Tag Archives: Milton Friedman

Life on Hannan World (Part 9)

The occasion of Milton Friedman’s 101st birthday…no, he’s still dead, I just checked… has moved the Lyin’ King to pen this gushing tribute to the man whose economic theories have quite literally turned the world into a toilet. Dan opines:

Today would have been Milton Friedman’s hundred-and-first birthday. The Chicago economist, who died in 2006, is already acquiring that almost Homeric status that normally comes only decades after a man’s life.  Perhaps social media have speeded up the process, or perhaps it’s the fact that Friedman’s strongest enthusiasts are often students with no direct memory of their hero.

Friedman, darling of neoliberals everywhere and supporter of Pinochet’s Chile, where his theories were rammed down people’s throats, is given the airbrush treatment… well, that’s not quite true. Friedman’s supporters refuse to see any flaws in the man. In their eyes, he was the very model of economic perfection. So no need for the airbrush.

Yet for someone who talked so movingly about ‘freedom’, Friedman was capable of turning a blind eye to political repression. For him, all that mattered was the functioning of the free market with its insistence that social relations be reduced to financial transactions between actors. Friedman was also fervently against any form of regulation, so in a pure Friedmanite dystopia, surgeons can practice without proper qualifications and driving licenses would be banned. Can you see the dangers? Yes? Well, Dan can’t.

Here, Hannan tells us:

Friedman did not limit himself to academic theories; he had a keen sense of how to translate ideas into action. He understood politics very well, and used to say that his aim was not to get the right people elected, but to create a climate where even the wrong people would do the right thing. Every year I spend in politics I find that insight more brilliant.

Yes, Friedman understood politics so well that in his perfect world, certain kinds of political activity would have been outlawed because they didn’t fit into his perfect model of a rampant capitalist society.

Here we get to the core of the blog:

What mattered to him most of all? Oddly enough, it was nothing to do with monetary policy, or indeed with economics at all. He believed that the single measure that would do most to ameliorate society was school vouchers.

School vouchers, loved by Pinochet’s Chicago Boys and loathed by those who have had to put up with a substandard education, have become a sort of gold standard in the eyes of the Right.  Higher education, too, has moved backwards. For the last few years, students have been protesting over the inequalities of the education system. Dan simply ignores this.

He had first suggested the idea as early as 1955 – in an intellectual climate so unfriendly that he might as well have been proposing that children be cooked and eaten.

You can see where this is heading and predictably enough, Dan tells us:

But the climate shifted, not least through Friedman’s own interventions and, by the end of his life, a few places were prepared to give his idea a go. Chile had led the way in the 1980s, followed by Sweden in the early 1990s. Milwaukee became the first city in the US to adopt vouchers 23 years ago, and around a quarter of a million American pupils are now benefiting.

“Chile had led the way in the 1980s” he says. No mention of the oppressive weight of the Chilean ‘small state’ crushing those below. No mention of the thousands rounded up, tortured and executed. No mention of the oligarchical free-for-all ushered in by Pinochet’s ‘hands off’ approach to the economy and its disastrous consequences for ordinary Chileans. He continues:

Though Britain has stopped short of full-blown vouchers, Michael Gove has plainly embraced the idea that governments can fund schools without running them, and the free schools programme is one of the greatest of the Coalition’s achievements.

The truth of the matter is that the Tories have been historically opposed to the state school system and have spent the better part of 60 years talking it down when they’re out of power and running it into the ground when they’re in government.  The unspoken dictum here is “some state schools are bad, therefore the state education system is bad”.

The Cat believes that the Tories would prefer it if everyone paid for their schooling and if you can’t find the money, that’s tough. You will die illiterate and ignorant. Why? Because it’s God’s will. That’s why.

Finally Dan tells us:

With his wife, he established the Milton Friedman Foundation for Educational Choice, which has helped thousands of students, especially poor students, to get a decent education.

“Choice” has been used as a battering ram since the 1980s. But choice is neither here nor there. You can only have what is available. The Tories believe that if you don’t live in the catchment area of a school that you’ve fetishised, then you should be able to bypass the rules and send your kid there anyway. Better still, set up your own free school where you can be free to inculcate children in any superstitious tosh that occupies your thoughts.

While 75% of free schools were found to be “good” or “outstanding” by OFSTED inspectors, 25% were not. This article from The Guardian says:

One of the first free schools to open has been placed on special measures and given an inadequate rating by Ofsted inspectors, in an untimely blow to the government’s flagship education policy.

Adding:

Inspectors were severe on the primary school’s leadership, saying its governors failed to grasp the school’s “serious shortcomings”, while school leaders “believe the school is far better than it is”.

The inspection team gave the school the lowest grade, of “inadequate”, in three of four categories, for pupil achievement, quality of teaching, leadership and management. “Too many pupils are in danger of leaving the school without being able to read and write properly,” inspectors concluded. “Unless this is put right quickly, pupils are unlikely to flourish in their secondary schools and future lives.”

To borrow from the Tories’ lexicon of smears, I could say that “some free schools are poor, therefore all free schools are poor”. But unlike Dan,  I’m not that petty.

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So what’s Miliband got to say?

Clueless Mr. Ed

Hey dude, where’s my vision?

In a nutshell? Not a lot. Well, nothing that anyone on the left wants to hear. I found this blog in today’s New Statesman, in which Mr. Ed is quoted as saying,

The Government’s economic failure means that whoever wins the next election will still face a deficit that needs to be reduced. The redistribution of the last Labour government relied on revenue which the next Labour government will not enjoy. The option of simply increasing tax credits in the way we did before will not be open to us.

We need to care more about predistribution.  Centre-left governments of the past tried to make work pay better by spending more on transfer payments.  Centre-left governments of the future will have to make work pay better by doing more to make work itself pay.  That is how we are going to build growth based not just on credit, but on real demand.

I think this is a centre-left moment. Why might you think it’s a centre-right moment? Well, because of issues of fiscal responsibility, which is why we must be strong on that. But for me it’s a centre-left moment because people think there’s something unfair and unjust about our society. You’ve got to bring the vested interest to heel; you’ve got to change the way the economy works. That’s our opportunity.

Straight from the horse’s mouth, so to speak. So if Labour gets into power at the next General Election, we can expect to hear things like, “the country is broke” and “tough choices have to be made” repeated at every opportunity. But what is this “predistribution” idea? It’s a non-word that PPE types love to coin in the absence of real ideas.  If Mr. Ed is serious about “making work pay” then everyone needs to be paid a living wage. I’ve heard little from him about that. What he seems content to do is carry on with the bankrupt idea of negative income tax  Friedmanite bollocks tax credits.

The rest of the interview carries on in a similar vein. Lots of platitudes, loads of “I feel your pain” type stuff.  We also find out what books he took with him on holiday [sighs].

If you were any doubt that Mr. Ed’s Labour Party is a different beast to Lord Snooty’s Tories, think again. This is the same beast but it speaks in warm words and wears a sickly smile. It still has its neoliberal claws and fangs, they’re sheathed… for now. Here’s another snippet,

On welfare and benefits, the Labour leader insists that some form of contribution from the recipients of welfare must replace what Liam Byrne, former head of the Labour policy review, called “unearned support”.

“I do think we need a society where people make a contribution,” Miliband says. “You build a successful society out of people showing responsibility. That’s an important principle at the top, it’s an important principle elsewhere. But people at the top have a particular responsibility because they help define the ethic of the country.”

These words could have been said by Cameron, the only real difference here is the tone. The word “responsibility” is deployed as a buzzword.  It’s one that makes disciplinarian ex-bankers like Liam Byrne drool with uncontrolled anticipation.

But how does Miliband intend to make people more responsible? If making people work for their benefits is considered to be a mark of their “responsibility”, then he has some serious moral and ethical questions to answer. What about dignity and respect?  In effect, Labour’s support of workfare would be tantamount to giving a nod and a wink to the further erosion of worker’s wages, which have declined in real terms for the last 20 years.  My, wouldn’t Gaitskell be proud of this lot? Ramsay MacDonald too. In fact, this is a party in which even Twinkletoes Cable would feel at home these days.  Maybe that’s the point: to appeal to the SDP lot in the Lib Dems should the coalition fall. Then again, maybe it isn’t. In fact, I think I’m being too generous on Mr. Ed and his crew of weak-willed snivellers. In truth, they haven’t got the guts to offer hope to a nation that’s crying out for it. Instead of doing anything that could be described as visionary, the former party of labour takes another sharp right-hand turn into a ditch.

UPDATE 6/9/12 @ 1758

Mr. Ed fleshed out the “predistribution” idea that I mentioned earlier in a speech to The Policy Network.

The BBC has the story,

“Predistribution is about saying, ‘We cannot allow ourselves to be stuck with permanently being a low-wage economy and hope that through taxes and benefits we can make up the shortfall.’

“It’s not just, nor does it enable us to pay our way in the world.

“Our aim must be to transform our economy so it is a much higher skill, much higher wage economy.

“Think about somebody working in a call centre, a supermarket, or in an old peoples’ home.

“Redistribution offers a top-up to their wages. Predistribution seeks to go further – higher skills with higher wages.

Yay! Higher wages! How? Anyway, it seems I got it wrong vis a vis the tax credits. That was one of Gord’s ideas… well not really, it originally came from Milton Friedman, who was neither a socialist or a social democrat.

The BBC article also notes that Miliband is having text with Twinkletoes (what did I say?).

The FT has this rather interesting story here.  Here’s a snippet,

Mr Cable told the Financial Times in July he did not “exclude” a run for the party leadership and polls suggest the business secretary, who is a former Labour councillor, is more popular than Nick Clegg, the deputy prime minister.

But behind the mischief, Mr Miliband is making another calculation: that Labour may need to work with the Lib Dems in the event of a hung parliament in 2015 and that Mr Cable may hold the key to a Lib-Lab deal.

How’s life in that ditch, Ed?

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From Hayek to Rand: a short stroll through neoliberal thinking

Hayek: the Daddy of Neoliberalism

Friedrich von Hayek was the daddy. He was the Thatcher government’s philosophical anchor. He was one of the high priests of neoliberalism.  Hayek was the man whose book Thatcher famously slammed down on a table and declared “This is what we believe in”! The book in  question was Hayek’s second attack on socialism titled The Constitution of Liberty. His first, The Road to Serfdom is given similar veneration by Conservatives and is no less visceral in its straw man critiques of socialism and liberalism. This is an odd position for a man who was wedded to the ideals of classical liberalism but it is the social aspects of liberalism that Hayek rails against, not its economic message.

In the first chapters of the book, Hayek rails against both liberalism and socialism. He holds Britain (or England as he says) as a model economy and it is through Britain’s free trade policies of the 19th century that his notion of liberty is predicated. he says,

The rule of freedom which has been achieved in England seemed destined to spread throughout the world

He ignores the methods by which the British idea of freedom was exported throughout the world: by the barrel of a gun. The Road to Serfdom was published in 1944. Hayek, an Austrian economist had taken a position at the London School of Economics. In Vienna he had been influenced by Ludwig von Mises, the founder of the Austrian School of Economics whose name has gone on to grace the title of a US right wing libertarian think tank. Interstingly enough for a self-confessed ‘liberal’, von Mises gave his support to Englebert Dollfuss’s Austrofascist regime. Von Mises served as economic advisor to Dollfuss until the latter was assassinated by the Nazis.  The Jewish von Mises would have found it difficult to live under a Nazi regime because of its racial purity laws.

The von Mises Institute ‘scholar’, Lew Rockwell has a selective take on fascism here. He completely rewrites history by airbrushing out von Mises involvement in Dollfuss’s regime.  Indeed apologists for von Mises will brush aside any suggestion of  his collaboration with the “it was a lesser evil [than communism]” defence. We can see the start of a pattern here: those who would describe themselves specifically as classical liberals would go on to offer their support for authoritarian regimes. Hayek and Friedman both lent their support to Pinochet’s Chile – Hayek visited there in 1984. The libertarian rhetoric obscures the reactionary and authoritarian tendencies that are present within their strain of classical liberalism. Von Mises left Austria for the United States and together with Hayek and Friedman they founded the Société du Mont-Pèlerin, which became a sort of anti-Kenynesian think-tank; a hothouse for neoliberal thinkers. You can read their Statement of Aims here.

Neoliberalism is essentially a late 20th century variant of classical liberalism. Whereas the the emphasis of classical liberalism was on free trade, limited government and so forth, Hayek and his contemporaries Ludwig von Mises and Milton Friedman, placed greater emphasis on the notion of the individual as a sovereign being who was unimpeded by regulation or ‘red tape’ and free to act as agents consumers within a ‘liberal democracy’. This, they posited, would move human society along a progressive path because competition, they argued, is the natural human condition and the logic was that competition was therefore good for progress. In other words, system that entirely deregulated economic activity would produce greater wealth and thus greater happiness and provide an outlet for natural competition.  To achieve this, all social relations would become market relations: everything that was once publicly-owned would be bought and sold in a market place (Gilbert, 2008). This included the welfare state, much of which was largely dismantled by Thatcher in the 1980’s. Neoliberalism is classical liberalism that has been taken to an extreme.  Everything and everyone must make a profit. Thatcher once declared that she wanted to see a “nation of entrepreneurs”. Everyone would become an entrepreneur, un petit capitaliste, a shopkeeper, a spiv whether they wanted to be one or not.  The former nationalized companies were expected to make profits for their shareholders, the lessons of history were apparently forgotten as the government sold the public a romanticized image of the age of the great railway companies; it was an image that was intended to restore a lost pride in an underfunded rail network that was now re-branded using, in some cases, the names of the Big 4 rail companies (like GWR).

Nostalgia was a new way of selling government ‘products’. But nostalgia is history that has been purged of those discourses that do not conform to the narrative of the dominant ideological class. Gil Scott-Heron says in his beat poem, B-Movie

The idea concerns the fact that this country wants nostalgia. They want to go back as far as they can – even if it’s only as far as last week. Not to face now or tomorrow, but to face backwards.

What the government failed to mention was the fact that all the so-called Big 4 railway companies (Southern, LNER, GWR and LMS) were struggling before they were nationalized in 1945.  LNER never made a profit.  It is impossible for an enterprise that serves the public interest, such as a publicly-owned railway, to turn a profit. They are public enterprises. Such enterprises are necessary for the greater good of the nation because they stimulate the economic growth of which Hayek and his disciples claim to be in favour. Publicly-owned enterprises are therefore  too important to be left to the devices of the market. As we have seen with rail privatization, the situation is chaotic: there are multiple train operating companies, a separate rail infrastructure company and at least 3 different regulators, which includes the Department for Transport.

Material wealth underpinned this notion of the individual and the human being was magically transformed into a rational calculating machine free only to make money and consume commodities. This is best illustrated by Adam Curtis’s examination of Nash’s game theory and its employment in the neoliberal project in his documentary, The Trap – What Happened to our Dream of Freedom? (BBC2, 2007). In the film he says that the theory was employed by the West during the Cold War. It produced the so-called theory of ‘Mutually Assured Destruction’, which was a sort of ‘who blinks first gets annihilated” game. Nash’s theory also filtered into the sphere of economic thought and resonated with Hayek.  It was posited that human beings are irrational beings that act only in their own self interest and that people need to be given targets to acheive that will eventually become benchmarks. In Hayek’s grand vision there is no room for altuism. There is no alternative (TINA). One of the cornerstones of neoliberalism is its insistence on personal responsibility

Freedom to order our own conduct in the sphere where material circumstances force a choice upon us, and responsibility for the arrangement of our own life according to our own conscience, is the air in which alone moral sense grows and in which moral values are daily recreated in the free decision of the individual. Responsibility, not to a superior, but to one’s own conscience, the awareness of a duty not exacted by compulsion, the necessity to decide which of the things one values are to be sacrificed to others, and to bear the consequences of one’s own decision, are the very essence of any morals which deserve the name.

Nietzsche would question the use of the word “morality” here. He said “morality is the herd instinct of the individual”. Morality is imposed on others by those who dishonestly claim that they have some form of moral authority or a superior framework of morals to the Other.

The Tories were in the electoral wilderness for 13 years. During this time they had 4 leaders, 3 of whom offered little different to the standard Hayekian formula that had been fused with romanticism (Hague’s Save the Pound campaign slogan). The election of David Cameron in 2007 was portrayed as a break with the past. He was a fresh-faced old Etonian with some blue blood in his veins. In spite of his evident poshness, Cameron was immediately compared to Blair but the comparison relied solely on the fact that they were both relatively young when they became party leaders. Blair had no philosophical anchor unless you count Giddens. Indeed Blair claimed to be “beyond ideology”. He was neither right nor left (sic).

There is no such confusion with the Tories, they are right wing. But Cameron

A is A

had to make some kind of break with the past. Hayek was deemed too old fashioned; too closely associated with the Thatcher years. More importantly, they were swept along by the tide of  libertarian thinking in the United States. These libertarians were searching for a new ‘philosopher’ to help them solve the economic mess that they and their associates in the banking and finance sector had got us into. They looked for a new way of justifying their attacks on the poor. So with nary any hesitation, they turned to Ayn Rand.

Last year, I was watching Newsnight, I don’t remember the exact month but they were running an item on Rand. If I remember correctly, Douglas Carswell,  MP for Clacton, whom I had never heard of at the time, came on to talk about her.

That was the first sign of what was to come.

I also noticed that Rand was being talked about more in the quality press. There was talk of Brad Pitt and Angelina Jolie making a film based on Atlas Shrugs. Pitt and Jolie are self-confessed fans of Rand. There are others too ranging from Oliver Stone to Ronald Reagan. In April of last year, Carswell penned this blog.

Rand ’s ideas are back.  Or more accutrately, Rand’s ideas never went away.  They were simply ignored by that leftist elite that presides over our culture and our institutions.  But now the internet means all those quangocrats, bogus academics and Guardianistas no longer call the cultural shots like they did.

The left are going to hate it.

Not just the left but anyone with a shred of humanity in their soul, Doug. Carswell talks of a “leftist elite” but what is this “leftist elite”?  He assumes that because the UK hasn’t fully embraced the authoritarian libertarianism of Hayek et al, then the country is dominated by these “leftist elites”. To be sure, this is a phrase that Carswell has borrowed from the lexicon of the US Right where Rand is still very big business. Carswell also ignores the fact that his own party, the Conservatives is a party full of elitists – many of them are millionaires and sit in cabinet (there’s 22, count them).

Rand, like Hayek, placed the individual at the centre of her philosophy. The Noble Soul was the habitus for her ideas of rational self-interest or, as I would suggest it be called, rationalized  selfishness. This selfishness was further rationalized as ‘freedom’. For Rand, freedom could only be achieved through unbridled laissez-faire capitalism which she described as “the unknown ideal”.

When I say “capitalism,” I mean a full, pure, uncontrolled, unregulated laissez-faire capitalism—with a separation of state and economics, in the same way and for the same reasons as the separation of state and church.

The sudden fetishization and appropriation of Rand’s philosophy by some Conservatives is odd. On the surface, there is little to choose between Hayek and Rand. In both cases, the arguments against collectivized activity by Hayek and altruism by Rand ignore the complexities of human existence which reduces humanity to its most bestial level; an unfeeling lump of flesh that only has the capacity for making money . Emotions, community and family ties, empathy, sympathy and kindness are all erased by Rand. If one should show kindness to another, she would argue, then it is done entirely out of self interest. She does not say why.  Regarding emotions, she wrote,

Emotions are the automatic results of man’s value judgments integrated by his subconscious; emotions are estimates of that which furthers man’s values or threatens them, that which is for him or against him—lightning calculators giving him the sum of his profit or loss.

This is a rather strange rationalization of emotions, which are in themselves, hard to pin down.  What this passage certainly reveals to us is Rand’s coldness. Perhaps it is because she thought of relationship with other people as a means to an end. So cold was she that she rationalized emotions as products in a system of exchange, profit and loss. Her coldness is further revealed in her pronouncements on humour.

Humor is the denial of metaphysical importance to that which you laugh at. The classic example: you see a very snooty, very well dressed dowager walking down the street, and then she slips on a banana peel . . . . What’s funny about it? It’s the contrast of the woman’s pretensions to reality. She acted very grand, but reality undercut it with a plain banana peel. That’s the denial of the metaphysical validity or importance of the pretensions of that woman. Therefore, humor is a destructive element—which is quite all right, but its value and its morality depend on what it is that you are laughing at. If what you are laughing at is the evil in the world (provided that you take it seriously, but occasionally you permit yourself to laugh at it), that’s fine. [To] laugh at that which is good, at heroes, at values, and above all at yourself [is] monstrous . . . . The worst evil that you can do, psychologically, is to laugh at yourself. That means spitting in your own face.

It is arguable that Rand had no sense of humour because it does not figure in the calculus of profit and loss.

Ayn Rand has been portrayed as a philosopher. Her philosophy, which she named Objectivism, has become the template for those who are either unfamiliar with Hayek or have been persuaded to read her fiction because it is supposed to be some sort of rite of passage.  It is possible to argue that Rand was deeply misanthropic, seeing only the potential for making money and rejecting human complexities as an almighty inconveniences – which she categorically ignored. She once said,

Money is the barometer of a society’s virtue.

It is not clear what she means by the word “virtue” but she employs the word in the title of her book The Virtue of Selfishness. When Rand died her followers placed a wreath in the shape of a 6 foot high dollar sign beside her grave. It was an oddly pertinent symbol of her cupidity, though her supporters thought otherwise. Here she declares her selfishness

I swear, by my life and my love of it, that I will never live for the sake of another man, nor ask another man to live for mine.

Other people are simply there for their usefulness. Not because there is any desire for companionship or anything like it. Rand had no use for companions. She had disciples. She was a cult leader.

It is easy to see where phrases like “socialized medicine” come from too,

Socialism may be established by force, as in the Union of Soviet Socialist Republics—or by vote, as in Nazi (National Socialist) Germany. The degree of socialization may be total, as in Russia—or partial, as in England. Theoretically, the differences are superficial; practically, they are only a matter of time. The basic principle, in all cases, is the same.

The alleged goals of socialism were: the abolition of poverty, the achievement of general prosperity, progress, peace and human brotherhood. The results have been a terrifying failure—terrifying, that is, if one’s motive is men’s welfare.

Of course this presupposes that capitalism has never been responsible for countless deaths, the loss of liberties or the imposition of an authoritarian regimes that were wholly supportive of the idea of unfettered capitalism as a ‘cure’ for all ills. I am thinking here of Pinochet’s Chile.

As this article from Mother Jones suggests, the world of Rand is an upside down one. In an deliberate inversion of logic, Rand’s thesis is that the rich and powerful are the oppressed, while the poor, the vulnerable and the low-waged – whom she labelled “looters” and “moochers” – are the oppressors. It is now easier to recognize the source of the coalition’s policies in relation to those on the lowest income scales. Those who receive state welfare benefits (including those on Disability benefits) have been consistently painted as “scroungers” regardless of their circumstances. The Tory press has been at the forefront of this war against the subaltern classes by printing a drip-feed of stories about “chavs”, “dole cheats” and so on. They have acted as the Conservative Party’s unofficial information service. It is arguable that the only reason the Conservatives have adopted Rand’s philosophy is to legitimate selfishness and greed. Rand’s ideas provide and instant justification to the false premise that the poor and the unemployed are stealing money directly from their pockets through taxation.

A better world is out there.

Bibliography

Duggan, L (2003). The Twilight of Equality? Neoliberalism, Cultural Politics and the Attack on Democracy. Boston: Beacon Press

Gilbert, J (2008). Anticapitalism and Culture. Oxford: Berg

Hayek, F. A. (1983). The Road to Serfdom, London: Routledge Kegan Paul

Nietzsche, F (2008). Beyond Good and Evil. Cambridge University Press

Rand, A (1975). The Romantic Manifesto. London: Signet

Rand, A (1964). The Virtue of Selfishness. London: Signet

Filmography

Curtis, A (2003). The Trap – What Happened to our Dream of Freedom? (BBC2)

UPDATE: 30/1/11 @ 0102

Tidied up blog and made some clearer connections

UPDATE: 23/2/11 @ 1957

Made some additions to the text and did some further tidying up.

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The ghost of Pinochet rears its ugly head

The Chilean presidential election which took place in January received superficial attention in the British media. But those of us who have been watching Chile know that the new President, Sebastian Piñera is a billionaire. What many people don’t know is that his elder brother, Jose, was in Pinochet’s cabinet as the Secretary for Labor and Social Security and Secretary of Mining (he oversaw the privatization of Chile’s mines which were nationalized under Salvador Allende). Sebastian Piñera on the other hand amassed a fortune during the Pinochet years. This fortune mainly came from the introduction of credit cards to Chile in the late 1970’s. Like his brother he is also connected to the infamous Chicago Boys. He was Professor of Economics at the University of Chile from 1977 to 1990. Presumably he was moonlighting for Pinochet while inculcating his students in the benefits of an unfettered market economy. Both Sebastian and Jose’s father (also called Jose) was once a CIA operative.

As I reported in yesterday’s blog, the Chicago Boys have returned to power; Piñera has rewarded three of them with cabinet portfolios – one of which is the Economy portfolio. In fact, Piñera’s election depended  largely on support from Pinochet supporters. This blogger reports that a blog called Cuestionatelo Todo had this to say on Piñera’s victory,

His (Pinera’s) triumph represents a resurrection of “pinochetismo,” […] Pinochet never really died, and Piñera’s victory is only the natural consequence of a transition that never happened and the simple continuation of the same thing with faces that appear friendlier. The triumph of Piñera’s party is a step backward for Chilean democracy.

Quite, it is almost as if The Caudillo were controlling events in Chile from beyond the grave. There’s more from the Comment Factory

Piñera himself has ties to the Pinochet-era, something which he has been keen to downplay. While he was among those who in 1988 voted to end the dictatorship and restore democracy to Chile, in 1989 he also managed the unsuccessful election campaign of Hernàn Buchi who was a minister in the Pinochet regime for ten years, including the position of Minister of Finance from 1985-1989. Buchi has never been implicated in any of the abuse or corruption allegations that stain the regime, yet his participation in so oppressive a system makes him a figure of animosity to a large section of Chilean society, something that is true of all Pinochistas.

Last year US Expat Living in Chile said,

So, Sebastian Pinera, perennial candidate, is running again. I saw a poll showing he and Frei (concertacion candidate) were within a few points but another independent and former socialist party candidate has entered the race. He is somewhat left of Frei and appears to be taking votes-Pinera is now far ahead with the other two splitting the rest of the vote. Pinera has carefully distanced himself from the Pinochet legacy.

He may have tried to distance himself from Pinochet but he is tainted by both association and the fact that he amassed millions under the dictator. Piñera has also claimed that he voted “No” in the 1989 plebsicite to retain Pinochet (who expected the vote to go his way). This is from US Expat who found this interesting nugget,

The first document is a compilation of data and analysis on Miguel Juan Sebastián Piñera Echenique, ordered by the Department of Communications at the U.S. Embassy in Santiago, which increased the number WSA/Was/3215B, the input register 1975, 1984 and 1990, and is related to money laundering, setting up shell companies, bribery and conspiracy, all acts relating to the intervention and liquidation of the Banco de Talca, 1982.

Veteran Chile-watchers may recall that Pinochet was also accused of money laundering as well as drug-trafficking. Piñera also owned one of the biggest television channels in Chile, which he was reported to have sold to Time-Warner. Nikolas Kozloff’s blog on Buzzflash says,

Piñera, a kind of Chilean Berlusconi who owns a television channel amongst other business holdings, and who piloted his private helicopter around the country to make campaign stops in isolated regions, is one of the world’s 700 richest people. The politician opposes human rights prosecutions for military and police officers implicated in abuses during the Pinochet military dictatorship, and as such represents a political step backwards for Chile.

Kozloff also reminds us,

Unlike Venezuela for example, Chile has no television station that espouses the views of the left. There are two left-wing bi-monthlies, El Siglo of the Communist Party and Punto Final. Both have notoriously low circulation. The Communist Party owns a radio station, and there are a few other progressive leaning stations. On the Internet, there is more political diversity than in TV and print, but digital media is still incipient in Chile where most people lack Internet access.

I think we know where this is going: a media that is controlled by the right did the ‘right thing’ by Piñera and convinced the electorate to hand him their votes. According to Huffington Post, Piñera also owns a controlling interest in LAN, the Chilean flag-carrier and the country’s most popular football team.

Piñera has pledged to continue former President Michelle Bachelet’s policies. However,

Other promises include privatizing 20 percent of state-owned Codelco, the world’s biggest copper producer, and hiring 10,000 new police officers and pushing for renewable energy and improvements in public education.

Socially, he said he would expand legal rights for gay and lesbian couples, but draw the line against same-sex marriage or adoption. He’s also against euthanasia and abortion, which remains illegal in all cases in Chile.

While trade unions are not illegal in Chile, intimidation and union-bashing are near routine; a legacy of the Pinochet years. Interstingly enough, one company that has been identified for violating trade union rights is LAN,

Union bashing at LAN Airlines: In July, LAN Airlines Chile dismissed three union representatives, Juan Martínez, Carlos Sarmiento and Mario Ricci. This anti-union measure was one of a series of practices violating organising rights, aimed at weakening the union’s power to act. In addition, the company, which has branches in other countries, is developing a policy of precarious employment, making increased use of subcontracting and outsourcing arrangements.

Enough of Piñera, what about those Chicago Boys? I reported yesterday that Juan Andrés Fontaine had been given the Economy portfolio (which includes development and tourism). One interesting appointment has been in Education with Joaqín Lavín taking that portfolio. Lavín is a member of Opus Dei who wrote a book praising Pinochet’s economic policies . He is also a former presidential candidate having lost to Ricardo Largos in 1999. The last Chicago Boy to be included in the cabinet is Cristián Larroulet, who has the intriguing title of Minister Secretary General of the Presidency of the Government (or Segpres). It’s a pretty fair bet that he is extremely close to the president.

What do the next 4 years hold in store for ordinary Chileans? Given the inclusion of 3 Chicago Boys in the cabinet, it is clear that the Piñera presidency will continue with its Friedmanite economic practices. Bachelet’s presidency changed precious little in that regard. The rescue of the trapped miners at Copiapo reminds what happens when a nation’s economy is left to the free market: safety goes begging and trade union rights are violated. When the Thatcher government took on the miners, it did so for ideological reasons. The coalition government is pledged to ‘reform’ public services; the reason for this, too, is ideological: the public sector is heavily unionized, whereas few companies in the private sector are unionized. This is sold as a form of ‘freedom’. Pinochet promised the same thing but this  freedom was only accessible through him. It was the same during the Thatcher years and this idea has been resurrected and re-articulated by the present government.

Finally Piñera is set to meet our esteemed PM, Lord Snooty for a cup of tea next week.  I wonder what they will talk about?

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The Chicago Boys are back in town

The Chilean Miners’ plight has been the biggest news story of the year – next to that of the hapless Raul Moat of course. But what is really going in post-Pinochet Chile aside from the massive world media event that surrounds every move of the rescue efforts at Copiapo? I don’t want to denigrate the plight of the miners; they’ve suffered and will probably continue to suffer for some time to come. What I cannot fathom is the way in which the company that owns the mine has behaved towards the 33 trapped miners and the workers on the surface. Last week, the Buenos Aires Herald reported that,

Employees from the San Esteban Company, owner of the mine where 33 miners have been trapped since August 5, held a demonstration in Copiapó, northern Chile, in order to protest unpaid salaries.

Some 300 persons, amongst them miners and their families, protested peacefully against the company, owner of the San José mine, claiming that the salaries corresponding to the month of September have not been paid.

There was a brief mention of this on BBC News but the focus was inevitably drawn towards the ‘human interest’ story of the trapped miners – who have also not been paid.

Union leaders have called on the government to pay compensation to the men, together with roughly 270 other employees of San Esteban who are now out of work. They blame the accident on poor regulation, pointing out that the mine was allowed to remain open despite repeated safety violations which led to the death of a miner in 2007.

But this is Chile. Remember? This is the Friedmanite Paradise designed by Pinochet’s Chicago Boys.  Here the market operates without any interference, what began under Pinochet continues to this day in spite of the stagnation of Chile’s economy,

While both the Concertación economists and those of the far right sought to blame Chile’s woes on outside factors—the Asian crisis of 1997, the Argentine implosion of 2000, the U.S. slump of 2001, and so on—a few dissident economists had predicted all along that the boom would inevitably reach an impasse. One, economist Graciela Moguillansky of the U.N. Economic Commission for Latin America and the Caribbean, argued that the large Chilean finance/resource-processing conglomerates which dominate the economy had exhausted the easy resource-processing opportunities handed to them by the government through programs created decades ago. The “Chilean miracle” had reached its own self-imposed limits.

Nothing can grow indefinitely, not even economies but try telling that to some Austrian School zealot.

While the Chicago School is known for its devotion to free-market policies and its hostility to government regulation, the chief target of the Chicago Boys (and other right-wing economists), along with the military dictatorship and the business class, was not state intervention in economic life, but rather the organized power of the Chilean working class.

Does any of this sound familiar? It should.  The soi-disant libertarians of the British right often try to couch their anti-union rhetoric in terms of freedom. Last week Emperor Boris called for a change in strike laws.

The UNHCR has documented cases of serious violations of trade union rights in Chile.

So while the world waits for the latest chapter in the latest media drama to unfold, spare a thought for Chile’s workers who now have to struggle to survive under Chile’s first right wing government since Pinochet. 3 of the original Chicago Boys have been installed in the cabinet as ministers. One of them, Juan Andrés Fontaine, is currently Minister of the Economy.

Fontaine said he was “called to serve with a mandate to increase economic activity in Chile.”

He even has a Facebook page.

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Cheap tricks and smears. Welcome to the world of Dan Hannan

Hannan’s repeating the lie that the BNP is a ‘left wing’ party again in his blog. Only this time, he is involved in a spat with fellow Telegraph blogger, Damian Thompson. who says,

I really am bored of Right-wing Tories like my old mate Dan Hannan insisting that the British National Party is “far Left”. It isn’t. It’s on the far Right. Sure, the BNP’s economic policies reflect a version of socialism; it would create a monstrously intrusive, high-spending state not unlike those on the totalitarian Left. But, for crying out loud, let’s use some common sense here. Political parties are defined not just by their economic manifestos but also by their culture. And the culture of the BNP expresses a nationalist racism that is almost identical to that of European parties that everyone identifies as far Right, even if they are less statist and protectionist. This culture is a long way removed from Dan’s free market Whiggery; but then Dan is not on the far Right, just as (say) Will Hutton is not on the far Left and has almost nothing in common with the Socialist Workers’ Party. Calling the BNP Left-wing is like calling the Soviet apparatus Right-wing, as so many libertarian Lefties did in the 1970s. It’s a debating society trick, nothing more.

Quite right, Damian, quite right….it’s not only a debating society trick, it’s a cheap trick; a cheap and nasty trick.

Mad Dan’s headline reads “There’s nothing Right-wing about the BNP – except in the BBC sense of baddie”. I think that title reveals more about the man than he cares to admit.

Here, he falls back on a rather shaky piece of logic

The BNP, like all fascist movements, emerged from the revolutionary Left. It dislikes free enterprise, hates the rich and resents the monarchy. It markets itself as “the Labour Party your parents voted for” and its last manifesto promised “to give workers a stake in the success and prosperity of the enterprises whose profits their labour creates by encouraging worker shareholder and co-operative schemes”. Its support comes overwhelmingly from ex-Labour voters.

Wrong. The BNP was formed as a splinter group from the National Front whose precursor was Mosley’s British Union of Fascists. So what does this prove? Nothing whatsoever. Did Mussolini’s fascists emerge from the revolutionary left? No,  they did not. Mussolini may have, at one time, been a socialist but he was soon expelled for supporting WWI. he soon followed the lead of irredentist,  Gabriele d’Annunzio (who was a darling of the Futurists). Being expelled from a socialist party doesn’t necessarily mean that you will have taken socialism with you to forge into a new dynamic party of fascists. Yet, this is what Mad Dan assumes. Quite frankly, I don’t know what history this man has been reading but it is all wrong. Appealing to the working classes is pretty common for fashos, but actively incorporating them into the party’s leadership structure is something quite different. No far-right party has ever done this. In this way, the far-right shares something in common with the Tories. Remember the Primrose League? It was an attempt by the Tories to attract working class support in the 1880’s. But the working class never found themselves actually leading the League’s  local branches; they remained at the bottom of the hierarchy.

Then there are the Nazis:  Hitler was not and never was, a socialist.  While some of the Nazis may have, at one time, been socialists, they were either expelled or left the party of their own accord. Hitler was totally opposed to socialism from the outset. How on earth could he and his party be ‘left-wing’ when they were opposed to trade unions?

Hannan then quotes FA Hayek. This is a very bad move because Hayek isn’t exactly neutral in his ‘analysis’ of socialism; he wants to tie it to fascism and in so doing ignores the corporatist nature of fascism/Nazism in order to score a political point. The defence of Hayek appears to rest on a single premise: Hayek lived in Austria during the Dolfuss regime.  For Hannan, it is as if Hayek exists in some kind of ideological vacuum.

Read Hayek’s chapter on “The Socialist Roots of Nazism” in The Road to Serfdom,

No thanks, I tried Hayek and he made me sick….and he made the rest of the country sick when Thatcher adopted his philosophy.

This is pure gold,

In what sense, then, is the BNP Right-wing? Some argue that it is Right-wing to discriminate on the basis of race and nationality rather than class and income, but this would surely make Stalin, Gerry Adams, Pol Pot and Robert Mugabe very Right-wing indeed. A true Rightist believes that, other things being equal, the individual should be as free as possible from state coercion: a position equally abhorrent to socialists of the National or Leninist varieties.

When did Gerry Adams discriminate on the basis of race or even religion? You’re going to have to find some pretty solid examples, Dan; because your case is looking shakier by the minute. You do realise that there have been Protestant members of the IRA or did you think that the ‘Troubles’ was all about religion? Your take on the Right as ‘defenders of freedom’ is so risible that I can only say one thing by way of reply: Pinochet. Of course I could have said Franco or Salazar, but Pinochet was alleged to have presided over an ‘economic miracle’  that was, in part, informed by the theories of Hayek (as well as those of Friedman who was also influenced by the Austrian School).

As the blog nears its end, it becomes ever more batty. He shrieks,

No, there is only one sense in which the BNP is Right-wing, and that is the BBC sense. Our state broadcaster uses the epithet “Right-wing” to mean “disagreeable”

Do they? Is that like when “lefties” allegedly use the word “hate” when they mean “disagree”?  To be honest, I think you’re spending far too much time around Teabaggers, Dan.

One thing is clear from this blog and your blog of a couple of days ago: you don’t know your right from your left.

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Nation-building and imagining nationhood: is Afghanistan being fattened up for neo-liberal exploitation?

“Nations” as Benedict Anderson observed are “imagined communities”. They are socially constructed spaces that only a small group of people have a hand in building  This group is, for all intents and purposes, the dominant class. They commission national anthems, flags and compile the histories. They are also responsible for the way in which myths are incorporated into the story of the nation or conscripted for use in war-making campaigns. There are always legends of heroes fighting against the odds to create the nation that we all know today. There is also the lie that is told each time someone criticises the nation-state – “I fought a war to give you your freedom”.

As we have witnessed in the last 70 years, the construction of nations is not always the responsibility of the inhabitants of that nation; rather they are constructed by an outside nation – usually a more powerful nation that has either invaded or occupied the geographical space that people think of as their country. We have some recent examples of this tendency of the powerful to build states or nations in their own image. Iraq is one place and Afghanistan is another.

Before the 18th century, nation-states were dominated by a sovereign who was the physical embodiment of the state. As Foucault argues, any crime that was committed was considered to be a slight on the body of the sovereign (who was also His ‘representative’ on Earth) and the punishments could be brutally severe – even for the slightest crime. Nation-states exist to make wars; they invade other countries, lay siege to its cities, kill its denizens and cart home the booty – this was the case in the Classical and Medieval periods and it still the case today but rather than use Deuteronomy as a means of legitimation, the cry of ‘free-trade’ is now employed to achieve the same effect – this is a product of Enlightenment thinking. Therefore today’s wars are ostensibly waged either for the ‘defence of liberty/freedom/democracy’ or to ‘open up markets’. Iraq and Afghanistan provided cover for the latter in the guise of the former. The ‘opening’ of  Iraq’s markets in the aftermath of the invasion is a modern version of carrying home the spoils of war.

Today, we still have vassal states that are yoked to more powerful countries rather than vast empires . These are the states that have been destroyed and rebuilt with mainly US money. The principle of humanitarianism in the case of Iraq does not apply; it was seen as ripe for conquest and colonization by the free-market – a lab for the extended free-market ideas of Friedman. The memory of Chile was still fresh in the mind of the war’s planners who had high hopes for Iraq’s resources.

In the early days of the occupation, the US exarch in Iraq, L Paul Bremer, issued a series of executive orders all designed to lay claim to as much of Iraq’s wealth as possible. Executive Order 39 for example says that “all sectors of the economy except oil and gas are open to foreign investors on terms no less favourable to an Iraqi investor”. Bremer instituted a flat tax rate under Order 37 –  flat tax rates are often portrayed by proponents as ‘fair’, when in fact they benefit big business and the rich.  Order 17 grants immunity to certain contractors and persons associated with the Civil Provisional Authority immunity from prosecution under Iraqi law. So any foreigner could quite literally get away with murder.

So what is in store for Afghanistan, that other site of Western nation-building? I saw an item on yesterday morning’s BBC Breakfast where the journalist was reporting from inside the mine. He pretty much said, ‘Afghanistan has a lot of natural resources: iron, copper, gold’…. It wasn’t so much a news report as a marketing message to would-be opportunists, ‘Come to Afghanistan and claim your share’!

The Globalrealm says that the war in Afghanistan is a profit-driven one and US geologists have discovered plenty of mineral booty under the ground. It argues that these vast mineral deposits will pay for cost of the war  I am sure that Karzai’s  government has already bent over backwards to assist foreign investors.  Here’s what the Cato Institute said in 2002

The real long-term answer to Afghanistan’s development lies with free trade and the internal pro-market reforms that trade helps bring about. The Bush administration should therefore pledge to negotiate a sweeping free-trade agreement with Afghanistan’s newly formed government once the Senate passes trade promotion authority (TPA)–something that needs to happen soon.

The TPA expired in 2007 but USAID (US Agency for International Development)are still deeply involved in the country – as one would expect. USAID produced a document in 2002 that provided the blueprint for the mass privatization of Iraqi assets. Has it done the same for Afghanistan? USAID does not dole out aid as such, it doles out reconstruction contracts to companies like Bechtel and Dyncorp. It is deeply involved in the liberalization of state economies to not only re-form them in the economic image of the parent but to create systems of exploitation that benefit the occupying power(s). As US General Smedley Butler once said “War is a racket“. Here’s what he said in his pamphlet written about World War I but it could be about any war.

A racket is best described, I believe, as something that is not what it seems to the majority of the people. Only a small “inside” group knows what it is about. It is conducted for the benefit of the very few, at the expense of the very many. Out of war a few people make huge fortunes.

A YouTube version of Butler’s speech can be viewed here.

Another example Butler’s thoughts on war and nation-building can be found in this clip from The Corporation.

 

A group of US industrialists and others tried to persuade Butler to participate in a coup plot against the White House but he refused to become, in his words, a “gangster for capitalism”. Shame that lesson hasn’t been learned by other military leaders.

We were told that the war in Afghanistan was being waged to ‘protect us’ and to defend ‘our way of life’. The plain truth is that the world is not a safer place and the bodybags are still coming home in their hundreds (the British death toll  stands at 308 at the time of writing). Yet, there are those who would applaud the nation-building efforts in Afghanistan precisely because they have something to gain from the adventure. The Afghans, on the other hand, have nothing to gain from any of this – except, perhaps, for Karzai and the various warlords who are allied to the NATO occupiers.

Nation-building is fine if it is done by those who live in the country or region but national identity is a different matter and one that I shall cover at a future date on this blog. Creating nations in order to serve the interests of a more powerful nation can only lead to one thing: exploitation.

UPDATE:

I found this while looking for something else. It’s about rentier state-building in Afghanistan.

http://www.cigionline.org/blogs/2010/5/rentier-state-building-afghanistan-political-economy-view

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