Two Harvard economists whose widely-cited research on austerity was called into question last month have published a formal correction.
Read the original here: Austerity economists correct errors
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Two Harvard economists whose widely-cited research on austerity was called into question last month have published a formal correction.
Read the original here: Austerity economists correct errors
MPs on the Public Accounts Committee question whether the government’s £310bn infrastructure spending plans are ‘credible’.
Read this article: MPs question infrastructure spending
Labour party look at proposal to encourage workers to participate directly in management
The Government is considering a fundamental review of company law to allow workers to sit on boards. Mrs Barbara Castle, Secretary for Employment and Productivity (DEP), has written to employers and the Trades Union Congress (TUC) telling them of her interest in plans to encourage workers to participate directly in management. A confidential document from the DEP on industrial democracy admits that very large issues are involved, adding that they “could involve a fundamental review of company law and of the accountability of management to employees.”
The TUC yesterday set up a special working party to clarify union attitudes. Sir Sidney Greene, TUC president, is to take the chair and among other members will be Mr Jack Jones of the Transport and General Workers’ Union. The Government paper poses a series of questions about the appointment and authority of workers as directors. The TUC will give Mrs Castle a general reply before embarking on a detailed study.
TUC leaders are expected to tell the DEP that worker directors must be appointed only by the unions and not by shareholders nor by direct election from the shop floor. They believe there need be no conflict of interest between such directors and their union colleagues during plant-level wage bargaining. TUC staff point out that ordinary directors have to juggle their institutional interests and those of shareholders.
Mrs Castle draws attention to West Germany where companies have two boards – one composed of working managers and the other taking a supervisory role. The TUC has not decided whether it wants a similar set-up here and, until it does, it will find difficulty in saying whether it wants full-time voting positions on boards, union officials sitting on a part-time basis, or rank and file workers attending board meetings as advisers.
In the public sector at least, the TUC wants a much more radical approach to the whole question of worker representation. It will tell the Government that union nominees should come from the industry and the region in which they serve as part-time members, and that they should be allowed to continue to hold rank and file union positions during their terms of office.
Category : Stocks
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HOLLYWOOD, Calif., March 29, 2013
Dell auction remains punctuated by question marks.
See the rest here: 6 questions about the Dell deal
It’s not a question of whether we should have such a tax. It’s a question of how big it needs to be to ensure that it’s effective.
See the original post here: Why a financial transactions tax is a no-brainer
At the heart of the argument over the results of the partially state-owned banks is sovereignty of the people
Hearing the CEOs of Britain’s “too big to fail” banks talk up their annual results in the past few days, it was difficult not to feel a mixture of pity, respect and fear. In particular, the heads of the partly state-owned Lloyds and RBS face demands that are logically impossible to meet, and to see them trying to be everything to everyone almost produces compassion. Their struggles also elicit respect, because they still manage to put on a pretty good show. But then you realise what they can’t tell us, and how their bank’s failure will be the financial equivalent of a nuclear meltdown, and you shudder.
Announcements of annual results – Lloyds and RBS last week, HSBC on Monday – come with conference calls for financial journalists in the morning and, sometimes, press conferences for lunch. It was interesting to note that the two banks dependent on the government made their top people available for informal chats in the margins of a press conference, while HSBC, which isn’t, made do with a conference call at which almost half the time was taken up by the heads reading out a prepared text.
The Lloyds and RBS press conferences were strikingly similar and, as they wore on it became hard not to think of them as dull, rather sophisticated but above all extremely effective rituals. On one side of the table were men (Lloyds had one woman, who said nothing) in suits projecting an image of control. Yes, they were presiding over banks with tens of thousands of employees engaged in very different and often wildly complex activities across the globe. Yes, they had been caught out by scandal after scandal somewhere in their vast empires and yes, in the past their books had given a wildly inaccurate picture of the risks they were running.
But all of this was now in the past and firmly under control, they implied, as they fired off endless numbers and percentages and ratios, and said things like “We remain very confident of our capital position,” or “Our strategy remains centred on taking into account the interests of all of our stakeholders”, or some other cardboard PR phrase CEOs learn to use when they want to deflect a question they know can’t be followed up.
Their vocabulary had been sanitised to a startling degree, with PPI and other schemes that cheated tens of thousands of trusting Britons out of their money becoming “legacy issues” requiring “customer redress”. (HSBC referred to its huge fines in the US for massive drug money-laundering as “regulatory and law enforcement matters”.)
This was one side of the table, and on the other side were the financial journalists, most of them looking distinctly less well dressed. What to ask when you’ve only just been given a telephone book of numbers and tables? Excluding three appendices, the RBS annual results came to 289 pages. HSBC produced 550 pages and Lloyds 165. Finding the hidden risks therein wasn’t a puzzle in which you look for an answer to a question. These annual reports, and the huge organisations they purport to cover, constitute a mystery, ie a situation where the question itself is unknown.
“What was that £250m for?” asked one journalist. How was the CEO’s pay structured? What did Lloyds think of the EU cap on bonuses? The CEOs would address most reporters by their first names, then give a meaningless answer. About a third of the questions focused on the terms and timetable of Lloyds’ and RBS’s return into private hands; will the taxpayers get their money back?
This was where it quickly became clear that Lloyds and RBS are asked to do the impossible. The holes in their books are caused mostly by toxic loans, but they are told to increase lending, that is to lend to parties they would otherwise prefer not to lend to. At the same time, they must increase their capital buffers, so hold on to the same capital they are told to lend. RBS and Lloyds must increase profits, but are crucified when they pay bonuses to the very bankers who bring in those profits. The banks must also be ethical, so stop the profitable practice of ripping off their clients. Also, Lloyds and RBS must focus on the UK, even though it is almost impossible for a bank to make profits in an economy that is flatlining (HSBC lost money in its UK and US operations, and was saved by its activities in emerging markets). To boot, the UK government intends to increase competition between banks on the high street – a move that ought to decrease margins.
In short, Lloyds and RBS are told to increase profits so they can be privatised as soon as possible, while at the same time being told to stop doing many of the things that traditionally brought in these very profits.
It almost felt as if the RBS and Lloyds CEOs’ job was to maintain the illusion that this could be done, while providing a lightning rod to all those who don’t want to look beyond bonuses and the question of whether the taxpayers get their money back.
What if bonuses and privatisation are diversions and the real issue is “too big to fail” in combination with too big to manage? If you believe that CEOs knew nothing about the scandals taking place under their watch, what reason is there to believe that this time they are on top of things?
Over the past 18 months I have interviewed more than 150 people working in finance in London, most of them in junior functions. Many of them believe that the top of their organisation has no idea what’s really going on. They are equally scathing about the regulators.
This is the debate Britain refuses to have. The timing and conditions of the privatisation of Lloyds and RBS are vital to the British government’s financial health, and it makes for powerful and simple-to-produce stories, especially if these banks continue to pay high salaries and bonuses. But Lloyds’ and RBS’s return to private ownership is ultimately a question of secondary importance when both banks continue to be too big to fail – and so effectively remain a public liability.
While this idea persists, Britain remains hostage to the health of banks over which it has only very limited influence. Knowing that your vital interests are affected by factors beyond your control is a recipe for stress. It’s not what democracies should be about. But it has become the new normal. The big issue today is not whether British taxpayers get their money back. It’s whether British citizens get their sovereignty back.
As communists once did, today’s capitalists blame any failures on their system being ‘impurely’ applied
The Christmas issue of the Spectator ran an editorial entitled “Why 2012 was the best year ever“. It argued against the perception that we live in “a dangerous, cruel world where things are bad and getting worse”. Here is the opening paragraph: “It may not feel like it, but 2012 has been the greatest year in the history of the world. That sounds like an extravagant claim, but it is borne out by evidence. Never has there been less hunger, less disease or more prosperity. The west remains in the economic doldrums, but most developing countries are charging ahead, and people are being lifted out of poverty at the fastest rate ever recorded. The death toll inflicted by war and natural disasters is also mercifully low. We are living in a golden age.”
The same idea has been developed systematically in a number of bestsellers, from Matt Ridley’s Rational Optimist to Steven Pinker’s The Better Angels of Our Nature. There is also a more down-to-earth version that one often hears in the media, especially those of non-European countries: crisis, what crisis? Look at the so-called Bric countries of Brazil, Russia, India and China, or at Poland, South Korea, Singapore, Peru, even many sub-Saharan African states – they are all progressing. The losers are western Europe and, up to a point, the US, so we are not dealing with a global crisis, but simply with the shift of progress away from the west. Is a potent symbol of this shift not the fact that, recently, many people from Portugal, a country in deep crisis, are returning to Mozambique and Angola, ex-colonies of Portugal, but this time as economic immigrants, not as colonisers?
Even with regard to human rights: is the situation in China and Russia now not better than it was 50 years ago? Describing the ongoing crisis as a global phenomenon, the story goes, is a typical Eurocentrist view coming from leftists who usually pride themselves on their anti-Eurocentrism. Our “global crisis” is in fact a mere local blip in a larger story of overall progress.
But we should restrain our joy. The question to be raised is: if Europe alone is in gradual decay, what is replacing its hegemony? The answer is: “capitalism with Asian values” – which, of course, has nothing to do with Asian people and everything to do with the clear and present tendency of contemporary capitalism to limit or even suspend democracy.
This tendency in no way contradicts the much-celebrated progress of humanity – it is its immanent feature. All radical thinkers, from Marx to intelligent conservatives, were obsessed by the question: what is the price of progress? Marx was fascinated by capitalism, by the unheard-of productivity it unleashed; but he insisted this success engenders antagonisms. We should do the same today: keep in view the dark underside of global capitalism that is fomenting revolts.
People rebel not when things are really bad, but when their expectations are disappointed. The French revolution occurred only once the king and the nobles were losing their hold on power; the 1956 anti-communist revolt in Hungary exploded after Imre Nagy had already been a prime minister for two years, after (relatively) free debates among intellectuals; people rebelled in Egypt in 2011 because there was some economic progress under Mubarak, giving rise to a class of educated young people who participated in the universal digital culture. And this is why the Chinese Communists are right to panic: because, on average, people are now living better than 40 years ago – and the social antagonisms (between the newly rich and the rest) are exploding, and expectations are much higher.
That’s the problem with development and progress: they are always uneven, they give birth to new instabilities and antagonisms, they generate new expectations that cannot be met. In Egypt just prior to the Arab spring, the majority lived a little better than before, but the standards by which they measured their (dis)satisfaction were much higher.
In order not to miss this link between progress and instability, one should always focus on how what first appears as an incomplete realisation of a social project signals its immanent limitation. There is a story (apocryphal, maybe) about the left-Keynesian economist John Galbraith: before a trip to the USSR in the late 1950s, he wrote to his anti-communist friend Sidney Hook: “Don’t worry, I will not be seduced by the Soviets and return home claiming they have socialism!” Hook answered him promptly: “But that’s what worries me – that you will return claiming USSR is not socialist!” What Hook feared was the naive defence of the purity of the concept: if things go wrong with building a socialist society, this does not invalidate the idea itself, it simply means we didn’t implement it properly. Do we not detect the same naivety in today’s market fundamentalists?
When, during a recent TV debate in France, the French philosopher and economist Guy Sorman claimed democracy and capitalism necessarily go together, I couldn’t resist asking him the obvious question: “But what about China?” He snapped back: “In China there is no capitalism!” For the fanatically pro-capitalist Sorman, if a country is non-democratic, it is not truly capitalist, in exactly the same way that for a democratic communist, Stalinism was simply not an authentic form of communism.
This is how today’s apologists for the market, in an unheard-of ideological kidnapping, explain the crisis of 2008: it was not the failure of the free market that caused it, but the excessive state regulation; the fact that our market economy was not a true one, but was instead in the clutches of the welfare state. When we dismiss the failures of market capitalism as accidental mishaps, we end up in a naive “progress-ism” that sees the solution as a more “authentic” and pure application of a notion, and thus tries to put out the fire by pouring oil on it.
Labour leader says the Conservative squeeze on middle incomes has contributed to economic failure and no growth
Ed Miliband promises to make the 2015 general election a “living standards election” as he claims that the coalition’s squeeze on middle-income Britain has deepened the recession and created the “chilling prospect” of a further decade of pressure on most families’ living standards.
In a Guardian interview before a major speech on the economy, he also accuses David Cameron of deliberately squeezing the living standards of middle Britain in his determination to cut the deficit.
Bidding to set the frame for the next election, and drawing on some of the strategy that helped re-elect Barack Obama, the Labour leader says: “I am offering a choice between an economic recovery made by the many, not just a few at the top, and a Conservative strategy that consists of trickle-down from the top, a squeeze on the middle and a race to the bottom.”
He goes on: “I will be asking the question ‘are you better off than you were four years ago?’ and I don’t think it is in dispute – people are worse off. The Office for Budget Responsibility figures are showing earnings behind inflation, and the Institute for Fiscal Studies shows the same. It would be a good start if David Cameron could just admit the facts.
“Squeezing living standards does not achieve economic success. It contributes to economic failure and is a consequence of their economic failure and the lack of growth. I am offering a recovery made by building, not squeezing the middle.”
Obama also successfully promised to restore the American economy “from the middle out”, as opposed to relying on the trickle-down reforms of the Reagan era that aimed to stimulate production by removing regulations.
In an attempt to underline how the Tories have failed on the economy, Miliband will make his speech in Bedford, where nearly 60 years ago the Tory prime minister of the time, Harold Macmillan, declared: “You’ve never had it so good.”
Miliband tells the Guardian: “Far from feeling they have never had it so good, millions across Britain today fear they will never have it so good again. The question that people ask me the most is ‘how do we turn this round?’ The answer starts with a truth that we have forgotten as a country: that economic recovery will be made by the many, not just by a few at the top.”
He first signalled the new line of attack at prime minister’s questions when he challenged Cameron to admit living standards were falling for most people. The exchanges led Cameron to counter that Labour under Gordon Brown had hit strivers by abolishing the 10p tax rate. There is pressure from some Tory circles, as well as some Labour policy analysts, to grab the policy, but the estimated cost of £6.2-£7bn makes it unlikely to be adopted by George Osborne in the short term.
Labour officials say Miliband’s speech will contain new policies, “including specific measures to address the living standards crisis for the squeezed middle, both now and after the election”. It will include pledges to break the stranglehold of the big six energy suppliers; stop train company “rip-offs” on popular routes; introduce rules to stop unfair bank charges; and cap interest on payday loans.
Asked if he would support a mansion tax to help raise cash for the “squeezed middle”, Miliband told the Guardian: “We have said we will look at the idea of mansion tax. Ed Balls was right to say that and we have said we would work with the government to make it happen.”
Such a move would leave the Conservatives isolated in their opposition to a tax on expensive properties and give Labour a common policy with the Liberal Democrats, who have made Tory opposition to the tax one of their defining issues in the Eastleigh byelection.
With Labour still trailing the Conservatives in most polls on the economy, it is crucial for Miliband to gain credibility in this territory. He promised: “This issue of living standards and how you create growth is absolutely at the centre of people’s lives. It is the first, second and third question of the election.”
He rejected suggestions that a pick-up in growth before the election or a Conservative promise to do more in a second term would resonate.
“You don’t need to gaze into the crystal ball – you just have to look at the record of what they have done over the past three years. They are saying that is their priority to supposedly cut the deficit as much as possible, squeeze living standards as much as they can, regardless of the consequences, cut taxes at the top and deregulate as much as much as possible. It has not worked. It’s not a mystery that it has not worked. It’s not a growth strategy.”
His attack came as Office for National Statistics figures showed the real value of average earnings fell in real terms for the last three years, and have slumped to a similar level to a decade ago. The Bank of England also forecast no rise in living standards. The Resolution Foundation suggested it might take a decade for Britain’s low to middle income families to see their living standards return to pre-recession levels. Miliband described the figures as chilling.
The Conservatives pointed out they show real average earnings rising by 1.7% in the last year of this parliament when adjusted for CPI inflation, or by 0.6% by RPI inflation.
Prof Mary Beard tells BBC Question Time online shopping is not the solution people think it is and shopping in real life still has its place.