Tag Archives: global politics

Trump vs. Clinton: 10 Ways the Next President Will Impact Your Wallet

roulette wheelMy Comments: New and existing clients are asking me what I think will happen to their money after the election. My gut tells me there will be a correction before long anyway. If Trump is the winner, the correction could be dramatic with chaos in the years ahead. If Clinton is the winner, the correction will be muted. Necessary changes are going to happen; it’s the natural order of things. But I’m ready for less drama and an orderly transition into the future. Trump will try and turn back the clock on many levels, including globalization, and it will be disastrous for lots of reasons.

This comes from Kiplinger, and is with most everything I post, I did not ask their permission. I’m giving you the text of the first two, but if you want the rest of it, then here is a link to their site where I found it all.


By Meilan Solly and Douglas Harbrecht | September 2016

The policies that Democrat Hillary Clinton or Republican Donald Trump say they’ll bring to the White House could have a dramatic impact on your wallet, your job, your health care and your retirement. Here’s where the two candidates stand on major economic and financial issues, with key differences in their approaches. We also threw in a few campaign quotes that help illustrate their views. Take a look:

Economic Growth and Jobs

Key differences: Trump wants to pull back from worldwide economic engagement in pursuit of tougher trade deals and creating more jobs at home. His approach is similar in many ways to the Brexit vote to pull the United Kingdom out of the European Union. Clinton emphasizes economic development that relies on trade. And she supports more liberal immigration policies, which Trump opposes.

Key Clinton quote: “We need to raise pay, create good paying jobs, and build an economy that works for everyone—not just those at the top.”

Key Trump quote: “Americanism, not globalism, will be our credo. As long as we are led by politicians who will not put America First, then we can be assured that other nations will not treat America with respect. The respect that we deserve. Nobody knows the system better than me. Which is why I alone can fix it.”

Trump’s proposals are a radical departure from 100 years of Republican pro-business, free-market orthodoxy. He wants to force some American companies to bring their foreign manufacturing operations back to the U.S. from China, Mexico, Japan and Southeast Asia. To put Americans to work, he advocates a huge infrastructure rebuilding program at home (more on that later in the slide show), including building a wall along the Mexican border to stop illegal immigration. He says he’ll deport all 11 million undocumented immigrants living illegally in the U.S. and place new restrictions on H-1B visas, which allow skilled immigrants to work in the U.S. for up to six years.

Trump supports a federal minimum wage of $10. He wants to declare China a currency manipulator and impose huge tariffs on Chinese and Mexican imports “if they don’t behave.” Such threats concern economists, who worry that they will provoke a trade war and increase the likelihood of a global recession.

Where Trump waves a stick, Clinton favors a carrot approach: She would create tax and economic incentives to entice multinationals to bring jobs back to the U.S. She supports creating a pathway to citizenship for undocumented immigrants living in the U.S., and supports the H-1B program. In accordance with the Democratic Party platform, Clinton would increase the federal minimum wage to $15 an hour from $7.25. She says trade has been a “net plus for our economy,” yet she opposes President Obama’s Trans-Pacific Trade Agreement. Economist Chris Farrell worries that neither candidate is embracing retraining and financial support for workers who have lost their jobs to international competition. “Yes, protectionism is wrong. But so is not sharing the bounty from freer trade with those on the losing side of trade liberalization,” Farrell says.


Key differences: Clinton’s plan would increase taxes on the wealthiest Americans. Trump’s would cut taxes across the board — from the lowest-income earners to the top 1%.

Key Clinton quote: “I want to make sure the wealthy pay their fair share, which they have not been doing.”

Key Trump quote: “Middle-income Americans and businesses will experience profound relief, and taxes will be greatly simplified for everyone. I mean everyone. […] Reducing taxes will cause new companies and new jobs to come roaring back into our country.”

Under Clinton’s plan, taxes would change slightly or not at all for the bottom 95% of taxpayers, while the top 1% would see sizable increases. This is because Clinton wants to implement a 4% surcharge tax on income over $5 million, plus the Buffett Rule, which would ensure that individuals who earn more than $1 million annually pay a minimum effective tax rate of 30%. Clinton’s tax plan would also cap the value of itemized deductions at 28% for folks in higher brackets. This limitation would apply to other tax breaks, too, such as the write-off for IRAs and moving expenses. And it would nick some currently tax-free items, such as 401(k) payins, tax exempt interest, and the value of employer-provided medical insurance. Finally, her plan would increase estate taxes, and place higher taxes on multinational corporations.

In a speech at the Detroit Economic Club on Aug. 8, Trump modified his proposal for overhauling the tax system.He still wants individual rate cuts, but they’re not as deep as in his original plan. Many said his first plan, with four brackets topping out at 25%, was too costly. Now he sees three brackets, maxing out at 33%, the same as the House GOP plan.

He continues to offer up a 15% rate on corporations and pass-throughs, such as partnerships and LLCs, and would extend the rate to sole proprietors. He favors full expensing for new asset purchases such as buildings and equipment. And he wants to do away with the estate and gift tax.

He’s silent on capital gains for now. His prior plan called for rates from 0% to 20%, compared with a 16.5% top rate under the House GOP blueprint. Also, he gives no details about which write-offs will be on the chopping block. He’ll probably keep breaks for home mortgage interest and donations to charity. But most others would have to disappear to help offset the cost of his proposed rate cuts..

Says Roberton Williams of the Urban-Brookings Tax Policy Center: “The Clinton plan is basically stay as you go. You’ve got a basic tax plan in place right now. She has so far proposed no major changes to that structure other than to raise taxes significantly on some high income people. That’s not a very radical change. Trump’s changes are much bigger.”

WHY IT MATTERS: Income Inequality

Peasant-Wedding-Bruegel-the-ElderMy Comments: I’ve argued frequently that if income inequality is not addressed, our children and grandchildren will be rioting in the streets of America. I’ve also argued that the recent rioting in Louisiana, and elsewhere, ostensibly because of racial issues, is as much caused by economic disparity as it is racial disparity.

At the extreme, in the Middle East, the rise of ISIS is as much an economic issue as it is a religious issue. If there are no jobs for young men and women to aspire to and become the economic foundation of a family, one is left with strapping on a suicide vest and causing chaos.

We better hope the next round of elected leaders in Washington and elsewhere pay attention to this problem.

By Josh Boak – August 18, 2016 –

WASHINGTON (AP) — THE ISSUE: The rich keep getting richer while more Americans are getting left behind financially.

Income inequality has surged near levels last seen before the Great Depression. The average income for the top 1 percent of households climbed 7.7 percent last year to $1.36 million, according to tax data tracked by Emmanuel Saez, an economics professor at the University of California, Berkeley. That privileged sliver of the population saw pay climb at almost twice the rate of income growth for the other 99 percent, whose pay averaged a humble $48,768.

But why care how much the wealthy are making? What counts the most to any family is how much that family is bringing in. And that goes to the heart of the income-inequality debate: Most Americans still have yet to recover from the Great Recession, even though that downturn ended seven years ago. The average income for the 99 percent is still lower than it was back in 1998 after adjusting for inflation.

Meanwhile, incomes for the executives, bankers, hedge fund managers, entertainers and doctors who make up the top 1 percent have steadily improved. These one-percenters account for roughly 22 percent of all personal income, more than double the post-World War II era level of roughly 10 percent. One reason the income disparity is troubling for the nation is that it’s thinning out the ranks of the middle class.
Hillary Clinton has highlighted inequality in multiple speeches, with her positions evolving somewhat over the past year. Bernie Sanders held her feet to the fire on that subject in the primaries. Clinton hopes to redirect more money to the middle class and impoverished. Clinton would raise taxes on the wealthy, increase the federal minimum wage, boost infrastructure spending, provide universal pre-K and offer the prospect of tuition-free college.

Donald Trump offers a blunter message about a hollowed-out middle class and a system “rigged” against average Americans. Still, he has yet to emphasize income inequality in the campaign. To bring back the factory jobs long associated with the rise of the middle class, Trump has promised new trade deals and infrastructure spending. But Trump has also proposed a tax plan that would allow the wealthiest Americans to keep more of their earnings.

President Barack Obama has called rising inequality “the defining challenge of our time.” And experts warn that it may be slowing overall economic growth. Greater inequality has created a festering distrust of government and of corporate leaders whose promises of better times ahead never fully materialized.

The result has been a backlash against globalization that many Americans feel tilted the economy against them. For the top 1 percent, the ability to move money overseas and reach markets worldwide concentrated pay for “superstars,” according to economists. At the same time, factory workers now compete with 3 billion people in China, India, Eastern Europe and elsewhere who weren’t working for multinational corporations 20 years ago. Many now make products for Apple, Intel, General Motors and others at low wages. This has depressed middle-class pay. These trends have contributed to a “hollowed out” labor market in the United States, with more jobs at the higher and lower ends of the pay scale and fewer in the middle.

Social factors have amplified the trend as well. Single-parent families are more likely to be poor than other families and less likely to ascend the income ladder. Finally, men and women with college degrees and high pay are more likely to marry each other and amplify income gaps.

The Rise of Liberal Intolerance in America

babel 2My Comments: I’ve been a registered Democrat since I first registered to vote back in 1962. Back then you had to be registered as a Democrat if you wanted to participate in the primary elections. Republicans only showed up on the November ballot.

Democrats lay claim to a higher level of tolerance for those whose expressed values and opinions differ from their own. Today, there is a growing level of intolerance among those on the left. It’s no longer the exclusive territory of those on the right. With contemporary technology and vastly more ubiquitous communication channels, mass intolerance seems to be growing, and I don’t like it.

Life never moves in a straight line; there are always ups and downs. My approach is to embrace the volatility and learn to manage the risk instead of railing against what is uncontrollable and living in the past. I try to embrace the future and the challenges it brings to all of us. This was written some months ago but is worth reading again.

Edward Luce November 29, 2015

It ought to be a triumphal moment for American liberalism. In the space of a few years gay marriage has been accepted, marijuana has been legalised, America has twice elected its first black president and may well be gearing up to elect its first woman. Yet the revival of political correctness on US campuses — and the increasingly shrill tone of much of the intellectual left — tells another story. Instead of championing free speech, the left is trying to shut it down. In the name of diversity, it demands conformity. At stake is the character of US democracy. If elite Ivy League schools cannot stand the heat, what kind of kitchen will it be?

Far from outgrowing race, the PC movement is entrenching it. Princeton students this month occupied the university president’s office demanding the name Woodrow Wilson — America’s 28th president and former head of Princeton — be scrubbed from campus. That included the prestigious Woodrow Wilson School of Public Policy and International Affairs, residential halls and a mural of him in the dining hall. Protesters also demanded “cultural competency training” for faculty members and the introduction of mandatory courses on marginalised peoples.

The case against Wilson is simple. He reintroduced segregation into the federal workforce. The case in his favour is that he is an important historic figure. He was also author of the Treaty of Versailles. Once you start eliminating names, it is a journey without end. Logic would demand the renaming of Washington, since America’s first president owned slaves. Others, such as Thomas Jefferson and James Madison, were guiltier. Should they be judged solely on that? Winston Churchill was an unabashed imperialist. Yet history judges him kindly for standing up to Nazism. What about Franklin Roosevelt? America’s 32nd president did not lift a finger to advance civil rights. He also interned 120,000 Japanese-Americans in the second world war. There is no such thing as an uncomplicated historic figure.

The point of higher education is to inculcate a spirit of inquiry and toughen up the mind for the confusing world beyond. Yet US campuses are moving in the opposite direction. Today’s mantra is to create “safe spaces”. Campus libraries put “trigger warnings” on works of fiction: students are warned off Ovid’s Metamorphoses because it depicts rape, Shakespeare’s The Merchant of Venice (anti-semitism), F Scott Fitzgerald’s The Great Gatsby (misogyny) and Harper Lee’s To Kill a Mockingbird (patriarchy). The term “microaggression” — giving unconscious verbal offence to marginalised groups — has entered everyday vocabulary. I have lost count of the conversations I have had with faculty heads who admit to censoring their language for fear of giving offence. Their jobs are sometimes at stake.

The goal is to eliminate prejudice from the mind. Yet it can have the perverse effect of heightening awareness of race. There is a boom on America’s campuses — and beyond — of what one critic has dubbed the “race therapy complex”. University faculties are bulging with multicultural guidance counsellors, diversity officers and those whose task it is to provide training in racial etiquette. Their job is to detect racial insensitivity. Naturally, some find it where it does not exist. The more such positions are created, the greater the vested interests behind it. As Upton Sinclair said: “It is difficult to get a man to understand something, when his salary depends upon his not understanding it.”

There is no doubt that racial prejudice is alive and well on the streets of America: look at the frequency of trigger-happy police responses to unarmed black suspects. But quashing free speech is no answer. Last year student protests forced a number of outside speakers — including Christine Lagarde, head of the International Monetary Fund; Condoleezza Rice, former US secretary of state; and women’s rights activist Ayaan Hirsi Ali — to withdraw from campus events. As head of the IMF, Ms Lagarde was a “primary culprit in failed developmental policies in the world’s poorest countries”, according to the students at Smith College. Ms Rice was a “war criminal” for supporting the Iraq invasion, said students at Rutgers. Ms Ali was guilty of Islamophobia, said students at the University of Michigan.

This year was notable for safe commencement speakers. On UK campuses it is called “no-platforming”: to deprive those with whom you disagree of a chance to speak. For the record, I think the Iraq invasion was a colossal mistake and Ms Ali plays up dangerous stereotypes of the Muslim world. But different voices should be heard and debated.

What does this mean for the future? Forget about universities. The future has already graduated. Anyone with ambition in US public life has long since learnt the value of self-censorship. A word out of context can ruin your chances of being confirmed by the US Senate. Risk-taking is penalised. Blandness is key to career advancement. Little wonder large swaths of the American public have lost faith in their leaders’ integrity. When a politician speaks, the effect is too often chloroformic. The vacuum that spontaneity once occupied is wide open for others to fill. Next time you wonder why a demagogue like Donald Trump is doing so well, ask why there is such high return to his plain spokenness. Could it be because it is being rooted out of public life?

The Only Way To Save the EU Is For The UK To Leave It

Brexit-4My Comments: Forget the UK and Europe. There’s a message here that applies to us in the United States and the anger among so many that gives rise to a choice between Donald Trump and Hillary Clinton.

It echoes the comments I’ve made here for years that “It’s economics, stupid!”. A primary driver of deteriorating race relations, of attacks on immigrants, on law enforcement, on the LGBT community, on gun owners, etc., is the fear that many of us are no longer in control of our own destiny. There is a pervasive appeal to try and turn back the clock, to reinvent the past and the conditions that led to a growing middle class in this country.

To the extent that those at the lower end of the economic spectrum, whether white, black or brown, cannot find a way to improve their quality of life, there is going to be stress. And that stress manifests itself as protests in the streets that appear to be focused on racial issues, on law enforcement issues, on immigrants who ‘take away our jobs’, and any number of other real and imagined grievances.

When you’re working 40 plus hours a week and making enough money to adequately feed, clothe and house your family, those grievances become irrelevant. Or at least manageable. They only surface and become a societal nightmare when enough people feel abandoned and disrespected and forgotten. And economics is a fundamental cause behind this drift toward chaos.

I’m not sure Hillary can fix this and I’m quite sure Trump can’t fix this. But I’m going to vote for whomever I think is most likely to force a discussion about the economic realities in this country. This is a long read but if you believe that income inequality is a problem, you need to read all of it.

by Gwynn Guilford on July 15, 2016

Xenophobic. Racist. Jingoistic. Nativist. Parochial. The 52% of British voters who hit the EU eject button might be all of those things. But they were also backing the right horse.

The vote repudiates a vision of Europe that rewards companies at workers’ expense. It’s a rebuke of a government that invests authority in a professional elite insulated from the economic realities of ordinary Europeans. The free flow of goods, services, capital, and people within the EU was supposed to spread prosperity. It hasn’t. Eventually, something big had to break.

While Brexit is certainly big, the fissure beneath it is bigger than Britain, or even Europe. The imbalances of trade, capital, labor, and—above all—savings that lie at the heart of Europe’s current turmoil warp the entire global financial system. Nearly everywhere you look, growth is sputtering because there’s simply too little demand—and far too much debt—to go around. And that’s thanks in no small part to the EU’s wooly-headed policies. However painful it might make the next few months or years, Brexit might ultimately be the wake-up call that prevents the EU from unleashing another global financial crisis, and condemning the world to decades of feeble growth.

To understand why things have gotten to this point, we have to examine the fundamental flaws in the EU’s design that are largely responsible for these distortions.


The Governing Cancer of Our Time

babel 2My Comments: Like most everyone else, I’m alarmed by the negativity and frantic rhetoric that is pervasive these days. I’ve tried to get used to it, but am not sure I should get used to it. I know that whatever is in the past is forever in the past and I can only observe the present and attempt to influence the future. Arguing in favor of what existed in the past is simply tilting at windmills or commanding the tides to stop their up and down movements.

Regardless of the outcome, we all have to encourage people to first register, and then to vote this coming fall. If you don’t vote, you forfeit your right to bitch and moan if the outcome is not what you wanted.

by David Brooks, FEB. 26, 2016

We live in a big, diverse society. There are essentially two ways to maintain order and get things done in such a society — politics or some form of dictatorship. Either through compromise or brute force. Our founding fathers chose politics.

Politics is an activity in which you recognize the simultaneous existence of different groups, interests and opinions. You try to find some way to balance or reconcile or compromise those interests, or at least a majority of them. You follow a set of rules, enshrined in a constitution or in custom, to help you reach these compromises in a way everybody considers legitimate.

The downside of politics is that people never really get everything they want. It’s messy, limited and no issue is ever really settled. Politics is a muddled activity in which people have to recognize restraints and settle for less than they want. Disappointment is normal.

But that’s sort of the beauty of politics, too. It involves an endless conversation in which we learn about other people and see things from their vantage point and try to balance their needs against our own. Plus, it’s better than the alternative: rule by some authoritarian tyrant who tries to govern by clobbering everyone in his way.

As Bernard Crick wrote in his book, “In Defence of Politics,” “Politics is a way of ruling divided societies without undue violence.”

Over the past generation we have seen the rise of a group of people who are against politics. These groups — best exemplified by the Tea Party but not exclusive to the right — want to elect people who have no political experience. They want “outsiders.” They delegitimize compromise and deal-making. They’re willing to trample the customs and rules that give legitimacy to legislative decision-making if it helps them gain power.

Ultimately, they don’t recognize other people. They suffer from a form of political narcissism, in which they don’t accept the legitimacy of other interests and opinions. They don’t recognize restraints. They want total victories for themselves and their doctrine.

This antipolitics tendency has had a wretched effect on our democracy. It has led to a series of overlapping downward spirals:
The antipolitics people elect legislators who have no political skills or experience. That incompetence leads to dysfunctional government, which leads to more disgust with government, which leads to a demand for even more outsiders.

The antipolitics people don’t accept that politics is a limited activity. They make soaring promises and raise ridiculous expectations. When those expectations are not met, voters grow cynical and, disgusted, turn even further in the direction of antipolitics.

The antipolitics people refuse compromise and so block the legislative process. The absence of accomplishment destroys public trust. The decline in trust makes deal-making harder.

We’re now at a point where the Senate says it won’t even hold hearings on a presidential Supreme Court nominee, in clear defiance of custom and the Constitution. We’re now at a point in which politicians live in fear if they try to compromise and legislate. We’re now at a point in which normal political conversation has broken down. People feel unheard, which makes them shout even louder, which further destroys conversation.

And in walks Donald Trump. People say that Trump is an unconventional candidate and that he represents a break from politics as usual. That’s not true. Trump is the culmination of the trends we have been seeing for the last 30 years: the desire for outsiders; the bashing style of rhetoric that makes conversation impossible; the decline of coherent political parties; the declining importance of policy; the tendency to fight cultural battles and identity wars through political means.

Trump represents the path the founders rejected. There is a hint of violence undergirding his campaign. There is always a whiff, and sometimes more than a whiff, of “I’d like to punch him in the face.”

I printed out a Times list of the insults Trump has hurled on Twitter. The list took up 33 pages. Trump’s style is bashing and pummeling. Everyone who opposes or disagrees with him is an idiot, a moron or a loser. The implied promise of his campaign is that he will come to Washington and bully his way through.

Trump’s supporters aren’t looking for a political process to address their needs. They are looking for a superhero. As the political scientist Matthew MacWilliams found, the one trait that best predicts whether you’re a Trump supporter is how high you score on tests that measure authoritarianism.

This isn’t just an American phenomenon. Politics is in retreat and authoritarianism is on the rise worldwide. The answer to Trump is politics. It’s acknowledging other people exist. It’s taking pleasure in that difference and hammering out workable arrangements. As Harold Laski put it, “We shall make the basis of our state consent to disagreement. Therein shall we ensure its deepest harmony.”

Brexit: Why Most Commentaries Miss The Point

Brexit-4My Comments: I found this a couple of days ago and it really helped me understand what happened in Great Britain the other day. If Brexit concerns you, this might help. It appeared in a news feed I follow written by a Tom Dispatch, if I have his name correct.


Economist Robert Kuttner has a particularly judicious summary of and analysis of the Brexit decision, what lay behind it, and what it means. I’ve reproduced the whole essay below and recommend it for everyone puzzled by what just happened and what to make of it. Tom

What was the narrow British vote to leave the European Union really about? In recent days, you have read commentaries with variations on the following themes, ad nauseam. All of them contain pieces of the truth, but all miss the basic point:

Irrational Racism. This vote was a mostly racist reaction on the part of Brits who resented dark skinned foreigners in their midst, and mistakenly blamed the E.U. Britain actually has more control over its borders than most E.U. members, since London never signed the 1985 Schengen Agreement, which got rid of border controls for travelers throughout most of the Union. Before entering Britain, Europeans must still go through passport control, just like Syrians or Americans.

Scapegoating the E.U. for Economic Frustrations. Britain actually has a better deal than most E.U. nations. For starters, it retained its own currency, and controls its own monetary and fiscal policy. But as a member of the E.U., Britain does get to send tariff-free exports to the continent and London operates as a major European financial center. All of this now at risk.

The E.U. Had It Coming. Brussels is a remote, unaccountable bureaucracy, imposing regulations beyond democratic control. The vote, rightly or wrongly, was a yearning for lost national sovereignty.

Rejecting Liberal Internationalism. Britain has grown at a good clip since joining the E.U. in 1973. Globalization is here to stay. The people who voted for Brexit, are badly informed flat-earth types, failed to understand that they were shooting themselves in the foot.

What’s wrong with these commentaries? All fail to grasp that there is more than one brand of liberal internationalism. The kind represented by the E.U. since the 1990s (and Thatcherism since the late 1970s) has been operated largely by and for financial elites.

When the original institutions that later became the E.U. were created in the 1940s and 1950s, the international system was designed on the ashes of depression and war to rebuild an economy of full employment and broad based prosperity. The system worked remarkably well.

In the 1980s, as a backlash against the dislocations of the 1970s, Margaret Thatcher came to power in Britain (and Ronald Reagan in the US). Their policies returned to a dog-eat-dog brand of capitalism that benefited elites and hurt ordinary people. By the 1990s, when the European Economic Community became a more tightly knit European Union, it too became an agent of neo-liberalism.

Policies of deregulation ended in the financial collapse of 2008. The austerity cure, enforced the gnomes of Brussels and Frankfurt and Berlin, is in many ways worse than the disease.

Rising mass discontent has failed to dethrone the elites responsible for these policies, but it has resulted in loss of faith in institutions. The one percent won the policies but lost the people.

So, yes, the Brits who voted for Brexit got a lot of facts and details wrong. And Britain will probably be worse off as a result. But they did grasp that the larger economic system is serving elites and is not serving them.

The tragedy is that we are further away from a reformed EU than ever. A progressive EU, more in the spirit of 1944, is not on the menu. The exit of Britain will give even more power to Angela Merkel’s Germany, architect and enforcer of austerity.

The rest of Europe will become more like Greece economically and more like the British rightwing politically. there will be more far-right populist movements for other nations to quit the EU. This has already begun in France and the Netherlands, two of the founding nations of the European Community — and ones that also benefit, on balance, from the EU.

What about race? Didn’t race play a big role in this vote. Is surely did — and not just a backlash against just recent influx of refugees and economic migrants. Since the 1950s, when Britain rebranded its empire as the Commonwealth, Britain has had a relatively liberal immigration policy for its former colonies—one part carrot to promote allegiance, one part guilty conscience.

In the 1960s, the rightwing Tory Enoch Powell was already campaigning against immigrants and slogans appeared, “If you want a Ni—-r for a neighbour, Vote Labour.” By 2001, fifteen years ago, Britain was already 8 percent nonwhite. As traditional industry declined and living standards crashed, non-white populations increased, creating resentments against both economic misfortune and racial change. But the history of rightwing populism is invariably a mix of economic factors and nativist ones. In the 1960s, when Europe had full employment, there was little backlash against foreign “guest-workers.” Anti-Semitism was never far below the surface in Europe, but it took the German economic collapse of the 1920s and early 1930s to produce Hitler.

Rightwing revolts are always substantially irrational, as was the vote for Brexit. But when downwardly mobile Brits grasp that the EU and the larger model of neo-liberalism aren’t exactly on their side, they are grasping a truth.

What makes this vote so tragic is the absence of enlightened leadership, either in Britain or on the continent, to propose something better. Prime Minister David Cameron, who proposed the reckless gamble of a referendum as a tactical feint to paper over an intra-party schism, may now be responsible for the dissolution of two unions — not just the EU, but the UK, as Scotland secedes. He will be remembered as the worst British prime minister ever, a near-tie with Neville Chamberlain. The Labour leader, Jeremy Corbyn, who said he opposed Brexit but refused to actively campaign against it, was not much better.

Britain’s two major parties are now both in disarray. I can think of one possible silver lining. The referendum was not legally binding, and Article 50 of the Lisbon Treaty — withdrawal — still needs to be voted by the House of Commons. And a majority of British M.P.’s oppose Brexit.

Now that the implications of Brexit are clearer, including the likely breakup of the United Kingdom itself, it’s possible that the Commons could refuse to approve Article 50. Rather, Britain could have an early election, and maybe even a partisan realignment, with one party pledged to keep Britain in the EU but to modernize the EU to better serve regular Brits, and the other party standing for narrow nationalism. My bet is that the modernizers would win.

Absent this sort of recasting of politics and political choices, we are in for a grim era in which ultra nationalists and neo-fascists keep gaining ground.

Robert Kuttner is co-editor of The American Prospect and professor at Brandeis University’s Heller School. His latest book is Debtors’ Prison: The Politics of Austerity Versus Possibility.

The Death of NeoLiberalism

retirement_roadMy Comments: The more things change, the more they stay the same. You’ve heard that before. Is it also true that the more things stay the same, the more things change?

It’s said that the world you live in as a teenager largely determines who you will be throughout your life. And since the world 65 years ago was vastly different from the world in which we live today, my values are perhaps out of date.

It’s also true the world that existed during the first ten years of my professional life was also very different from today. It has occurred to me that the orthodoxy I follow when advising my clients today might also be out of date. So I am making an effort to once again be relevant.

The article I want you to read below is not easy to read but I see a parallel between the discomfort many of us have about the changes happening in the political world and the changes happening in the financial and economic worlds. I welcome your thoughts about this and how I might evolve to provide better financial insights for my clients.

by Aditya Chakrabortty May 31, 2016

What does it look like when an ideology dies? As with most things, fiction can be the best guide. In Red Plenty, his magnificent novel-cum-history of the Soviet Union, Francis Spufford charts how the communist dream of building a better, fairer society fell apart.

Even while they censored their citizens’ very thoughts, the communists dreamed big. Spufford’s hero is Leonid Kantorovich, the only Soviet ever to win a Nobel prize for economics. Rattling along on the Moscow metro, he fantasises about what plenty will bring to his impoverished fellow commuters: “The women’s clothes all turning to quilted silk, the military uniforms melting into tailored grey and silver: and faces, faces the length of the car, relaxing, losing the worry lines and the hungry looks and all the assorted toothmarks of necessity.”

But reality makes swift work of such sandcastles. The numbers are increasingly disobedient. The beautiful plans can only be realised through cheating, and the draughtsmen know it better than any dissidents. This is one of Spufford’s crucial insights: that long before any public protests, the insiders led the way in murmuring their disquiet. Whisper by whisper, memo by memo, the regime is steadily undermined from within. Its final toppling lies decades beyond the novel’s close, yet can already be spotted.

When Red Plenty was published in 2010, it was clear the ideology underpinning contemporary capitalism was failing, but not that it was dying. Yet a similar process as that described in the novel appears to be happening now, in our crisis-hit capitalism. And it is the very technocrats in charge of the system who are slowly, reluctantly admitting that it is bust.

You hear it when the Bank of England’s Mark Carney sounds the alarm about “a low-growth, low-inflation, low-interest-rate equilibrium”. Or when the Bank of International Settlements, the central bank’s central bank, warns that “the global economy seems unable to return to sustainable and balanced growth”. And you saw it most clearly last Thursday from the IMF.

What makes the fund’s intervention so remarkable is not what is being said – but who is saying it and just how bluntly. In the IMF’s flagship publication, three of its top economists have written an essay titled “Neoliberalism: Oversold?”.

The very headline delivers a jolt. For so long mainstream economists and policymakers have denied the very existence of such a thing as neoliberalism, dismissing it as an insult invented by gap-toothed malcontents who understand neither economics nor capitalism. Now here comes the IMF, describing how a “neoliberal agenda” has spread across the globe in the past 30 years. What they mean is that more and more states have remade their social and political institutions into pale copies of the market. Two British examples, suggests Will Davies – author of the Limits of Neoliberalism – would be the NHS and universities “where classrooms are being transformed into supermarkets”. In this way, the public sector is replaced by private companies, and democracy is supplanted by mere competition.

The results, the IMF researchers concede, have been terrible. Neoliberalism hasn’t delivered economic growth – it has only made a few people a lot better off. It causes epic crashes that leave behind human wreckage and cost billions to clean up, a finding with which most residents of food bank Britain would agree. And while George Osborne might justify austerity as “fixing the roof while the sun is shining”, the fund team defines it as “curbing the size of the state … another aspect of the neoliberal agenda”. And, they say, its costs “could be large – much larger than the benefit”.

Two things need to be borne in mind here. First, this study comes from the IMF’s research division – not from those staffers who fly into bankrupt countries, haggle over loan terms with cash-strapped governments and administer the fiscal waterboarding. Since 2008, a big gap has opened up between what the IMF thinks and what it does. Second, while the researchers go much further than fund watchers might have believed, they leave in some all-important get-out clauses. The authors even defend privatisation as leading to “more efficient provision of services” and less government spending – to which the only response must be to offer them a train ride across to Hinkley Point C.

Even so, this is a remarkable breach of the neoliberal consensus by the IMF. Inequality and the uselessness of much modern finance: such topics have become regular chew toys for economists and politicians, who prefer to treat them as aberrations from the norm. At last a major institution is going after not only the symptoms but the cause – and it is naming that cause as political. No wonder the study’s lead author says that this research wouldn’t even have been published by the fund five years ago.

From the 1980s the policymaking elite has waved away the notion that they were acting ideologically – merely doing “what works”. But you can only get away with that claim if what you’re doing is actually working. Since the crash, central bankers, politicians and TV correspondents have tried to reassure the public that this wheeze or those billions would do the trick and put the economy right again. They have riffled through every page in the textbook and beyond – bank bailouts, spending cuts, wage freezes, pumping billions into financial markets – and still growth remains anaemic.

And the longer the slump goes on, the more the public tumbles to the fact that not only has growth been feebler, but ordinary workers have enjoyed much less of its benefits. Last year the rich countries’ thinktank, the OECD, made a remarkable concession. It acknowledged that the share of UK economic growth enjoyed by workers is now at its lowest since the second world war. Even more remarkably, it said the same or worse applied to workers across the capitalist west.

Red Plenty ends with Nikita Khrushchev pacing outside his dacha, to where he has been forcibly retired. “Paradise,” he exclaims, “is a place where people want to end up, not a place they run from. What kind of socialism is that? What kind of shit is that, when you have to keep people in chains? What kind of social order? What kind of paradise?”

Economists don’t talk like novelists, more’s the pity, but what you’re witnessing amid all the graphs and technical language is the start of the long death of an ideology.