capitalism 4.0

Op-Ed Contributor - Blaming China Won’t Help the Economy - NYTimes.com

 

IT is a safe bet that Asian currency intervention was not on the minds of Republican primary voters in Delaware this month when they selected a Tea Party favorite, Christine O’Donnell, as their Senate candidate. But the pendulum swings in American politics are a key concern of Wen Jiabao and Naoto Kan, the prime ministers of China and Japan, respectively, who both met with President Obama in New York on Thursday, with the loss of American jobs to Asian competition high on the agenda.

The Asian nations’ interest in American politics stems not just from America’s standing as the sole global superpower, but also from a growing belief among Asian leaders that the era of United States hegemony will soon be over, and that the polarization of its politics symbolizes America’s inability to adapt to the changing nature of global capitalism after the financial crisis.

What does this sweeping statement have to do with the price of yen? Plenty. On Sept. 15, the yen dropped sharply against the dollar, improving the competitiveness of Japanese exporters. After a brief bounce last week, expect the downward trend to continue. Mr. Kan’s government has decided to follow the lead of China and other Asian nations in “managing” (some critics would say manipulating) its currency; it spent a record $23 billion in a single day on foreign exchanges — the largest such intervention ever — instead of leaving the yen’s value entirely to market forces.

To understand how this decision will affect the United States, we must start with parochial politics — not in Delaware, but in the larger parish called Asia, which remains terra incognita to most American politicians and voters.

In Asian politics, what you see is often the opposite of what you get. On Sept 14. Mr. Kan, generally seen as favoring free markets, held on to his job in an intraparty election after a bitter challenge from his rival Ichiro Ozawa, who had loudly demanded a Chinese-style policy of currency intervention to keep the value of the yen low. Given Mr. Kan’s victory, investors assumed that currency intervention was off the agenda and piled into the yen, lifting it to a 15-year high against the dollar. It turns out, however, that Mr. Kan, in winning the election, may have tacitly ceded control of economic policy to Mr. Ozawa, known as the “shadow shogun” for his prowess in backroom dealing. Hence the ensuing sell-off of the yen.

The decision to break with free-market ideology and spend government money to control the yen’s value against the dollar was mainly driven by Japan’s relationship with China, not America. Japanese companies including Sony and Toyota that had demanded government action devaluing the yen were not concerned primarily with their competitiveness against America rivals. The motivation was a fear of being undercut by exporters in China, Korea, Singapore and Taiwan — all countries that aggressively manage their exchange rates.

With Chinese economic policy now serving as a model for other Asian countries, Japan was faced with a stark choice: back United States criticisms that China is artificially keeping down the value of its currency, the renminbi, or emulate China’s approach. It is a sign of the times that Japan chose to follow China at the cost of irritating America.

Japan’s action suggests that, in the aftermath of the recent financial crisis, the dominance of free-market thinking in international economic management is over. Washington must understand this, or find itself constantly outmaneuvered in dealings with the rest of the world. Instead of obsessing over China’s currency manipulation as if it were a unique exception in a world of untrammeled market forces, the United States must adapt to an environment where exchange rates and trade imbalances are managed consciously and have become a legitimate subject for debate in international forums like the Group of 20.

Market fundamentalists who feel that government interference with free markets is anathema should be reminded that, by today’s dogmatic standards, Ronald Reagan is one of the great manipulators of all time. He presided over two of the biggest currency interventions in history: the Plaza agreement, which devalued the dollar in 1985, and the Louvre accord of 1987, which brought this devaluation to an end.

The fact is that the rules of global capitalism have changed irrevocably since Lehman Brothers collapsed two years ago — and if the United States refuses to accept this, it will find its global leadership slipping away. The near collapse of the financial system was an “Emperor’s New Clothes” moment of revelation.

In this climate, the market fundamentalism now represented by the Tea Party, based on instinctive aversion to government and a faith that “the market is always right,” is a global laughingstock. Yet more moderate figures from both parties largely hold the same view: a measure to punish China over its currency passed the House Ways and Means committee on Friday with bipartisan support.

Outside America, however, a strong conviction now exists that some new version of global capitalism must evolve to replace what the economist John Williamson coined the “Washington consensus.”

If market forces cannot do something as simple as financing home mortgages, can markets be trusted to restore and maintain full employment, reduce global imbalances or prevent the destruction of the environment and prepare for a future without fossil fuels? This is the question that policymakers outside America, especially in Asia, are now asking. And the answer, as so often in economics, is “yes and no.”

Yes, because markets are the best mechanism for allocating scarce resources. No, because market investors are often short-sighted, fail to reflect widely held social objectives and sometimes make catastrophic mistakes. There are times, therefore, when governments must deliberately shape market incentives to achieve objectives that are determined by politics and not by the markets themselves, including financial stability, environmental protection, energy independence and poverty relief.

This doesn’t necessarily mean that governments get bigger. The new model of capitalism evolving in Asia and parts of Europe generally requires government to be smaller, but more effective. Many activities taken for granted in America as prerogatives of government have long since been privatized in foreign nations — even in what so many Americans view as socialistic Europe.

In France, Germany, Japan and Sweden, water supplies, highways, airports and even postal services are increasingly run by the private sector. For home mortgages to be backed by government guarantees would be unthinkable anywhere in Asia or Europe. Tax systems, too, are in some ways less redistributionist in Europe and Asia than they are in the United States. According to the Organization for Economic Cooperation and Development, the proportion of income tax raised from the richest tenth of the population is 45 percent in America, compared with only 28 percent in France and 27 percent in Sweden. These countries raise money for public services mainly from middle-class voters, through consumption and energy taxes, not by soaking the rich.

AS a result, these nations’ budgets are more stable and their governments have more ability to support their economies in times of crisis. They are also better positioned to manage their currencies and their trade relations, subsidize long-term investment in nuclear and solar energy, and spend money on infrastructure, job retraining and education. In America, by contrast, the tax system’s dependence on revenues from the richest citizens means that the social safety net and long-term goals like energy independence can be achieved only if the rich keep getting richer.

Which brings us back to Delaware. What if America decides to ignore the global reinvention of capitalism and opts instead for a nostalgic rerun of the experiment in market fundamentalism? This would not prevent the rest of the world from changing course.

Rather, it would make it likely that the newly dominant economic model will not be a product of democratic capitalism, based on Western values and American leadership. Instead, it will be an authoritarian state-led capitalism inspired by Asian values. If America opts, for the first time in history, for nostalgia and ideology instead of pragmatism and progress, then the new model of capitalism will probably be made in China, like so much else in the world these days.

 

 

Anatole Kaletsky, the chief economist of a Hong Kong-based investment advisory firm, is the author of “Capitalism 4.0: The Birth of a New Economy in the Aftermath of Crisis.”

 

via ScribeFire

A May Day distress call

| guardian.co.uk

Around the world uncertainty is becoming the single unifying characteristic of working life. And for anyone who's not independently wealthy, uncertainty about work means uncertainty about everything.

It's been over a generation since we were told about the end of the job for life. Now people are uncertain about whether they'll have a job at all, whether they'll get a pension at the end of their working lives, and whether their kids will grow up – as every parent wants – to be healthier, wealthier and wiser than them.

Far too many people across the globe – from rich countries like the UK to developing ones in sub-Saharan Africa – are making money out of the uncertainty working people are forced to endure.

Take, for example, those running our financial institutions. Many of them are once again picking up their seven-figure bonuses while the global dole queue they helped to cause hits 35 million. If it wasn't for the taxes of you and me, their banks would have gone bust months ago. It cannot be right that hedge funds are making huge profits from speculation over Greece's future while ordinary workers face having their pay, jobs, pensions and public services slashed.

Uncertainty at work goes further than pay cuts and job insecurity. Consider the outright criminals who pay below the minimum wage in Britain, no wage at all in parts of India, employ children who should be at school, or hire death squads to terrorise the trade unionists standing up for their workmates in places like Guatemala or Colombia.

Uncertainty is the main challenge facing people working in the global economy.

People don't know when they're suddenly going to discover their employer is upping sticks and relocating to the other side of the world. People wake up not knowing whether there will be work for them today, or whether their zero-hours contract will mean another day waiting for the phone to ring. And three days after Workers' Memorial Day, people don't even know whether their employer cares enough so that they come home at all at the end of a hard day's work.

Workers in Europe still have a welfare state, rights at work and – for many – a union to protect them from all that uncertainty. And while they still face risks at work, workers in developing countries often face this uncertainty completely unprotected.

Today, tens of millions of people around the world will go to work in someone else's home as a domestic worker. Even in Europe these people are excluded from protections like health-and-safety legislation. Many of them around the world are underage, overworked and prey to brutal employers who think nothing of abusing and sexually harassing the people who clean their clothes and care for their children.

But May Day is not just a distress call. It is also a day for celebrating what people are doing to challenge uncertainty and face the future, instead, with confidence and hope.

May Day belongs to people like Sonu Danuwar, the 18-year-old leader of the Nepalese domestic workers' union who is looking forward to attending the UN's International Labour Conference this June for the beginning of the debate on a new global convention on domestic workers' rights.

If she can take control of her life and campaign for a better deal for herself and people just like her, then the future may not be quite so bleak after all.

Michael Moore : Capitalism is evil

'Capitalism is evil … you have to eliminate it' | From the Guardian | The Guardian

After guns and the Iraq war, Michael Moore is now taking on an entire political and economic system in his latest documentary, Capitalism: A Love Story. So what message does the man who once planned to become a priest have?

Michael Moore on Capitalism: A Love Story

Michael Moore says of Capitalism: A Love Story, ‘I want audiences to get off the bench and become active.’ Photograph: Kevork Djansezian/AP/PA Photos

Michael Moore has been accused of many things. Mendacity. Manipulation. Rampant egotism. Bullying a frail old man with Alzheimer's. And that is by people who generally agree with his views. His latest film Capitalism: A Love Story is already out in the US when we meet. He comes storming down the hotel corridor, predictably unkempt in ragged jeans that have the unusual quality of appearing both too large and too small at the same time.

I wasn't sure what to expect. Arrogance, perhaps. Cynicism. But he begins to schmooze while he's still some distance away, shouting he feels he knows me. A few months ago one of Moore's producers interviewed me for the film. I was cut from the finished version but Moore says he watched my every word.

Settled on a couch I ask why he hasn't managed to persuade the downtrodden, uninsured, exploited masses to revolt. "My films don't have instant impact because they're dense with ideas that people have not thought about," he says. "It takes a while for the American public to wrap its head around some of the things I'm saying. Twenty years ago I told them that General Motors was going to collapse and take a lot of towns down with them. I was ridiculed, and GM sent around this packet of information about me, my past writings – pinko! With Bowling for Columbine, I told people that these shootings are going to continue, we've got too many guns, too easy access to the guns. [In Fahrenheit 9/11] I'm telling people that we're not going to find weapons of mass destruction in Iraq, we've been lied to."

Capitalism: A Love Story seems the natural culmination of all his others, an overarching look at the insidious control of Wall Street and corporate interests over politics and lives. Its timing is exquisite, coming in the wake of the biggest financial collapse in living memory. And once again Moore is bracing himself: as the film drew to a close at its premiere in Los Angeles, he posted a message on Twitter: "The packed house gets up to grab their torches and pitchforks …"

The film is certainly shocking. Early on, Moore sets out the meaning of "Dead Peasants" insurance. It turns out that Wal-Mart, a company with a revenue larger than any other in the world, bets on its workers dying, taking out life insurance policies on its 350,000 shop-floor workers without their knowledge or approval. When one of them dies, Wal-Mart claims on the policy. Not a cent of the payout, which sometimes runs to a $1m (£620,000) or more, goes to the family of the dead worker, often struggling with expensive funeral bills. Wal-Mart keeps the lot. If a worker dies, the company profits.

Wal-Mart is not alone. Moore talks to a woman whose husband died of brain cancer in 2008. He worked at a bank until it fired him because he was sick. But the bank retained a life insurance policy on the unfortunate man and cashed it in for $4.7m (£2.9m) when he died. There were gasps from the audience in a Washington cinema at that.

They came again as Moore focused on the eviction of the foreclosed. The Hacker family of Peoria filmed themselves being chucked out of their home because of skyrocketing mortgage payments. Randy Hacker, gun owner, observes that he can understand why someone might want to shoot up a bank. In a final twist, the eviction squad offers the Hackers cash to clear out their yard.

The Hackers are Republicans. So was the widow of the bank worker. It is the gap, between the ordinary American – Democrat or Republican, middle-class or dirt-poor – and predatory banks and mammoth corporations that Moore has made his target ever since Roger and Me, his first film, set out to expose the damage wreaked by General Motors on his hometown of Flint, Michigan.

"One movie maybe can't make a difference," Moore says. "I'll say, what's the point of this? What do I want [my audiences] to do? Obviously I want them to be engaged in their democracy. I want them to get off the bench and become active."

Last summer something happened that renewed Moore's conviction that his film-making was politically worthwhile. "I'm in the edit room and there's Bill Moyers on the TV interviewing the vice-president of Sigma health insurance. Massive, billion-dollar company. He's sitting there, telling the country that he's quit his job and he wants to come clean. That he and the other health insurance companies got together and pooled their resources to smear me and the film Sicko to try and stop people from going to see it because, as he said, everything Michael Moore said in Sicko was true, and we were afraid this film would be a tipping point.

"I came away from that, with 'Wow, they're afraid of this movie, they believe it can actually create a revolution.' The idea that cinema can be dangerous is a great idea."

Moore's critics would argue this is his ego speaking. The idea that his film about the failings of the US healthcare system was on the brink of prompting a revolution of any kind looks all the more far-fetched given how the political fight over the issue has panned out. But if Moore's primary intention is to send up a warning flare, to alert Americans to what is going on in their country but not usually reported, he's been pretty successful.

At the end of Capitalism: A Love Story, Moore makes a pronouncement: "Capitalism is an evil, and you cannot regulate evil. You have to eliminate it and replace it with something that is good for all people and that something is democracy." Michael Moore once planned to be a priest. In his youth he was drawn to the Berrigan brothers, a pair of radical priests who pulled anti-Vietnam war stunts such as pouring blood on military service records. In an instructive moment for Moore, the brothers made clear they weren't just protesting against the war, but against religious organisations that kept silent about it.

These days he disagrees with Catholic orthodoxy exactly where you would expect him to – he supports abortion rights and gay marriage – but he credits his Catholic upbringing with instilling in him a sense of social justice, and an activism tinged with theatre that lives on his films.

But what does it mean, to replace capitalism with democracy? He sighs and tries to explain. In the old Soviet bloc, he says, communism was the political system and socialism the economic. But with capitalism, he complains, you get political and economic rolled in to one. Big business buys votes in Congress. Lobbyists write laws. The result is that the US political system is awash in capitalist money that has stripped the system of much of its democratic accountability.

"What I'm asking for is a new economic order," he says. "I don't know how to construct that. I'm not an economist. All I ask is that it have two organising principles. Number one, that the economy is run democratically. In other words, the people have a say in how its run, not just the 1%. And number two, that it has an ethical and moral core to it. That nothing is done without considering the ethical nature, no business decision is made without first asking the question, is this for the common good?"

These days Moore, the son of a Flint car worker, lives in the smalltown surrounds of Traverse City with his wife Kathleen Glynn and stepdaughter Natalie, a four-hour drive and a world away from where he came from. But Traverse City, which is on Lake Michigan, has endured its own decline. Walking along the restored foreshore, a sign says that the city was once a major lumber exporter. Now it is known as the "Cherry Capital" of America.

"When I first got here the theatre was boarded up," says Moore. "It was a mess. I said, look, let me reopen this theatre, I'll create a non-profit. It has brought, like, half a million people downtown in the first two years. If they're downtown they go out to dinner, they go to the bookstore. It livens everything up. Stores open. Now there's no plywood on any windows." This, says Moore, has made him something of a local hero even in a town that votes Republican.

"The county voted for McCain and for Bush twice. But not a day goes by when a Republican here doesn't stop me on the street and shake my hand and thank me. Me, the pariah!"

There are conservatives who get Moore's message, particularly families such as the Hackers who have been betrayed by the system they thought was working for them. But identifying their suffering, and even the cause of their problems, is very different from persuading them that capitalism is evil, although they might just buy in to what Moore says is the core message of his latest film – "that Wall Street and the banks are truly the enemy, and we need to tie that beast down and quick".

His enemies in the rightwing media will be doing everything they can to ensure this doesn't happen, portraying him as a propagandist. And even some of his supporters say he is too willing to leave out inconvenient facts. But there's no denying some very powerful truths in Capitalism, one of which is that it didn't need to be this way in America.

Moore has dug out of a South Carolina archive a piece of film buried away 66 years ago because it threatened to rock the foundations of the capitalist system as Americans now know it.

President Franklin D Roosevelt was ailing. Too ill to make his 1944 state of the nation address to Congress, he instead broadcast it by radio. But at one point he called in the cameras, and set out his vision of a new America he knew he would not live to see.

Roosevelt proposed a second bill of rights to guarantee every American a job with a living wage, a decent home, medical care, protection from the economic fears of old age, sickness and unemployment, and, perhaps most dangerously for big business, freedom from unfair monopolies. He said that "true individual freedom cannot exist without economic security and independence".

The film was quickly locked away.

"The next week on the newsreels – and we've gone back and researched this – they didn't run that," said Moore. "They talked about other parts of his speech, the war. Nothing about this. The footage became lost. When we called the Roosevelt presidential library and asked them about it they said it wasn't filmed. His own family told us it wasn't filmed." Moore's team scoured the country without luck until they were given a tip about a collector connected to the university of South Carolina.

The university didn't have anything archived under FDR's speeches that fitted, but there were a couple of boxes from that week in 1944.

"We pop it in. It was all there. We had tears in our eyes watching it. For 65 years not a single American saw that speech, not one. I decided right then that we're going to fulfil Roosevelt's wishes that the American people see him saying this. Of all the things in the film, probably I feel most privileged that I get to share this. I get to give him his stage." It's a powerful moment not only because it offers an alternative view of American values rarely spoken of today – almost all of which would be condemned as rampant socialism – but also an interesting reference point with which to compare the more restrained ambitions of the Obama administration.

It is hard to imagine any circumstances in which Obama could put forward such an agenda, I suggest. Moore disagrees.

"He could make that speech."

And survive politically?

"He has told people he's going to operate these four years not with an eye on getting re-elected but on getting things done. I have been very happy for the last year. We came out of eight dark years and his election was – what's the word? – the relief I felt that night, I've been filled with hope since then. Now my patience is running a bit thin. He hasn't taken the reins and said: I'm in charge here, this is what we're doing. Do it. I can understand he's afraid but he's gotta do it."
Dude, where's my country? Michael Moore's America

"A thief-in-chief … a drunk, a possible felon, an unconvicted deserter and a crybaby"

On George Bush, 2001

"I say stupid white men are always the problem. That's never going to change"

After 9/11, in response to his publisher's pleas that he go easy on Bush

"It was pretty much like any other morning in America. The farmer did his chores. The milkman made his deliveries. The president bombed another country whose name we couldn't pronounce"

In Bowling for Columbine, 2002

"Back home we call it fuck-you money, OK? What that means is, the distributor of the film can't ever say to me, 'Don't you dare say this in the interview' or 'You better change that in the movie because if you don't, you're not going to get another movie deal.' Because I already have my home and my family taken care of, and enough money from this film and book to make the next film, I'm able to say, 'Fuck you.' No one in authority can hold money over me to get me to conform." 2002

"There is a country I would like to tell you about. It is a country like no other on the planet. Many of you, I am certain, would love to live there. It is a very, very liberal, liberated, and free-thinking country. Its people hate the thought of going to war. The vast majority of its men have never served in any kind of military and they aren't rushing to sign up now … The majority of its residents strongly believe in equal rights for women and oppose any attempt by the government or religious groups who would seek to control their reproductive organs ..." 2003

"There's a gullible side to the American people. Religion is the best device used to mislead them … and we have disastrous media." 2003

"I would like to apologise for referring to George W Bush as a 'deserter'. What I meant to say is that George W Bush is a deserter, an election thief, a drunk-driver, a WMD liar and a functional illiterate. And he poops his pants." 2004

"Halliburton is not a 'company' doing business in Iraq. It is a war profiteer, bilking millions from the pockets of average Americans. In past wars they would have been arrested – or worse." 2004

McDonalds recognize methane emissions as a problem

McDonald's To Fund Cow Methane Study--Can We Trust the Results or Ourselves?

The UK Guardian reports that McDonald's is funding a three-year study of cows on 350 British farms to look for ways to reduce greenhouse gas emissions that contribute to global warming. The methane emitted from cows and other livestock is a significant factor in global warming, according to multiple studies, and the British government has asked industry to see what can be done to mitigate the problem. The study will be conducted by an independent consulting entity, the E-CO2 project. Over three years researchers will regularly measure greenhouse gas emissions on the farms and specialists will advise on ways to reduce the methane levels.

How far would McDonald's to toward envisioning the kind of radical change in its offerings that might make a real difference? It is tempting to roll one's eyes and view McDonald's as the corporate devil, and I have certainly done my share of dismissive shrugs. However, any progress in understanding cause and effect of greenhouse gas emissions is useful. McDonald's is doing (part of) its job in funding the project, but it is really up to all of us "non experts" to ask the tougher questions:

Can You Bite the Hand That Funds You?
Can those performing a study funded by a multinational corporation be trusted to come up with results that might displease the people with the purse strings? Is it asking too much of business not to expect a "return" for their investment in green or environmental research and good citizenship? While I do not impugn the morals of the researchers, it is only human not to bite the hand that feeds you.

Who Is Blowing Smoke?
By examining the symptoms (methane emissions) are we avoiding the tougher questions around what is causing the emissions? Cows (and indeed, humans) emit methane in the process of digestion; but variations of diet and the sheer number of animals, driven by demand for dairy and beef, has made livestock, by some estimates, the cause of 18% of global warming. Rather than accepting the methane and trying to mitigate it, are there ways to cut down on the number of cows?

What's Normal?
When did eating meat two or three times a day become normal? In many cultures today, meat is an occasional luxury. In the U.S., per capita meat consumption has risen from 125 pounds in 1950 to 201 pounds per person per year in 2007, in a period where we have seen increases in obesity, heart disease and other illnesses of poor nutrition. And the western diet is being adopted by more people globally, increasing the demand for meat. What chance do we have to instill a cultural change, a shift away from a norm of eating four pounds of meat a week per person?

The food journalist Michael Pollan is an inspiration when it comes to fortifying oneself against the advertising industry and the corporate titans of processed food. His book In Defense of Food contains the simplest rules of all, and sometimes the hardest to follow, as he promotes mindful eating of food prepared from fresh products, mostly vegetables and fruits. His mantra--Eat food. Not too much. Mostly plants.--is a challenge to all that McDonald's currently stands for. It is simple, to the point, and a challenge to all of us to eat consciously to improve our health and to mitigate global warming and global inequity. And if enough of us change how we eat, McDonald's will follow our lead.