Globalisation and Inequality

This thinkpiece is opinion with some small basis in researched reality, but please don’t take this as definitive. All my own views.

The argument being made in the US post-Trump and in the UK post-Brexit is that the forces of globalisation and free trade have led to increasing inequality, and that’s what the working class of these countries is getting upset about – their increasing distance from the “elite” that are perceived to benefit from the globalisation at the cost of the working class.

Except what’s happening here – to put it in Thomas Friedman’s The World is Flat terms – is that the playing field is flattening, at least at the lower end of the income distribution. This means more than just bringing the developing countries up to the standard of the developed countries – it’s also causing the developed countries to drop down a little, or more rather a reversion to the mean.

The way the working class in developed nations are feeling the pain is an inevitable consequence of this globalisation – the advantages they had were only ever relative, because for all that there’s said about equality, it was never the case that developed economies were “equal” – it was entirely in their average lying well above the global average.

But now… it’s not so much. The working class in developed economies is being levelled with the working class in other economies. The working class of developing economies are coming closer to equal footing as borders come down in the pursuit of the dollar. Immigration makes this even more so, where those willing to work for a low wage by developed economy standards are comparatively better off by their personal standards because it’s a high wage by their own standards; this only starts to break down when the wages in their home countries lift enough that the differential isn’t worth it.

Inequality has always been there; inequality, globally, has gotten lower. However, where it was also unequally spread – where some countries had less internal inequality – it’s now being more equally distributed around the world as a global population is included and free trade and movement of labour makes the production of goods anywhere the same.

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The End of the Obama Presidency

Today marks the end of the Obama presidency, and in some ways, it seems to mark the end of an era – or perhaps more pessimistically, the respite from the decline of an era that effectively ended with the events of September 11th, 2001.

Perhaps we’d been to unwilling to admit it over the last 8 years, but since 2001, the United States of America turned from being a leader for the multicultural, involve-everyone-everywhere sentiment to the navel-gazing self-interested country that its enemies had always accused it of being; where George W. Bush led the country into misadventures and tipping the delicate balance that had held for the 90s in the Middle East into the dumpster-fire, basket-case of a region it seems right now.

Obama’s efforts to revive American interest in the progressive, outward looking world seem an exception – the first years reacting to the financial crisis of 2008 that was never quite a full-blown multi-year recession, followed by the battles with the Republican opposition that organised into a parliamentary style opposition rather than the loose confederation that had always been the operating standard in the US Congress.

Obama’s efforts to rehabilitate America’s image post-W were for the most part successful – despite the ongoing issues in Syria, and the free hand used with drone warfare around the world, the open engagement with the world community and the level-headed leadership was respected. Adults were in charge. For a few years, it seemed like we could put the Bush years down as the anomaly.

Now… now we’re getting Trump and his henchmen. Bush wasn’t the anomaly, he was the prototype – a deep distrust of intellectualism and expertise infecting a populace convinced that things won’t change. The shame is the distrust of expertise, and the necessary recognition of this utility. Watching confirmation hearings for key executive branch positions, it’s clear the people being put in charge of these things have little to no idea of what they’re getting involved in. We’re going from people with deep knowledge and care to people who openly oppose the very notions of the departments they’re supposed to be running.

It’s like their assumptions are that everyone should have an equal chance at trying things, without realising specialist roles and knowledge are useful; the idea of putting a CEO in charge of an organisation and purpose that he or she does not know is not infinitely applicable; experience and excellence in the field of business does not equip one to consider a fundamentally different purpose in the public service space.

Add in Trump’s own openly declared insular views – withdrawal from NATO being on the table, a deep distrust of the UN and international processes, the childish ideas of a wall on a border, the hostility to global trade – and you see America steadily pulling its head in, repeating the experience of a hundred years ago as the post-WWI America retreated. Where they once led by example, now they disown any position of leadership beyond economic and military, both of which are likely to be overtaken soon by China and its particularly control-heavy model of society.

For most of my life, America’s been a presence that shows the way for a free and democratic society. The respect for law, freedom of speech and press, and the willingness of the people to experiment, try, fail, get back up – all ways in which the country and its culture has attracted people the world over for centuries. Sure, there have been foibles and ongoing failures, but now, it appears a dark curtain is falling across the country, and hope that America leads the way disappears.

Russia talks up hegemony in a oligarchical state led by a virtual dictator; Europe bifurcates as the populist movements tear apart international cooperation; China of all countries – the most successful notionally communist country – is a major proponent of free trade; Australia meanders directionless as leaders abandon leading; what hope do we have of solving big international problems like climate change – barring the fact that China itself recognises the costs, and India too commits to skipping the carbon heavy phase of development. With mistrust of expertise in the west though, I fear we just end up mired in the muck.

Today marks as strongly as November 8th did the decline and fall of American exceptionalism; for all that Trump claims to lead America to new greatness, is there anyone outside America that takes this credibly? The life he’s promising is long gone, the world moving on. Whatever comes next does not resemble the 1950s, but that’s what Trump and his followers hope and dream for – an era of greatness for a slice of the population not adapting to the world’s changing tides.

May you live in interesting times, as the Chinese curse goes.

The Role of Shame in Politics

And so at long last, we reach US Election Day 2016, when a reckoning has finally come for the American political system – the candidates perfectly set up as the establishment facing the insurgents, the know-nothing Donald Trump squaring off against the know-it-all Hillary Clinton.

How did we get like this?

How did we get from the point where once upon a time, a candidate that was even threatened with being revealed to be cheating on his wife, would step back, stand down, or resign altogether than face the music, to the point where we’re seeing a candidate standing despite those accusations and worse being thrown around, and still he appears to be as close as a 3% gap?

What changed to allow this to happen?

Shame. Or the lack thereof.

It is the nature of public shame more than anything in democracies to operate as the public conscience of the politicians. It is not the law that forces a resignation in the face of allegations of adultery, for instance; it is shame that pushes a politician to resign when word comes to light of legitimate but morally dubious donations; it is shame that forces departures that allegations of falsehoods bring to light, no matter how legal it may have been at the time.

It is shame, a somewhat quaint notion intrinsically linked with the quainter notions of honor and propriety. It is with shame that we have driven much of the better behavior without needing to codify it.

It was a key component that drove the first parliaments in England – honor and shame being what for years was enough to bring glory and to end careers. So much of parliament’s rules are mere conventions, and adherence to these is driven by the honor of doing the right thing. Where a parliamentarian would cross a line of honor, the sheer shame of doing so was in it self enough to force change.

Now? Who would bother with feeling shame, if the penalty isn’t there? Where’s the big stick as a result?

Let’s take the concrete example in Australia most recently of George Brandis, Attorney General. Ignoring the Solicitor-General’s advice should be grounds for dismissal due to ministerial dereliction of duty; misleading Parliament should have been sufficient for the shame of those deceitful actions to force Brandis to walk, as apparently it’s not an offence to do so.

Brandis didn’t walk, he didn’t fall on his sword, and Turnbull didn’t dismiss him.

Instead, these days, there’s no shame in it. It’s being able to go to the extremes of previously tolerated behavior, and then keep going, because what’s the penalty?

And thus we have Trump. A man with no shame so much that he keeps getting away with so very much and reaping the reward. We don’t hold Trump to a higher standard; we understand this man is poor and devoid of character in many ways, but it doesn’t matter because he’s on the side that uses shame when convenient and brushes it away. It’s not illegal, why should he apologize?

The outright denial of facts and truth is entirely possible if there’s no shame in doing so. If there’s nothing to say “You lied and you ought not have done that,” then where are we left to go?

Where is the shame in treating humans the way we’ve done in Nauru and Manus Island? Political expediency rules.

Truly, we will need to restore shame to its rightful place amongst the emotions that govern those who would governs us, because without it, Trump isn’t the last on this band-wagon, and that’s a truly terrifying thought.

Did George Lucas predict the current political environment?

A bit more US-centric, but this gives me the shivers:

A long time ago, in a galaxy far, far away, paralyzing political divisions threatened democratic governments. Disputes over free trade, and the free movement of people and goods, were a big reason. Stymied by polarization and endless debates, the Senate proved unable to resolve those disputes.

As a result, nationalist sentiments intensified, leading to movements for separation from centralized institutions. People craved a strong leader who would introduce order — and simultaneously combat growing terrorist threats.

Think we’ve already got Senator Jar Jar Bernadi here in Australia…

 

Australia’s Political Malaise

With Election 2016 well underway (but still with about 6 weeks to go… yeesh), it’s looking increasingly like we’re going get more of the same. What happened to Australia’s politics that made it so insipid, so unable to hold forth a discussion in which some may be worse off, but the result would be better for the country?

The MacroBusiness blog has a theory on the 8 factors that have contributed to the dire political straits we find ourselves in:

2. Bad economic structure

This is the more important reason behind the centrality of the budget to business and thus the push for rents. Australian spruikers like to sell the economy as “diversified” but this is rubbish. At its base, Australia has only two economic drivers: houses and holes. Mining delivers national income and banking leverages it up to spread the wealth. Everything else follows these two. That means that these two industries have limitless power over policy. Disruption in one equals disruption to the entire nation.

Given the financial crisis in 2008 and now the commodities price crash (which was always going to follow the boom), it’s increasingly inevitable that we’re looking down the barrel of some bad economic outcomes, but no-one in power seems to be acknowledging it.

The talk is small while the problems are writ large. I’m skeptical that any party is going to be in a position to manage it, and that’s going to become rather scary rather fast for us. More on those thoughts later.

Comparing economic records

May 2016 marks 43 years and 6 months since the election of the Whitlam Labor government in 1972, and conveniently provides a mid-point for the two political parties – 21 years and 9 months of government each. Stephen Koukoulas uses this pivot point to provide a detailed comparison of their respective economic performances, and he comes up with more-or-less a dead heat, with a slight edge to Labor:

The overall weighted average quarterly GDP growth rates since 1972 are 0.80 per cent for the Labor Party and 0.77 per cent for the Liberal Party. This shows that the economy grows faster, on average, under Labor than the Coalition by 0.03 per cent per quarter, which is a touch over 0.1 per cent per annum.

Figures are similarly in Labor’s favor for job growth – noting this also includes the recession we had to have.

Something to keep in mind this election season, and for the budget tomorrow.

The (true) killing of Bin Laden

Not sure if this is the kind of article that sparks revolts or is conveniently ignored for real politik – Bin Laden’s location was known to Pakistan, his killing was more about managing political realities than it was about the Americans finding him and taking him out:

‘The compound was not an armed enclave – no machine guns around, because it was under ISI control.’ The walk-in had told the US that bin Laden had lived undetected from 2001 to 2006 with some of his wives and children in the Hindu Kush mountains, and that ‘the ISI got to him by paying some of the local tribal people to betray him.’ (Reports after the raid placed him elsewhere in Pakistan during this period.) Bank was also told by the walk-in that bin Laden was very ill, and that early on in his confinement at Abbottabad, the ISI had ordered Amir Aziz, a doctor and a major in the Pakistani army, to move nearby to provide treatment. ‘The truth is that bin Laden was an invalid, but we cannot say that,’ the retired official said. ‘“You mean you guys shot a cripple? Who was about to grab his AK-47?”

So much of this seems more believable than the story we’ve been told so far, especially from a perspective that understands the reality of the ISI’s reach and capabilities; it’s now left to wonder who will write the history of this in the long run, and what it will reflect.

Edit: and of course, the follow-up which takes this story to pieces:

And there are more contradictions. Why, for example, would the Pakistanis insist on a fake raid that would humiliate their country and the very military and intelligence leaders who supposedly instigated it?

A simpler question: why would Pakistan bother with the ostentatious fake raid at all, when anyone can imagine a dozen simpler, lower-risk, lower-cost ways to do this?

The truth is out there, somewhere.

What’s behind ISIS?

Scott Adams (of Dilbert fame) asks: what is behind ISIS?

The ISIS story doesn’t pass my B.S. filter because it violates common sense that such a competent fighting force could suddenly emerge and bitch-slap professionally trained (or even poorly trained) military forces with such consistency. I have worked in large organizations and I know that the logistics involved – the planning, training, and resupplying are huge challenges even for organized armies. Did ISIS really figure out all of that while their communications are presumably monitored by the enemy?

Well if that ain’t just some delicious conspiracy. It’s one of those “that’s crazy, but… it might just work.”