Newsnotes 1999 02

Notes on the News

by Gwydion M. Williams

New Labour, Hard Labour?

Hague remains vague, posh

Gitec – who pays? [Chinese bank]

Euro Sleaze? [Damaging the European Union]

New Labour, Hard Labour?

Tony Blare is trying to persuade ordinary working people that they now belong to a ‘new middle class’. A concept that sounds worryingly similar to the American notion of a ‘middle class’ that includes lorry drivers and electricians, indeed almost anyone who had a job.

This American middle class has been led by the nose since the 1970s. The dominant Overclass – the richest 10% – have encouraged this ‘middle class’ to worry intensely about those poorer than themselves. These silly ‘middle class’ characters have seen their real incomes stagnate at 1970s level, while loosing the security they won as working people under the New Deal.

Are the mainstream of British society likely to be such fools? Probably not.

More people call themselves Middle Class than would have in the 1960s, but not many more. Sixty per cent are still clear they are working class. The Upper Middle Class – which has absorbed the old Upper Class and Aristocracy – is less than 3%

A lot of the newly rich are quite happy to be seen as they are – people from the working class, but with a lot of money and able to live as they please. Less and less need they bother with the old upper class. Nor with middle class respectability, which are only requirements in business and politics.

The working class got disorientated when it lost control of the Labour Party. The continuity between the current Labour ministers and their student-radical past is that they always felt they knew what was good for people, much better than they knew it themselves.

But if working people are less clear about their interests than they should be, they are not yet as dumb and money-worshiping as the Yanks.

 

Hague remains vague, posh

With Blare trying to define New Labour as Middle Class, William Hague had the chance to pitch in and say that the Tories had always been a party for the working class. As indeed it had, having protected them before they had votes and always tried to included them in a national consensus.

Liberals regarded it as a misfortune for anyone to be other than middle class. But the middle class on a narrow stuffy definition that has since perished.

Are any of Hague’s people bright enough? Thatcher had success, not because anyone mistook her origins, but because she did seem to be listening to working class concerns. Including a desire to be more individualistic. And Lord Tebbit as an airline pilot could be seen as ‘one of us’ by many workers, though I doubt if many of them still think it.

The 19th century Liberals failed because they were a middle class party. And the US delusion that working people are also somehow middle class has led to an alienated Underclass and a fat and happy Overclass.

 

Gitec – who pays? [Chinese bank]

“Guangdong International Trust and Investment Corp (Gitic) has been forced into bankruptcy, with debts totalling 36.17 billion yuan (HK$33.86 billion). It is one of the mainland’s biggest corporate crashes. Beijing, in a move likely to damage relations with international banks, has refused to bail out the company, clearing the way for liquidation….

“It is the first time since 1949 that Beijing has ordered the bankruptcy of a financial institution. In previous closures, creditors were fully paid off.”  (South China Morning Post, January 11 1999)

The next day’s issue included a comment:

“Beijing’s drive to strengthen its guard against potential financial risks comes days after Guangdong International Trust and Investment Corp (Gitic) was forced into bankruptcy due to its inability to repay foreign debts.”

It was fair enough for China to pay off all creditors when the state was running everything. But the normal rules of finance say that if you back a looser, you take your losses. No government in Europe or North America would allow its own people to be squeezed to pay foreign debtors. And nor, it seems, will China.

The East Asian Tigers were supposed to be the shining examples for China and India to copy. But it can now be seen that they and Japan too succeeded with America’s permission and encouragement.

The Asian Tigers were the attractive counterexample to the highly successful Leninist model. Had Europe and America continued to treat Asia as they had for the previous century, Leninism would have become the norm. Military suppression was tried in Vietnam and failed. But the parallel growth of East Asia in a well-managed world market and the increasing decline of the Soviet Union turned the tide.

With hindsight, we can see that the Soviet Union ruined itself in the 1970s. America’s confusion after its loss of Vietnam led them to think that everything was going their way. There was no need to compromise with dissidents or reformers in Eastern Europe. And Afghanistan would show that the superior Soviet system could do what the USA had notably failed to do.

From a viewpoint of say 2010, it may be equally clear that the USA threw away the fruits of its unexpected recovery and victory by its arrogance in the 1990s. The Gulf War was supposed to demonstrate that the USA could ruin anything, even if it could not actually rule it. Japan was intimidated into an economic recession, when its economic triumph under rules the USA had defined was suddenly declared to be not legitimate. The US idea of a ‘level playing field’ has a lot in common with the Rocky Mountains, Japan knew better than to insist on its rights under the laws as they actually existed.

The Asian Tigers were next on the list. I don’t know if anything was specifically plotted, what is definite is that the IMF turned a crisis into a disaster by its insistence that the interests of foreign debtors had to come first. It applied policies that would probably have given the Soviet Union an 11th hour triumph in the Cold War, had they been applied in Europe and the USA after the stock market crash of 1987.

The treatment of East Asia is having the net effect of transferring money from the poor and middling in East Asia to the rich in Europe and the USA.

Much of the 3rd World had been reduced to utter dependency. Nicaragua and Honduras, hit by hurricane, get interest payments suspended for 3 years, but no debt relief. It’s the policy of a usurer, keep the victim alive but dependant and ensnared.

But the ruthless treatment of the Asian Tigers was short-sighted and premature, even considered from the selfish interests of the US elite. It seems to have alerted people to the peril, especially in China. They refuse to ‘liberalise’ their financial system, for much the same reason as a bank would be unwilling to ‘liberalise’ its bank-vaults in a world full of sophisticated crooks. Superrich investors are expected to know what they are doing, or take a loss if they do not.

Maybe the elite didn’t expect to be resisted. Their own people still seem happy after being ripped off for a full generation. But then ordinary Americans are able to pretend to themselves that their actual circumstances are a sort of accident and that they really belong with the nice elite in the Overclass.

The American idea of a Free Market means the rich take an almost risk-free gamble when they get involved in money-lending and speculation. If it goes well they take the profits. Otherwise the state bales them out ‘in the public interest’. Or repayments that give priority to rich creditors are imposed on poor weak countries.

But China, while poor, is not weak. China is a nuclear-armed superpower with the world’s largest army and a solid record of military successes.

In the Korean War, the Chinese ended up holding far more territory than the rump of North Korea which was left when they entered the war. So by the normal criteria, while the war as a whole was a draw, that part fought between China and America was a Chinese victory.

Apparently the net worth of the Chinese banking system is negative. But so what? For as long as the system is well managed and fast growing, why should it matter what the numbers say?

The English-speaking tradition for the last couple of centuries had been to protect property at the expense of people, especially small property owners. This was briefly suspended from post-war to mid-1960s, when they put the needs of society first and let money fit in where it could. And that was the best ever period for the society as a whole.

The same era also saw the finish of the old ruling class, and inhibited the rise of a the new Overclass that has since flourished.

If this Overclass does consolidate itself, it will be very bad for the future of the planet. But it has had its failures, and China looks like being its biggest.

Washington must now fear a humbled Russia and a flourishing China get together. China has lots of cheep consumer goods, while Russia still has much excellent technology, even if the current gangster-capitalism is quite incapable of making use of it.

It is questionable if China would want to be burdened with Russia as a whole – not while the West goes on conciliating them, that is. Whatever particular items they need, they can and do buy. For themselves they continue to stick to what has been called a Communist Keynesianism. But the rest of the world is expected to look after itself, and there can be few Chinese who are not privately pleased by the plight of Japan.

The idea of breaking up China into fragments small enough to bully has been floated enough so that Beijing is understandably worried and thus harsh on dissidents. But even most of the dissidents seem to have taken note of the sufferings of the East Europeans after they trustingly followed the advice of their ‘friends’ in the West.

We are told that if the state does not cover the gambling debts of the rich, something awful will happen. The convention is, that stock exchange losses are losses. But debts are enforced no matter what, benefiting the rich at the expense of the poor. Most often, poor people in 3rd World pay.

Economist, employed at inflated salaries, favour what should be called the Ridiculous Hypothesis. This argues for natural stability, declares that the market always finds its own level.

The Ridiculous Hypothesis is not really a belief, because it would also say that the state should never ever cover the gambling debts of the rich. And this is not what is actually said, not in specific cases when real rich people might get annoyed with the pundits who said it and stop employing them on inflated salaries.

China has decided not to play by those rules. It allow in industrialists but limits the financiers.

Wisely.

 

Euro Sleaze? [Damaging the European Union]

If your house has mice, you can put down traps and block a few holes. Or you can be heroic and burn the entire house down. This will reliably rid you of the mice, though it will also leave you without a home.

Historically, anti-corruption has proved an utterly empty slogan. The normal pattern has been for the replacement establishment to be as bad as the old lot, sometimes worse. Anti-corruption in Italy destroyed a corrupt but highly successful Christian-Democratic system that had made Italy rich and did try to look after people. The replacements are less successful, less inclined to try to look after people, and maybe no more honest. It’s a familiar pattern.

The exceptions are when you have a party with a strong creed, Marxism or Fascism or Islam or whatever. These may indeed get rid of corruption. Along with a lot else, including what many people would see as fundamental freedoms.

The Nazis were quite successful in imposing ‘family values’ – banning pornography and contraception, criminalizing abortion, eliminating Germany’s previous marginal toleration of homosexuals (with special exceptions for their own people).

No such zealots are operating in today’s Europe. But the Tory Britano-Narcissists attacking the European Commission are part of a party which presided over a growth of corruption and sleaze during their own period of unprecedented power.

Should we bring in consultants from Britain’s Department of Trade and Industry? Or the Serious Fraud Office? The Tories are blaming the Commission for failing to do what they themselves never managed. These are the people who are sure they can improve Europe by attacking its existing institutions.

Which are not in fact particular corrupt, inefficient or bureaucratic. Compared with other institutions of a similar size, they are really quite clean. Given the vast differences in national tradition that must be bridged, the degree of success is impressive

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