A word about the UK Economy

The prevailing neo-liberal ideology to which the UK is wedded rests on the idea of completely open borders to trade and capital flows. It is a dog-eat-dog world that places market competition as the prime motif of economic policy-making. Companies are free, even encouraged, to have their products made wherever it is cheapest to do so and to export them into the UK rather than have them manufactured locally.

Countries with the lowest production costs are invariably those with low-paid labour, poor educational and welfare standards and non-existent pollution controls. So while we import cheap manufactures, we export, free of charge, our responsibilities for the welfare of employees and for the environmental impact of industrial production.

The weltanschauung also demands that companies redefine themselves as commodities, as if they were the same kind of substance as potash or sugar. National corporations, no matter how vital to our industrial profile, should be available for sale and thereafter moulded to suit the ambitions of owners who live elsewhere and have no stake in the welfare of the founding country or its citizens.

One obvious result of this economic paradigm has been the denationalization of UK manufacturing industry which - unsurprisingly - now only accounts for 12% - 14% of GDP,  down from over 30% in 1970.

Expenditure on R & D - the handmaiden of industry and catalyst of innovation - has likewise fallen dramatically compared with other so-called industrialized countries - and so has the UK’s trade balance in goods.

R & D has faded at least in part because we no longer own most of our major manufacturing base. Innovative effort tends to take place at headquarters - not in foreign-owned assembly plants or in the offices of wholesale importers. Japanese plants in the UK, for example, conduct almost no R & D. With the sale of so many great UK companies, the bulk of our work force has been deskilled with barely a murmur of protest, while politicians blithely ignore the evidence - demonstrated in the above table - of our poor performance.

Both Labour and Tory soothsayers dismiss the decline of UK-owned manufacturing by claiming that the service sector and the ‘knowledge economy’ will henceforth be our main engines of growth.
Except for financial services and tourism, however, most of the service sector does not generate wealth; it merely redistributes existing resources. And the jobs created are usually low-paid, semi-skilled, relying more often than not on government expenditure to survive.

The ‘knowledge economy’ equation rests on the fantasy that somehow we will be able to compete through excellence in design and innovation while the rest of the world remains content to manufacture products for our consumption. Keen-eyed readers will spot the contradiction. An economy dependent on low-grade service jobs is unlikely to have the wherewithal to command the heights of technological innovation. Nor are countries like China and India going to cede the territory to us, just because our politicians say so. On the contrary; with the manufacturing base at their fingertips, they will be almost inevitably become innovators as well. Given the current commitment of our politicians to the neo-liberal economic model, it is not wholly irrational to wonder whether we might be in the first stages of progressive underdevelopment of the kind that happened to other centres of excellence in the past, like ancient Egypt, Greece and Rome.

What has been the effect of UK economic policy on incomes? At first glance, the statistics seem reasonably positive. With the exception of 2008 - 2009, real wages appear have risen over the last decade

But if that is true why do so many people feel they are treading water?  The answer is slightly complex. Inflation was certainly kept in check during most of the past decade - largely through the importation from low-cost countries of cheap food, clothing, footwear, electronics and other modern ‘essentials’. This, by the way is the source of Gordon Brown’s famous boast about the end of boom and bust. Where inflation showed itself, however, was in ‘goods’ that couldn’t be imported, of which the most important and obvious is property. House prices where I live, for example, have risen five fold over the last dozen years - against an average wage increase of about 15%. That is a staggering difference.

How can it be that house prices rose so much faster than wages? The answer lies mainly in the amount of money available to buy them. It is not wages that have risen astronomically but debt.

During the boom that led to the current crisis, many will recall receiving countless offers of loans through their electronic or physical mail box. We should remember that under a Fractional Reserve Banking System  - which is what we have - every time a bank makes a loan it effectively creates new money and thereby increases its own assets. Granting loans was good business for the banks, and securing one became scarcely more arduous for the applicant than buying a sofa.  Many people took the bait. Private indebtedness soared, and with so much debt money sloshing around in the economy, property prices shot through the roof. Other “unimportable” costs rose as well, like education and health care, though health costs were partly attenuated by the “importation” of nurses from elsewhere and by contracting out cleaning and janitorial services to companies using low-cost immigrant labour. In other words, the underlying inflationary pressures in the economy only showed up in certain “immobile” sectors. Elsewhere they were disguised by cheap imports both of goods and labour.

Who has benefited from the UK’s neo-liberal version of globalization? Answer: bankers, financiers, major business owners, commodity brokers and corporate executives. News that the UK’s richest people enjoyed a massive increase in their wealth last year should come as no surprise. The present economic system foments the concentration of wealth at the top. Mega profits are the wages of a system in which capital is free to go where it will regardless of the effect on national economies and on the local labour force.

Let’s return for a moment to those loans. On both sides of the Atlantic we have long been sold the idea that a dignified life includes ownership of our own home. To borrowers who couldn’t muster an initial deposit, many of whom were unemployed or in low-paid employment, lenders - notably in the United States - began offering mortgage loans of 100% or more of the value of the property. They knew these loans were risky, so they charged borrowers a high rate of interest to reflect the risk level - thereby making monthly payments even more difficult and unlikely. Then they bundled these risky loans up with others that seemed a little less risky, tied them with plenty of string, and sold them as solid “securities” to other organizations with the promise of a steady income stream from the very attractive rate of interest being charged. All entirely legal - and fundamentally corrupt. Then began the chain reaction. Borrowers defaulted because they couldn’t keep up with their payments, and when the banks repossessed the properties they found that the market for them had shrunk and their value had plummeted. Meanwhile, the organizations left holding those parcels of high-value securities - RBS was one - suddenly discovered that the contents consisted of nothing but cool air.

How easy it is to forget that behind every loan default and property repossession are impoverished lives, people made homeless because they bought the dream of economic independence and discovered that the system itself made the dream impossible. The current financial crisis is not an aberration that can be addressed by a few changes in the banking regulations. It is a precise function of the neo-liberal model.

How have other countries approached the issue of western-style globalization? Many have taken it with a large pinch of salt. German nationals have retained ownership of a substantial proportion of their manufacturing base - and as a result Germany has remained an important source of technological innovation as well as one of the world’s largest exporters of manufactures.

In France, government regularly intervenes to prevent foreign takeovers of key industries. Denmark and The Netherlands have put huge resources and effort into horticulture and agroindustry - sectors not conventionally associated with high-tech but which demand as much scientific, engineering and managerial know-how as many of the more glamorous ‘knowledge’ activities. Selective protectionism has remained a part of economic policy.

China meanwhile, has taken a different route - ignoring the western neo-liberal model altogether and conducting a highly-managed industrial and trade strategy that includes exchange-rate manipulation as well as state oversight of foreign investment in China and Chinese investment elsewhere.

What does all this mean for the UK? That is precisely the question  our three main parties have studiously avoided in the run-up to the election. Both Tories and Labour are irrevocably wedded to neo-liberalism, while the Lib Dems watch placidly from the sidelines apparently afraid to comment. None of them seems inclined to question, let alone reverse, the laissez-faire trajectory on which we are embarked.

Yet if we are to avoid a future of ineluctable decline, we will have to tackle the issues of re-industrialization, R & D, and the need to start making things once more for ourselves. We will also have to face the implications - as even Peter Mandelson has finally understood - of allowing our industrial base to fall into foreign hands.

A Grumble about UK Economic Policy

Nowhere is the idea of consumer choice more absurd than with schools and hospitals. A choice of schools can only be meaningful if some are "inferior" - and therefore unpalatable; while the idea of choosing a hospital when we are sick presupposes that we are in a position to distinguish between available options - something that would lie beyond the expertise of most of us even when we are not sick. What, I suggest, we would prefer are good schools and good hospitals so that choice is rendered unnecessary.

But these are not the only absurdities of modern capitalist theology. Another is the idea that corporate efficiency is always compatible with national or regional economic efficiency. In fact, the two are different and, in many cases, mutually exclusive. In a capitalist economy it is always efficient for the firm to produce at the lowest possible cost - and its techniques for doing so include maximizing sales, reducing labour costs, and externalizing social costs. But it is not economically efficient at the national level for people to buy superfluities (and create the associated waste), nor for a nation to cope with employment instability, the displacement of small farmers and business-owners by multinationals, the ravages of industrial pollution, and the societal disruptions that accompany extremes of inequality. Inequality itself is arguably a spur to capitalist enterprise, but it is also a charge on the social fabric. Investment banking, and currency and commodity markets can net vast rewards for a few businesses and individuals, but they often do so by devastating vulnerable populations and, as we have recently seen, inflicting significant harm on national economies.

One of the most interesting ways in which companies externalize their costs is by laying them off on their own customers. Banks, for example, have been closing branches not a result of a loss of clientele but as a cost reduction measure; and the direct result can be measured in longer queues and more waiting time for customers. A similar effect can be noticed in the widespread practice of imposing multiple layers of alternative "choices" to customers trying to make a telephone enquiry, at the end of which, as often as not, they are invited to call back because "we are experiencing a large number of calls". Practices such as these are a means of transferring costs from the firm to the customer - making them wait for a service that "efficiency" suggests they should receive well...efficiently.

Recently while waiting in a bank line-up, I made a stab at estimating the value in lost working hours to the UK economy if my own waiting experience were representative of that of bank customers in general. The sum came to £320 million per year based on a modest average labour value of £20 per hour.

A couple of weeks later, I found myself making a similar calculation for time wasted trying to get BT to resolve a broadband issue. In this case I spent a total of just under four hours on the telephone over two days (including time "on hold") and spoke at length to no less than five different people. My estimate of the value of the time lost projected onto the UK population as a whole came to £1.5 billion - not including the cost to BT of having five staff members involved of whom four proved unable to help.

These are tongue-in-cheek calculations, of course. But could they also be food for thought?

Idealism, Politics, Uruguay

A small country in a region generally ignored by the anglo-saxon world is undergoing a remarkable transformation. Five years ago, for the first time in its history, the people of Uruguay elected a socialist government and a left-wing president, Tabaré Vásquez. They came to power with an idealistic mission not just to raise the general standard of living of the people but to institute a series of social and economic reforms that would both strengthen their democracy and fundamentally improve their quality of life.

At the heart of this mission - which to outsiders may well have seemed naively ambitious - was a plan to ensure that Uruguyan children had access to the same educational and informational resources as the most privileged children of the so-called First World. With this in mind, Vásquez announced at the end of 2006 his Plan Ceibal - to give a free laptop equipped for internet access to every child between the ages of 6 and 12 ..."so that each of them is not only equal in law but equal in opportunity".

Just under three years later, as Uruguayans were preparing to elect his successor, President Vásquez completed the task by personally handing a laptop to the 6-year-old who stood last in line. Every school child in Uruguay now owns a reader's ticket to the vast library of human knowledge and learning offered by the World Wide Web.

Don José Mujica - Uruguay's new president elect - belongs to the same left-wing coalition as Vásquez - the Frente Amplio - and he has made clear that he intends to make the same commitment as his predecessor to education, social welfare and justice.

Most of us have heard politicians voice similar intentions, and we are familiar, too, with their subsequent failure to carry them out. What makes Uruguay different, is that these apparently utopian dreams are being implemented - not in half-measures but fully, openly and with the participation of the people.

Uruguay's new president has a remarkable and colourful history. He is a former member of the Tupamaro movement - an armed revolutionary group formed in the 1960s. Apprehended several times, he spent nearly fifteen years in jail - where, in addition to being tortured, he was confined for two years at the bottom of a well. He was finally released after the restoration of democracy following the military dictatorship of 1973 - 1985.

In appearance Mujica could could scarcely look less like a guerrilla fighter or even a national leader. He never wears a tie and rarely a suit, and one could easily imagine him as a retired school teacher or bus driver spending his time chatting in a local café or dozing over a newspaper on a park bench. When he speaks, however, one becomes instantly aware of a quiet but deeply impressive charisma, and intelligence of a high order. His style is simple, his voice, tone, vocabulary those of the man and woman in the street. In every conceivable sense he appears as one of the people.

A speech he made to a gathering of intellectuals shortly after his triumph in the polls is as deeply inspiring in its own way as Obama's victory address to the US nation a year earlier. In it he lays out an Athenian vision - not of a country where citizens are offered a banal series of consumption choices, but of one where everyone is empowered by the quality of their education to lead fulfilling lives and to participate in the well-being of the nation and of their fellow citizens.

One senses that Uruguay is breaking new ground, and that if the country continues to travel the road on which it is now embarked, it will likely emerge in twenty years time as the Switzerland of the southern hemisphere: at once the most deeply democratic, technologically dynamic and culturally creative nation in Latin America.

In the anglo-saxon West, with our usual hubris and contempt for poorer nations in distant parts, we will probably refuse to see the lesson offered by this small country. Instead, as likely as not, we will watch in mild bewilderment as it scoots past us on the UN Human Development index. And then we will settle back to the petty squabbles of party politics, and the vacuous blather of political leaders who have long since traded in whatever idealism and principle they might once have possessed for the chintzy accoutrements of office.

Obama, the Crisis and the American Dream

Most of us were too thrilled by Obama's victory to worry about how he would perform. From the outset, as his choice of key cabinet members clearly demonstrated, he showed a lack of conviction about what he wanted to achieve: Clinton at State, Geithner at the Treasury, and Gates at Defense. Gates, of course, was CIA Director under Bush, Geithner comes straight out of Wall Street, while dear Hilary is nothing if not "old Washington". At a moment when Obama had a chance to blow some fresh air over the Potomac, he inhaled the stale DC air instead.

His dithering over Afghanistan and backtracking on key elements of health care reform once again show an absence of decisive leadership and maybe even of genuine political conviction. There is an old saying that it's better to die on your feet than live on your knees; but on health care in particular, Obama appears to have dropped to the floor as soon as the GOP shook a fist at him.

But where Obama - and indeed the US - are truly in a hole is with the economy. The flaw in the American version of capitalism lies buried in the heart of the American mythology about itself: that everyone can "make it", that individuals are responsible for their own success or failure, and that government should keeps its hands out of people's pockets and its nose out of their affairs. The US system is the best because - well - it's the best.

Unfortunately, international comparative statistics tell a different story. Social mobility in the US is among the lowest in the developed world (the UK's record is, if anything, even worse); and the US is at the bottom of the developed country list for life expectancy and infant mortality. Most people, in other words, don't "make it". Nor are they great at looking after themselves. Low educational standards is another US "achievement".

Meanwhile, and perhaps in the long term even more important, the neo-liberal, laissez-faire economic model has not only hollowed out industry in the US by fostering the flight of production facilities to low-cost areas of the world, but it is proving defenceless against the state-guided, protectionist capitalism of China and some smaller eastern countries. Much of the West's decline has, until recently, been masked by the availability of cheap imports (thereby disguising the relative reduction in quality of employment and in average remuneration) and the massive financial profits generated by Wall Street and the City. But the current recession, the gargantuan greed of western bankers, and the West's huge indebtedness have torn away the mask to reveal a sickly visage.

The US is very far from moribund, but she is unquestionably in trouble and her citizens are palpably angry about it - hence the voter volatility in the Massachussetts senate race. Ironically, voters want Obama to get the country back on its feet even though many of them don't believe government should be involved. They want health care fixed only if it comes tax free, and while they are wedded to laissez-faire, they want the bankers reined in and maybe even punished (unless punishment means more government in which case - maybe not). In a nutshell the problem isn't government involvement but the American weltanchauung.

What the country needs, one suspects, is a reevaluation of its sclerotic economic model, a searching re-examination of its collective myths, and a far more courageous administration in the White House.

Drug Nutts

Some years ago, I attended a celebration dinner at a well-known British university. A head of department had just been nominated to the position of vice-chancellor of another equally prestigious seat of learning, and we were gathered to celebrate his achievement. The food was more than acceptable and the wine both drinkable and in copious supply - so that when, over coffee, the speeches began, we were all in good humour. First in line to speak was the guest of honour himself and, as usual, he gave a brilliant and witty oration. After that, however, matters went rapidly downhill as a succession of mediocre wits - all heads of department - rose to their feet. Listening to one especially dull contribution, the Dean of Studies, next to whom I was seated, whispered "...there are professors and professors (pause) unfortunately".
Many years later the spat (November 2009) between the UK's Home Secretary Alan Johnson and Professor David Nutt - recently sacked as head of the Drugs Misuse Advisory Council - brought that Dean of Studies' pithy aside back to mind. The good Professor Nutt had claimed that the drug Ecstasy was no more harmful - perhaps less so - than horse-riding. Since he appeared to have most of the press and a handsome proportion of the pundits on his side, I decided to throw in a protest - choosing for my target a gruffly strident anti-Johnson polemic in Open Democracy.
Please understand, I'm no defender of any of the major UK political parties - but still less am I ready to be bludgeoned into intellectual submission by professors like Nutt who prefer to be believed (and even obeyed) because they are professors rather than because they are learned.
Here are my two submissions; the second in response to a suggestion by another contributor that I might not have understood the professor's use of statistics.

Submission One

The chattering classes are having a ball with this one - with everyone who thinks they are on the progressive wing of political correctness lambasting Alan Johnson for his sacking of Professor Nutt. Although I am cautiously in favour of legalization - and therefore probably on the professor's side with respect to policy, I find the widespread belief that a professor's advice should be taken as gospel to be no more credible than the fantasy of papal infallibility. When the professor demonstrates evidentially that alcohol and tobacco cause more harm (to health?) than ecstasy and cannabis, I assume he knows his stuff; but when he moves from there to speculating about the different effects of government policy, he seems to me to be laying claim to a level of authority and wisdom that exceed his professional qualifications. I even wonder if he has truly evaluated - scientifically - the evidence for his statement that ecstasy (also crack? Heroin? skunk? LSD?) and horse-riding are about equal in the degree of harm they cause. If so, I would be interested in seeing that evidence and would be mightily impressed - and astonished - if it proved to be watertight. Statements of this kind are a form of playing to the gallery: unnecessary if the audience consists of fellow scientists, but otherwise merely provocative.

Nor are they illustrative of anything. Lots of things can be said to cause harm. It might just as easily be shown, for example, that walking at night, or jogging are as dangerous as horse-riding. The argument rests on the fallacy of assuming that a comparison of two dissimilar elements sheds light on either of them. And if the professor truly thinks that banning horse-riding would be easy, one wonders what he's been smoking.The statement itself could not be more revealing of professorial naivety.

History shows that scientists frequently get things wrong. But even if Professor Nutt is entirely correct in his analysis, this doesn't mean his advice is equally correct. Politicians have to consider a great deal more than their scientific advisers: international treaties and understandings on the issue in question (the drugs trade), public opinion, the tabloids, the welfare of vulnerable members of society, and not least the opinions of other advisers (or are we to assume that professors always agree with each other?) etc.

Advisers merely give advice. They should not expect their advice always to be taken, still less expect ministers in effect to obey them. Nor should they conflate the right to freedom of speech with throwing a tantrum if their advice is rejected. If they want to influence policy, they should stand for office. They might then learn something about how difficult these issues are to deal with politically, however straightforward they may seem in the white-coated confines of the campus laboratory.

Submission Two

Okay. Let's have some fun.

The use of the word ecstasy in this context presumably means the practice of ecstasy consumption. The data obtained on its harmfulness are derived from the population of ecstasy consumers (NOT the proportion of the total population that consumes the drug).

Similarly the data on harm caused by horse-riding are derived from the population of horse riders.

Statistical data are, of course, taken from population samples.

In order for a comparison to be valid, the two samples have to be derived from the same (or at least very similar) populations. A simple random sample of the UK population will not work because it could not be guaranteed that it would contain any ecstasy consumers or horse riders. So in order to conduct a comparative analysis of "harm", we need a sample of ecstasy consumers and a sample of horse riders.

The population of horse riders in the UK includes:

1. Adults who ride horses as part of their profession: jockeys,
police officers, cavalry etc.

2. Adults who ride purely for recreation.

3. Hunters (or cross-country animal chasers)

4. Sports men and women, some of whom participate in national and international competitions.

5. Children

6. Circus and other performers.

The population of ecstasy consumers is...well no doubt Professor Nutt can tell us who consumes ecstasy and under what circumstances.

It's a fair bet that Professor Nutt's ecstasy population sample is different from that of horse-riders (if he ever used one). Children are unlikely to be represented among the drug-takers. Nor sports riders for that matter. Nor professional consumers - i.e. people who get paid for taking ecstasy.

You may think that if you remove professional horse-riders and children from your "rider" population and, say, restrict it to adults who ride for recreation, you can select ecstasy consumers of the same age range and thereby get comparable samples. The problem here is that the two samples would be selected differently and not randomly, which would invalidate the comparison.

Now let us look at how you define each activity. By ecstasy consumers do we mean anyone who consumes the drug once, or regular consumers. If the latter, what constitutes a regular consumer? How many acts of consumption qualify an individual for inclusion in the data sample?

We ask the same kind of questions of horse-riding. How many person-hours of riding per unit of time (say per year) qualify someone as a rider?

And once we have defined our sample populations, we still have to work out how to make one activity equivalent to the other (how many person-units of ecstasy consumption equal a person-unit of horse-riding or vice versa). This is necessary in order to be sure of a roughly equal chance a priori (i.e. before conducting the analysis) of finding "harmful effect" in each sample.

We then have to identify degrees of harm and its victims (the self and other parties). Do we choose, say, admissions to hospital, as our benchmark? Should we also include benefits (i.e. negative harm) as well as positive harm to health, happiness and long-term success or failure? In the case of horse-riding we can probably limit the definition of harm to injury suffered by the rider and the horse (okay there will be some third party injuries too).
Harm from drug-taking, however, is much less straightforward since the relationship of cause and effect may be less easy to establish and might only reveal itself in the long term. Harm to others may be significant - although we would have to be sure that ecstasy was involved (say a drug-induced driving accident), and this, of course, may be a matter of opinion unless we restrict ourselves to the decisions of a court of law following a trial.

All statistics derived from population samples are based on assumptions, but the assumptions themselves have to be reasonable, credible, defensible. The point I am making is that you can't simply take national statistics on aggregate horse-riding injuries, put them against figures (derived from where?) of harm caused by ecstasy consumption and say that one is more or less harmful than the other. To give an extreme example, breathing oxygen - something we all do - is 100% fatal. But it would be meaningless to say that breathing is more dangerous than warfare.

The chances of Professor Nutt having conducted a valid comparative statistical analysis between ecstasy and horse riding are - in my view - vanishingly small; and by making such a comparison he was, therefore, grandstanding. In other words, given that he was a government adviser, he was not making a scientific point but a political one.

JF

PS The above assumes a direct relationship between 'use' and 'harm' (i.e. the more you do the more you are likely to suffer or cause harm). For ecstasy, this is probably a safe assumption. In the case of horse-riding, however, the relationship could be inverse, i.e. harm may be more common among neophytes than experienced riders. If this is so, then Professor Nutt's comparison could be more accurately described as being between ecstasy and inexperience - which would render it even more nonsensical.

Chavez - a Response

Enrique Krauze's anti-Bolivarian diatribe against Hugo Chavez is a typical product of the right-wing Mexican intelligentsia. Like so many of the species, Krauze establishes his credentials in the eyes of readers with 'learned' references to European currents of thought (although the learning seems to me superficial). Even on the subject of Bolivar he defers to a single European source - John Lynch (with whom I studied at London's Institute of Latin American studies). Although Krauze omits to say so, Professor Lynch's biography is clearly in sympathy with its subject and admiring of the Liberator's achievements, as are most of the other manifold biographies (the literature both by and on Bolívar is immense). Salvador de Madariaga's "Bolívar" (1949) is an exception - the embittered, rather nasty account by an unsympathetic gachupín (Spaniard). But in case there should be any doubt about Professor Lynch's position, here is how he summarizes Bolivar's contribution to the struggle for independence: Bolivar
....showed the mental determination and physical skills required by the situation. He was the intellectual leader of the Spanish American revolution, the prime source of its ideas, the theorist of liberation whose arguments clarified and legitimized independence during and after the war. Let us take as given that Krauze has read the relevant pages of Marx, Plekhanov and Carlyle and more or less understood them. To claim, however, that these Europeans are fundamental to interpreting Bolívar and Chavez is an astonishing leap of imaginative effrontery. And it leads Krauze to conclusions about them that are widely at variance with reality. This is not surprising when one considers that another familiar characteristic of Latin American intellectuals of the Krauze variety is that their knowledge of Latin America beyond their own country is often flimsy and tends to rest, at best, on a narrow range of sources supplemented by rather too much armchair reflection. For inspiration and content, they look first to Europe and the United States, and only secondarily, if at all, to the countries whose language they share and with whose history they have so much in common. Hence why almost everything that Krauze says about Bolívar is factually incorrect (one wonders, indeed, if he actually read Lynch's biography or merely skipped through it). On that point, at least, he resembles Marx - whose virulent attack on the Liberator was based on little more than hearsay, since the history of the Latin American wars of independence and Bolivar's role in them had yet to be written. But facts didn't detain Marx any more than Krauze. What Marx detested in Bolivar was, above all, the idea of the great man, the charismatic leader, whose existence was ideologically repugnant if not inconceivable because it ran counter to historical materialism and the "inevitable" triumph of the proletariat. I think it possible to argue that it was not so much Bolivar's person that Marx reviled, but his reputation, the legend that had grown round him. Krauze nevertheless quotes Marx's views on Bolivar at length, allowing to go unchallenged the canard that the Liberator wrote his Bolivian Constitution with the aim of awarding himself the position of Dictator for Life. In fact, Bolivar's attempt at writing a constitution was an honourable failure and Sucre - not Bolivar - became, with the latter's endorsement, the first effective (though short-lived) president of the country. Bolivar may well have drawn his inspiration for the idea of a life presidency from the British system which he much admired, even though he would not countenance the idea of hereditary monarchy. Hence why the position of "President for Life" outlined in his Bolivian Constitution expressly states that
The President may not deprive any Bolivian citizen of his Liberty nor impose any sentence....he cannot prevent elections nor any other institution decreed by law...
An elected vice-president was to be the real head of government. Throughout his political and military life, Bolivar struggled (unlike Marx) with the practical as well as the theoretical complexities of establishing a viable political system in the vast regions whose independence he had done so much to bring about. He saw that without a strong central government, regionalism and factionalism would tear the region apart and pave the way for the military coups and caudillismo that, in effect, have characterised so much of its post-independence history. Bolivar himself complained that his name
...is used in Colombia for good and evil and many people quote it in support of their stupidity.
Nevertheless, his views on government are well known and documented. And nowhere, perhaps, were they better articulated than in his famous speech to Congress at Angostura:
Repeated elections are essential...because nothing is more dangerous than allowing the same citizen to remain in power over a long period. The people become accustomed to obedience, and he becomes accustomed to command. A republican government, that is what Venezuela ... should have. Its principles should be the sovereignty of the people, division of powers, civil liberty, prohibition of slavery, and the abolition of monarchy and privileges. We need equality to recast, so to speak, into a single whole, the classes of men, political opinions, and public custom. Despite these views, and his frequent attempts to turn them into policy, be began to despair of achieving them in the short term. Throughout his life as a public figure, he struggled with the issue of implementation in a region where most of the population was uneducated, while few among the tiny, ambitious elite were interested in anything other than a continuation of their privileged status. How far, Bolivar wondered, should democracy go without defeating itself? It is a question central to any effort to find a balance between liberty and equality, and one that continues to perplex philosophers and historians of ideas, and to exercise social scientists. To characterise Bolivar's struggle to shape and democratize the region as the blind ambition of a self-centred dictator is both ludicrous and disingenuous. Bolivar is not a South-American hero because the people are deluded - as Krauze implies with patrician disdain - but because he symbolizes and embodies ideals of justice and equality that have eluded - and continue to elude the vast majority of Latin Americans. Krauze's virulent assault on Chavez is similarly riddled with distortions and inaccuracies. Perhaps the most unpleasant accusation, and arguably the most serious, is that the Venezuelan leader is anti-semitic and engaged in orchestrating a campaign against the Jewish community. I have looked long and hard for evidence of this - so far without success. All I have found are expressions by Chavez of disgust and disquiet about Israel's behaviour towards the Palestinians - a view many people share - including, it seems, the United Nations. The conflation of criticism of Israel with anti-semitism is, of course, a commonplace and should not detain us in the absence of more convincing evidence. If Chavez is anti-semitic - that is unacceptable and unforgivable; but I have yet to be convinced that the accusation has any foundation, and Krauze doesn't offer any. Anyone inclined to add this accusation to the many others directed at Chavez by the western media might do well first to listen to the Venezuelan government's response to the assault on the Mariperez Synagogue. Right-wing attacks on Chavez invariably include - indeed often begin - with attempts to smear him with the rubric of dictator. The word occurs 22 times in Krauze's article; dictatorship 10 times. In fact, Chavez is a democratically-elected head of state who has survived at least one highly undemocratic attempt to unseat him, as well as a recall referendum. He has won and retained power in elections that all international observers agree to have been free and fair. Anti-chavista claims that the government controls the media also conflict with the evidence; as do the hysterical condemnations of the Venezuelan government's decision not to renew RCTV's licence. In truth, Venezuela has vigorous, independent media and - as Krauze admits (perhaps without quite understanding the implications) - a powerful, vociferous, well-financed and extremely muscular opposition. These would appear to be characteristics of a democracy. Among Enrique Krauze's distinctions is that he sits on the board of Televisa - Latin-America's largest purveyor of mindless trash. He is a middle class intellectual in a country with one of the poorest and most disgraceful public education systems in the middle-income developing world. He is an intellectual fellow-traveller not of Bolivar - which would do him honour - but of Santander - the Liberator's duplicitous lieutenant, of Chile's Carrera Brothers, or more accurately (since Krauze is Mexican) of Iturbide the would-be emperor, of Porfirio Diaz and - post revolution - of Aleman, Echeverria, Lopez Portillo and Salinas de Gortari, all skilled at adopting the language of revolution and social justice while embedding privilege and sanctioning corruption. One conclusion a casual reader might be tempted to draw from Krauze's account is that the Venezuelan people vote for Chavez because they're stupid and uneducated (perhaps like those who voted for AMLO in Mexico's stolen election), something that Krauze doubtless believes he understands a fondo because Televisa helps to keep them entertained (and no one with half a mind would pay attention to the pap it produces). Here Krauze (though he does not say so) joins Bolivar in acknowledging public ignorance and low educational attainment. But while Bolivar deplored this, saw it as a fundamental weakness, and did what he could to address it (including building schools and universities at state expense and paying the salaries of teachers); Krauze, 180 years later, earns money from it while excoriating figures like Castro and Chavez who have made public education a prime motif of government policy. If there is an outrage perpetrated on the people of Latin America it is not the governments of Cuba, Venezuela and Bolivia, but the centuries of impoverishment and exploitation visited on the populace by successive generations of feckless leaders and the middle class elites that have sustained them. Bolivar at the end of his life was painfully aware that he had found no solution:
They will say of me that I liberated the New World, but they will not say that I have improved the happiness or stability of one single nation in America.
The condition of the poor in Latin America has changed far too little since Bolivar wrote those valedictory words. Latin-America's middle and upper classes have had a long run and they have manifestly failed the people they were supposedly in power to represent. Castro, Chavez, and Morales are not unfortunate aberrations but a direct consequence of the refusal of elites - ever since the Conquest - to address the savage inequalities that disfigure the continent. Let us turn now to Krauze's view (such as it is) of Venezuela's economy. No one who has given the issue more than cursory attention disputes that Chavez has targeted the poor since he came into office - not just with rhetoric but with action aimed at improving their standard of living. Since the government gained control of the national oil company in 2003, Venezuela's GDP has almost doubled and - contrary to Krauze's account - most of the growth has been in the non-oil sector of the economy and in the private sector. Over the same period, the overall poverty rate has halved and extreme poverty has fallen by over 70 per cent. Between 1998 and 2008 social spending tripled in real terms, the number of primary health care physicians grew by a factor of 12, and infant mortality fell by a third. By any standards, these are remarkable achievements. Readers interested in understanding some of the real reasons why Chavez is repeatedly successful at the polls might wish to consult the study recently published by the Center for Economic and Policy Research (from which the data referred to above are sourced). To borrow the words of a famous American lawyer, Krauze's economic case against Chavez amounts to "ten pounds of hogwash in a five pound bag." Assuming that Krauze is not merely grandstanding and that he actually believes what he writes, the only possible conclusion is that he simply hasn't bothered to ascertain the facts. This, more than anything, shows him up as an intellectual poseur, concerned not with exposing truth but disguising it with fake erudition in the service of a drearily familiar set of fatuous upper middle-class prejudices. And those who know something of Latin American history may well read the last sentence of his essay less as a prediction than as a threat. For it is couched in precisely the kind of inflammatory language that all-too-often has proved to be the prolegomenon of violent intervention. Bibliographical note for English-language readers: An excellent brief account of Bolívar's thought can be found in J.L. Salcedo-Bastardo: Bolívar - A continent and its Destiny. The English translation (1978) is abridged - but contains most of the essentials. Of the biographies in English, the two best are those by John Lynch (2006), and Gerhard Masur (1948) - the former easily obtainable, the latter only in libraries. A fascinating contemporary narrative by Bolívar's aide-de-camp, Daniel Florence O'Leary seems to have been written in English, but it has only been published in Spanish as part of a multi-volume collection of papers that O'Leary assembled during and after the War of Independence. Bolívar's own writings were vast, but there is a good representative selection in Bushnell (ed): El Libertador: Writings of Simon Bolivar.

The Financial Crisis, Protectionism and Bullshit

Katinka Barysch's recent article in Open Democracy on the current financial crisis and the G20 neatly summarises the conventional view of how to retrieve the situation. She could have managed an even neater summary by simply writing "more of the same - but with a little closer regulation". That, effectively, is the spartan recipe that Gordon Brown and many, if not all, economic soothsayers are trying to thrust down the gullet of a bewildered public both in the West and elsewhere. What has to be avoided they tell us - in dutiful obedience to received opinion - is a new round of protectionism, like the "disastrous" one of the 1930s. Nicolas Sarkozy has come in for special criticism for reportedly "tying" financial support for French car-makers to the employment of French workers.
In the new world order of global capitalism, governments can't be allowed to use national funds to protect national economies. International treaties on free trade and globalization oblige them to ignore the problems and, indeed, the wishes, of their own electorates if these conflict with the prevailing orthodoxy. Unfortunately, it is hard to see how this constraint is anything other than fundamentally undemocratic.
Such is the dilemma that Sarkozy is confronting in France where a highly politicized citizenry expects the President to be first in line to protect them in times of economic difficulty. Assertions that they will be better off losing their jobs now so that " in the long run" they can earn a little more later cut no ice with the French. Nor should they with any other electorate. Do we have to keep reminding ourselves of Keynes's warning about what the long run means?

Anti-protectionist rhetoric is misleading in many respects - too many for the compass of a short note such as this. I will briefly touch on just two that seem to me of particular importance.
First, if the free-traders are to be believed, we have been living - at least up to the onset of the crisis - in a world of largely free and unfettered commercial exchange. Nothing, however, could be further from the truth. All western countries routinely provide a variety of overt and covert types of support for nationally-based industries, examples of which are export marketing assistance, investment incentives, tax holidays, infrastructural projects related to plant location, special utility rates, farm subsidies, manipulation of exchange rates and so on. In the United States, a great deal of assistance to US corporations is provided at state and municipal levels, and through regional agencies such as the Tennessee Valley Authority Economic Development Division, and it passes below the visible horizon of foreign onlookers. In fact, the range of protectionist devices is limited only by the ingenuity of the economists and bureaucrats who are paid to invent them. While most political leaders in the West pay lip service to free trade, many governments beaver away behind the scenes to evade its implications - as the French President appears to be doing; and so too the President of the United States. Where the working population is in trouble is if they find themselves governed by leaders who really believe in the free trade nostrum - like Gordon Brown and Peter Mandelson.

Here we come to our second point. The vast sums being ploughed into economic recovery by western governments is to be paid for by - you guessed it - western taxpayers. So what an obsessive adherence to open commercial borders may mean is that a good proportion of the £billions and rising that Gordon Brown and co. are putting into circulation could be going straight into productive activities in some other part of the world, leaving the UK's unemployed scarcely better off than if the sums had not been spent at all; worse off, in fact, when the increased indebtedness is taken into account. The question that Obama and Sarkozy are trying to tackle, but that no UK politician or commentator appears to acknowledge is this: why should national taxpayers foot the bill for an economic stimulus package that is not aimed primarily and fundamentally at employment creation in their own country? Put more simply, why should I pay for someone in Slovenia to make cars? Or someone in China to make t-shirts? Are the Slovenian cars and the Chinese t-shirts truly cheaper? In an era of full employment, they might be; but in conditions of unemployment, their prices rise exponentially. They rise first because I am financing the production, and second because I am financing my own unemployment. In this light, free trade, in the version foisted on the world by the West, is fundamentally unstable. It works most efficiently for countries with full employment; but. as unemployment increases, its efficiency decreases. For developing countries with high unemployment it is plainly nonsensical. And it is not the way any of the developed countries achieved their privileged status, as Cambridge University 's Ha-Joon Chang convincingly demonstrates. See also his recent interview with Democracy Now.

As I write this, the UK car industry is reportedly fighting for survival. Trade theory has it that industries that falter should be left to die, while their workers should retrain for some other - unspecified - activity in which the country enjoys an equally unspecified comparative advantage. In reality, it is not lack of competitiveness that is hitting the UK car industry, but the severity of the recession. It is also hitting the industry in many other countries. Car manufacturing plants that survive will not be the most competitive but the ones receiving enough state aid to nurse them back to health.
In the current conditions of crisis, competition is not taking place between semi-comatose companies, but between politicians. The smartest (Obama and Sarkozy among them) will ensure one way or another that their key industries live to fight another day; those who are wedded to extremes of free trade ideology can be assured of one thing: they will lose the next election.