The improbable rise of Jeremy Corbyn

So far this week, Jeremy Corbyn has caused over 100,000 new members to join the UK Labour Party he leads, has apologized for a war he opposed from the beginning and appears to have survived a coup attempt on his leadership. And despite his backstabbing MPs, he’s one of the few party leaders left standing after the Brexit referendum.

Given all this mayhem on the British political scene, I figured it would be a good time to speak with the writer Richard Seymour, author of the recently-released Corbyn: The Strange Rebirth of Radical Politics. Richard regularly publishes in major UK and international media; his  previous books include Against Austerity, Unhitched, and The Liberal Defense of Murder. He’s long been one of the best voices on British politics on the left.

Our conversation focused on the roots of Corbyn’s sudden rise to power, both within the Labour Party and politics in the UK more broadly, the failure of today’s Blairite coup plotters and the prospects of a long-term shift in ideology effected by Corbynism.

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Linda McQuaig is right, but there’s more to it

Since her common-sense quip that most of Canada’s tar sands reserves will have to stay in the ground, Linda McQuaig has been vilified by much of the political establishment and (rightfully) defended by a minority of voices in the media. That the facts of climate science vindicate her has made little difference to the debate. Is this because McQuaig’s comments have inadvertently scratched at a nerve that goes far deeper?

In what would be a world very different from our own, we can imagine a fairly straight line going something like this

Climate science → Climate regulations → Fiscal policy → Just transition

First, climate scientists tell us that 85% of tar sands reserves (given how high-cost they are) will most likely have to be left in the ground if globally we are to limit warming to two degrees. In response, the Canadian federal and provincial governments slowly stop subsidizing oil development, stop funding oil-related infrastructure and prepare for industry phase out (by for example, increasing royalties as extraction nears a limit). Next comes a big push for developing green projects, whether funded through direct spending or incentives. As the oil jobs and industries wither, new green jobs, new green industries and compensating income transfers take their place. Voila: just transition level unlocked!

Have a laugh first, then ask, where is the major stumbling block between this make-believe world and our own? For now politicians are acting and being berated for differing at the first step: brushing off the problem and effectively denying the climate science. Yet beyond Petroleum Correctness is a set of increasingly onerous political and economic constraints. (more…)

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Some thoughts on social democracy starting from a Fraser Institute graph

I’ve been meaning to post something on a chart from a Fraser Institute report for a while but slept on it. The chart comes from Fraser’s annual Consumer Tax Report and is supposed to show the different paths taken by how much households pay in taxes and how much they spend on basic goods like food and housing. 141209 fraser chart

In one way, this chart represents a good news story for the right. Capitalism is fulfilling one of its major promises: the cost of the basic goods is decreasing relative to household budgets – in the aggregate, which given an increasingly unequal distribution of income means that many budgets feel this very differently. Not only that, but the welfare state is slowly shrinking. Looking closely at the chart (showing the Fraser Institute’s version of the data), we see that the relative tax take is falling since about the turn of the millennium. Of course, the chart is riddled with errors (in short, the Fraser Institute either uses too many taxes or too little income in its measures) but better OECD data shows roughly the same trend, at least for taxes.

141209 canada tax-gdp

Ironically, while a story about lower spending on necessities could be a success story (capitalism works!), of course, that’s not the point of the exercise. Instead, the chart is intended to incite anger about taxes. The big caveat being to ignore the services these taxes actually pay for: the much-lower tax bill from 50 or 60 years ago is before universal healthcare, the Canada Pension Plan and other major elements of Canada’s welfare state. Yet in its ideological fervour, the Institute might be on the right track, because what the chart shows is in fact not just a success story but the changing nature of consumption. It illustrates how what economists once called the “subsistence wage” – where subsistence is not like a fixed number of calories, square feet and so on but culturally-relative and so varies according to time and place – has changed: most strikingly, what part of consumption is privately-provided and what part is socialized and provided by the state. (more…)

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On talking about priorities: Oil spills and teachers strikes

On the same day one week ago, teachers in British Columbia began a full strike and the Enbridge Northern Gateway pipeline was approved by the Canadian government. With such telling coincidences, it is hard not to juxtapose the two broad social conflicts in which BC has become a flashpoint: that over the quality of public education and that over the expansion of fossil fuel development.

This juxtaposition is made across the board. Writing in support of additional education spending financed by higher taxes, SFU economist Krishna Pendakur closes with this point:

B.C. must be one of very few places in the world where “invest in our future” means “invest in liquefied natural gas” and not “invest in the education of our children.”

(more…)

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Privilege and pseudo-science

When people ask me why I did graduate school in economics, I sometimes half-jokingly tell them that it was a case of going into the lion’s den to see what the lion is up to in there. This is an exaggeration to be sure, but it is in keeping with the dictum that we should understand something in order to critique it effectively. For the similar reasons, I keep reading a variety of mainstream economics books, journals and blogs.

And sometimes I come across things like this. The title, “Feminist framing and general equilibrium theory”, is innocuous enough – especially if one is used to the residual sexism and racism that sometimes accompanies the ahistorical and asocial theory of society that underpins mainstream economics. The author, Nick Rowe, is a frequent contributor to the group blog on which the article appeared; he is a professor of economics and a fellow of a prestigious research institute.

The article is an argument against some recent evidence that shows there may be structural reasons for why fewer women major in economics in university. In particular, there is evidence that women are far more likely to drop economics as a major if they do not receive As. (more…)

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Magic numbers and the math stick

Economics is often associated with numbers. We are bombarded with economic data: GDP, unemployment, inflation, debt, exchange rates, market indices…the list is seemingly endless. While many of these numbers change – we are encouraged to cheer when they rise, jeer when they fall – there are others that are presented as fixed, immutable boundaries between good policy and bad. These are magic numbers that aspire to reduce economic policy decisions simple rule-following. Upon closer inspection, the magic of these numbers may turn out to be nothing but pixie dust. Breaking the illusion, however, risks a real mathematical headache.

Last week, another nail was applied to the already tightly-shut coffin of what had until recently been considered a magic number in economics. In a series of influential papers, Carmen Reinhart and Kenneth Rogoff purported to show that a country’s public debt becomes a sizeable burden on economic growth once it exceeds 90% of GDP. This 90% threshold was used by governments, international institutions, lobby groups and others to create and influence public policy across the globe. Many countries either willingly undertook or were – more or less gently – nudged into undertaking destructive austerity programs to lower debt levels below this magic threshold.

An IMF study published last week indicates that the RR studies, as they’ve come to be called, use a much too short, one-year time-frame to measure the effects of public debt on GDP growth. Taking a longer view is not only much more appropriate, it shows there to be no discernible negative effect of higher public debt on GDP growth – and certainly no clear threshold like that posited by Reinhart and Rogoff. This latest study comes on top of another published last year by graduate students from the University of Massachusetts-Amherst, which uncovered  not only serious methodological flaws in the RR studies, but also simple errors in how data was entered into Excel spreadsheets. Together, these errors were responsible for the emergence of such a clear threshold. In short, the accumulated weight of critiques of the RR studies has largely shown these studies to be…to put it bluntly, wrong. The magic 90% number turns out to truly be a conjurer’s trick. (more…)

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QE: Furthering the habit of privatizing gains and socializing losses

“Privatizing gains and socializing losses” could be the motto for the neoliberal era. Alongside this and “there is no alternative”, few slogans better capture the ideology that has been so successfully diffused throughout the world over the past several decades.

Five years after latest financial crisis, this motto rings true as ever. To say that the losses stemming from the crisis were large is a heroic understatement; indeed, not only were they humongous, their exact size remains a tad fuzzy. Meanwhile, across the world in the aftermath of the crisis, stock markets have rebounded, wealth and income inequalities have grown and corporations and financial institutions have returned to making healthy profits. At the same time, many countries have seen both employment and median incomes either stagnate or fall.

In short, once again, losses were socialized, while gains privatized. Prominent among the means employed by governments to ensure that this be the case were various kinds of asset purchase programs. First, in the immediate aftermath of the crisis, came actions that transferred toxic financial assets into public hands either through direct buybacks (as in the US TARP program) or temporary nationalization/bailout. Since these short-term, more explicit socializations of private loss came to an end, the policy of quantitative easing (QE), through which central banks purchase vast amounts of long-term debt from financial markets, has been their implicit continuation. Unlike the earlier programs, QE is aimed instead at the other end of the equation, privatized gains. (more…)

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Solving Christmas conundrums with New Year’s resolutions

I know I promised to not post until the New Year. Clearly the holidays have gotten the better of me. This, however, will be a short reflection and at once a New Year’s resolution.

Christmas is a time of large get-togethers for my family and this year was no different.  We feasted late into the night on Christmas Eve and again on Christmas Day. Both nights the talk at the table inevitably turned to politics.

The range of economic, social and political problems identified during our meals would make any left-wing activist squirm in her seat with glee. A dearth of good jobs, runaway inequality, corporate control of politics, rampant consumerism, housing unaffordability, environmental degradation, climate change – these and more like them were raised many times over and by different people. Indeed, there was broad agreement at both feast-tables that we are in the midst of a systemic crisis.

At this point, you would expect the token lefty writer and activist (me) to easily leap up onto the table, make a rousing speech and lead a rabble in its Sunday best to take over the nearest bank, corporate office or shopping mall armed with borscht spoons and pierogis…or, at least, to get widespread agreement among those at the table that the only sensible way forward is a strong left-wing program – one best able to address the concerns raised.

Sadly, nothing like the latter took place (nor the former in case you’ve been holding your breath). (more…)

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