall-Marts, Microsoft, Apple and Nike. Let’s even put aside the VERY questionable thesis that governments have some sort of monopoly on power crony-ism, and the probability that when propaganda power is for sale and transparency up to the whim of corporations the corruption at every level would increase, not decrease.

What would happen in a Free Market lacking regulations?

Let’s take an expensive, high-tech item with very high start-up costs, like microchips. There is almost no threat of competition, because the start-up costs involved in producing this product, as well as the gap in technology to be surmounted are so vast.

At best there will be a very small number of serious competitors who will find it to be beneficial to all to collude and control prices. This maximises profits for the (naturally arising) cabal, and minimises the risk of catastrophic product failure.

Even so, there’s also a lot of non-techy stuff sold which doesn’t have high research costs… so a large part of the economy doesn’t have this problem! Actually, brading and control of distribution networks work much the same; to produce brand awareness takes enormous amounts of money, and small competitors will in all likelihood struggle and at best be forced to cooperate with larger corporations, to be bought up or snuffed out at a whim. Having a very powerful distribution network enables a corporation to suffocate smaller competitors and gives the large corporation a huge stick to whack anyone who dares support the competition. This happens now, and it would happen in Free Markets.

It is perfectly natural for Free-Market competitors to engage in a cannibalistic cycle of mergers until only huge, near-omnipotent monoliths remain, and I’ve never heard a coherent argument to why this wouldn’t be the case.

The thesis of Free-Market competition may hold for no-brand socks and muesli but it does not hold for real economies.

I have a counter-hypothesis. It is not regulations or governments or unfree markets that create monopolies, it’s the unequal distribution of power. The less equally power is distributed, the freer the more powerful they are to abuse their power, the smaller the number of equals they have to cooperate with (yes, it makes a difference whether you have a cabal of 10 or a cabal of 10000), the more able they are to game ANY system  to gain yet more power.

A ‘Free’ Market is a way to distribute power through property. Unfortunately, built in to the idea is the accumulation of property, and there are mechanisms to aid the accumulation of property of the wealthy in basic economics (economics of scale, for example) and basic psychology. In the long run, a ‘Free’ market is an increasingly poor way of distributing power equitably and leads to increased monopolies, crony-ism and corruption.

Representative democracy is a way to distribute power through politics. While in theory at least less susceptible to the accumulation of power, the use of money from rich families to their children and from business to favoured candidates creates an unequal distribution of power that too worsens as democracy grows more stale and intertwined with Big Business.

Together they are still better than picking just one, because distributing power twice is better than doing it once, even if the distribution mechanisms are all increasingly failing. However, the only true solution is to aim at a distribution mechanism that seeks to distribute power equitably and that has safety mechanisms that mean that it does not decay in its ability to do so over time.

Could such mechanisms be built into representative democracy or free market economics? Perhaps… for example, an equal start for all children (100% tax on inherited property – no inheritance) would go some way towards creating such a system and it would not take away from the freedom of the market itself, but of course it would create problems for classical economists who cannot understand humans except as rational sociopaths interested only in the accumulation and passing on of property. Also, it seems a certainty that those who manage to accumulate large amounts of power in their lifetimes will seek to create new mechanisms by which it can be passed on, corrupting the system.

Equality (not the straw-man version where we have bakers cure cancer and scientists sweep streets, but equality of status and an equitable share in the decisions of society) and Freedom go hand in hand, and these siblings are the only long-term cure to corruption, crony-ism and monopolies.

Most have seen a Hitler or Goebbels speech; a figure afire with conviction standing before a roaring crowd; the intonation of the speaker’s voice, the clever pauses in which the crowd can jump to their feet and cheer loud enough to drown out  all else, the repetetive chants of “Heil! Heil! Heil!” It was all an impeccably organised event of rabble rousing, down to the imposing decor, the goose-stepping children with Fatherland in their steps and iron in their eyes.

While the Nazis perfected the rabble-rousing speech, it’s been around for a long time; I presume it’s been with us since the beginning. It’s not magic, merely a simple psychological process that makes a collection of people perceive themselves as not merely a group but almost as a single individual. A process which would do wonders for the tribe during times of war, and perhaps bring it together in times of need.

Jingoists the world over frequently hold such events, flags billowing in the background and chants of “U.S.A, U.S.A, U.S.A!” or local equivalent. Whether campaign rally or tea party, a crowd is quickly transformed into a photogenic rabble.

Sometimes those of us on the left forget that the same situation appeals to us just as strongly, though there will probably be no national flags or nationalistic sloganeering. The essentials will be intact though; the spontaneous cheering, the electricity coursing through the crowd, pumping adrenaline into enthusiastic minds.

In the end, I don’t think there’s anything wrong with being inspired by being part of a crowd, even if it’s a simple psychological trick. The important thing is understanding that it’s happening. It’s OK to take the energy from such an event and apply it to though-out, well-reasoned causes. It’s counter-productive to be swept up by a wave of enthusiasm, to unthinkingly charge forward without pausing to consider whether what we’re doing is going to be productive and whether it’s even something that agrees with one’s political and moral outlook.

A big thing happened in the U.S recently; the Supreme Court overturned a judgement which prevented corporations from directly using corporate money to run political advertising and campaigning (it had to be done through political action committees or otherwise funnelled to parties through donations).

Many on the left are deeply worried by this development.

Then there are those on the left that agree corporations should enjoy freedom of speech. Those of the classic ‘liberal’ tilt. After all, the owners of corporations are also people, and they should be able to use their private resources to speak freely. Right?

Let’s disregard for a moment that the CEOs that make these decisions do not hold democratic polls of corporate shareholders (owners) and assume that all shareholders are somehow involved in this process and it is indeed their free speech that is voiced by the corporation. Is that really very free?

How free is your speech? We can talk to people, we can blog, we can youtube. We cannot purchase TV advertising, roadside advertising, radio advertising, viral advertising… sure, we could, theoretically, if we had a few million dollars just lying around for when we wanted to open our mouths; most of us don’t.

But we can join together, pool our money in non-profit corporations and then make our voices heard! Right? Sure… theoretically… we can scrape together enough money to run the occasional ad on an issue lots of us care very very strongly about. But we’re not even in the same ball park.

Why? Well, take into account that 5% of the U.S population own 60% of the total wealth. If we base free speech on the amounts of money that can be raised, those 5% have 60% of the voice. Then we know that the bottom 80% own 15% of the total wealth in the U.S. Translated, that means that rich U.S citizens have an economic voice 12x louder than would be the case would distribution be equal, and the bottom 80% have a voice only 1/5 of what it should be. The rich are 60x louder than the poor. And that’s without taking into account the known fact that of what poor people own, far less is disposable in percentage terms than for a rich person’s wealth.

Yes, income distribution is getting worse. This problem is getting worse. And we’re the lucky ones, we are the 80% of citizens of the  RICHEST countries on earth. The voice of your average African is the sound of perfect silence.

When democracy was in its infancy, there was both exclusion of minority groups and proportional voting, in which the votes of the powerful counted for more. Today, we are institutionalising a system that undemocratises (no, that’s NOT a real word!) free speech, and by omission stifles the speech of the vast majority of citizens. We allow ourselves to be propagandised and silenced, and we have learned to call this freedom.

We need the greatest amount of freedom for the greatest possible number of people. If we’re going to be satisfied with only the first part of the last sentence, we’re betraying ourselves and our fellow citizens because there’ll never be space for all of us in the top 5%. That’s just maths, folks!

Did you know that Haiti was forced to pay France the equivalent of over 20$ billion U.S dollars from 1825 when the Haitian people won their independence by force of arms?

Did you know this was to compensate French slave owners for loss of Haitian property? Did you know that these repayments were enforced by a Franco-British economic blockade of Haiti?

Did you know that by 1900, Haiti was spending 80% of its state budget on ‘repaying’ France for the loss in slaves and conquered land?

Did you know that these repayments continued until 1947?

Seems a much better explanation for Haiti’s abject poverty than a deal with the devil.

Sources:
http://en.wikipedia.org/wiki/Haiti#Treaty_of_Ryswick_and_slave_colony
http://www.wtop.com/?nid=111&sid=1865152
http://www.globalresearch.ca/index.php?context=va&aid=17130

Watching Fox, I came across one of their short filler pieces that boiled down the self-destructive nature of modern economic politics.

The piece focussed on one of the many shitty, run-down, impoverished U.S ex-manufacturing cities. I think it was Detroit (in many ways the show-piece of absolute and total economic failure) but there are plenty of other cities inside and outside the U.S that would work just as well.

Detroit cut taxes on the film industry by 40%. As a result, Hollywooders flocked to Detroit, and the city increased its income from the film industry from 2mio to >120mio annually. That’s a 6000% rise in profits. Wow! Free-market Capitalism does work! How could I argue with these numbers?

Here’s how: Detroit used to be one of the most prosperous cities in the U.S. Solidly working-class, it produced cars for the world. Then the globalisation game began, and industry started fleeing to tax havens, both national and overseas. Today Detroit has an official unemployment rate of 30%, compared to the ~14% rate in the U.S overall. The much-vaunted service industry employs a good chunk of Detroit’s population, but of course providing services cannot fill the gap left by the actual production of things people need.

It also has a post-hollywoodisation budget deficit of ~300mio dollars with a budget of 1.5 tri. dollars that is already insufficient to run vital public services. How’s it going to get fixed? Not by raising taxes, obviously. That’ll just speed up the big-business exodus. Not by cutting the budget, because there’s nothing left to cut. Not by federal intervention, because the federal government is even broker than Detroit.

What can Detroit do? Cut taxes and hope that it undercuts some other struggling city to gain a temporary boost in revenue. ’cause the dirty little secret of that extra 118$ mio. in Hollywood income is that it’s not magic money. It’s not money Detroit is making. It’s money that Detroit is sucking from other cities. How will other cities respond? By lowering taxes some more. Ca-ching, more money. That leads into another round of tax-lowering and incentivising. Where will it all end? It’ll end with a 0% tax rate and added incentives. How will the politicians spin this as a victory? Well, they’re losing the city a bit of money but they are creating jobs, and that will provide a net benefit to the community (and increase the size of the budget hole. Shhhh!). It’s exactly the same cycle that produced tax-free zones in developing countries (sweat shops, anyone?) , which means that no industrial area imposing any kind of social tax burden can compete. The result? A world of Detroits.

The precursor is with us today. California is the world’s fourth largest economy, and it is also essentially bankrupt. The Terminator went into the governorship with the brilliant idea of lowering taxes to spur economic growth. Guess what? The taxes were all lowered out. There’s no economy left to grow. The budget deficit is perfectly capable of growth, though. Interest rates on debts mean that even standing still would mean falling behind. And of course California is not standing still. It is charging full-force into total bankruptcy.

Being the strongest horse on the U.S apple cart, it’s doing an A-grade job of taking the rest of the U.S with it. California has a population of 38mio and a yearly budget deficit of 40bio. That means per resident, California is losing 1052$ a year. On the other hand, Michigan has a population of 10mio and a budget deficit of 1bio. That means Michigan is losing 100$ a year a person. Huh? The miracle child of economic success in the U.S is losing 10x more money per person a year than the economic basket case? How’s that possible? That makes NO SENSE. None whatsoever. It’s insane. The more economically successful in terms of gross state product, the less successful the state is in terms of not losing incredible amounts of money a year. And we’re ignoring the fact that compound interest compounds the problem inexorably.

Basically, economic guidance for governors should be: have as small an economy as possible, that way you will have the greatest economic success. Why is politics going the other way? Living standards. California has sky-high living standards built on the powerful economic base which provides good jobs for its residents. Michigan has high unemployment and crappy jobs, and hence blossoming slums.

Of course nobody wants to talk about the fact that this difference in living standards is built entirely on public borrowing, since it would probably be a somewhat unpopular political move to declare a program of increasing unemployment to combat public debt. Unfortunately this political expediency does not make the California model any more sustainable. The truth is, the more business you do with big business, the poorer you will be. And there’s no long-term way to win this game. It’s just a race to the bottom, and the fittest horse will get there first.

What awaits us at the bottom? Complete privatisation? A Great Chinese Buyout? A break-down of government followed by anarchy of the Darwinian kind? A revolution of angry citizens? Nobody knows the answer to that question, and I certainly don’t want to put my money on a positive outcome.