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President Obama can do little other than teach, in the last year of his presidency and with a majority opposition. Obama just advised the British to vote for the EU on the Brexit referendum. He is at risk of infringing upon national sovereignty, the very thing that the referendum is about.

The Brexit referendum stay / leave question is, and let me include the FT poll score,

Should the United Kingdom remain a member of the European Union or leave the European Union?
Remain a member of the European Union [  ] (44%)
Leave the European Union [  ] (42%)

Leaving the EU still allows various alternatives. If the vote would split over those options, perhaps one better stays. There is no way of knowing. Referenda tend to be silly and dangerous.

  • Referenda work only well when there are two options only, with a clear-cut Yes / No answer. This kind of question occurs only by exception.
  • Normal issues have more options and grades of grey. With at least three options, there arises the Condorcet paradox. For such issues, there better be representative government, with a Parliament selected by proportional representation (PR), and which Parliaments uses more complex methods for bargaining and voting – see Voting Theory for Democracy.
  • The pitfall is that a question might seem to have a clear-cut Yes / No answer while it actually has other options and such grades. Check how the Brexit question masks the other options. It often is an issue of political manipulation to reduce a complex issue to seeming simplicity, and to create a situation such that the political leader who drafts the question might argue to have the backing of the people.
  • Referenda belong to populism and not to democracy.

In this case, UK prime minister David Cameron has to overcome a rebellion in his own party and the threat of defection to UKIP. Check this report on Cameron’s bargaining with the EU. Given this bargaining result Cameron now argues for the EU and he hopes to secure peace in his party. It is somewhat curious that the whole of the UK is called to the ballot box to resolve such internal strife, but the same happened in 1975 with Harold Wilson and the Labour Party.

An advantage of the Brexit referendum is that the BBC now had two broadcasts “Europe: Them or Us“, that review the relation of the UK to the EU. It has been awfully nice to see the ghosts of the pasts perform their part in this drama. See also here and youtube. Some key points that struck me were:

  • Churchill argued for a united Europe.
  • The UK 1975 referendum caused people to complain a decade later: “We voted for a Common Market and later we got something else.”
  • Margaret Thatcher started out as a European, supported Europe in 1975, actually initiated and signed the 1986 Single European Act, with the change from a Common Market (with veto power by country) to the (Europe 1992) Single Market (replacing veto power by qualified majority), and whisked it through the UK Parliament without proper discussion about this abolition of national sovereignty. Only later came the 1988 Bruges speech.

The key point for Cameron has been to restore a shadow of that veto power. Britain cannot block others from having an ever closer union, but it has an opt-out:

“Assessment: Mr Cameron has secured a commitment to exempt Britain from “ever closer union” to be written into the treaties. He has also negotiated the inclusion of a “red-card” mechanism, a new power. If 55% of national parliaments agree, they could effectively block or veto a commission proposal. The question is how likely is this “red card” system to be used. A much weaker “yellow card” was only used twice. The red-card mechanism depends crucially on building alliances. The sceptics say it does not come close to winning the UK back control of its own affairs – and Mr Cameron is set to announce further measures which he claims will put the sovereignty of the Westminster Parliament “beyond doubt”.” (BBC Feb 20 2016)

Some points that I missed in these two “Europe: Them or Us” broadcasts:

  • There is no recognition for Bernard Connolly whose The Rotten Heart of Europe helped the British to stay out of the euro and to keep the pound. There is still room for a better approach to the notion of an optimal currency area.
  • There is little clarity about what the economic discussion really has been about. “Economic union” and “political union” are vague words, and it seems relatively easy to make a political speech or TV broadcast with these. Details matter however. Details help to keep out the ideologues. It is said that Britain has the best economists (Marshall, Keynes, Hicks) but Germany the best economy. Margaret Thatcher would have been much more effective when she had proposed good economics rather than banging the handbag. The relation of the UK to the EU would have been far better had the UK shown better economic analysis and an economy to prove it. Thatcher came to power during a time of stagflation when economists were in disarray and neoliberalism seemed the only way out. This neoliberalism however contributed to the global financial crisis and the economic crisis of 2007+. See my analysis since 1990. Of the core issue, a recent turn is the myth about German decentralised labour market bargaining. Britain has an impact on the European economy via the City and its banks (a fair reason to stay in), but why doesn’t Britain have more impact ?
  • Democracy in the UK suffers from district representation (DR), and it would be better to have proportional representation (PR). There is too little awareness in the UK that much of their political mayhem is caused by their rather unresponsive electoral system. See the comparison of Holland and the UK, and see how Nick Clegg shot his own foot (and destroyed the LibDems).

PM. After writing this, I discovered this review of “Europe: Them or Us” by Sean O’Grady and he says much of the same thing.

The recent Dutch referendum on the Association treaty with the Ukraine is another example of how referenda can be silly and dangerous. I voted against that treaty because of the military section hat would involve the EU in helping secure the Ukrainian borders, which would effectively move NATO’s borders eastward. Government propaganda did not pay much attention to the military section and emphasized the section on free trade. Even there the propaganda didn’t draw the parallel with the economic collapse in East Germany (DDR) when it was merged with West Germany (BRD). In this case, representative democracy failed, for it created this Association treaty, and the Dutch referendum was a freak event that might actually do some good. It still confirms that referenda tend to be silly and dangerous, since the proper answer would have been a better informed discussion in Parliament, notably by having (a) an Economic Supreme Court, (b) annual elections.

Reproduced with permission by Jos Collignon

Thanks to Jos Collignon for permission to reproduce this

I am no expert on terrorism and wonder whether the supposed experts aren’t either.

Dutch historian and “expert on terrorism” Beatrice de Graaf gave a lecture on Dutch TV on March 11 (or see Utrecht University) about David Rapoport‘s four waves of terrorism (his original article).

Her main message was that people might find some comfort in the idea that waves die out. March 22 saw the bombs in Brussels.

This theory of four waves of terrorism appears to be rather silly. Below gives my common sense rejection.

De Graaf is not the only academic who regards the theory of the four waves as serious. The West is vulnerable to terrorism when its “experts on terrorism” are academics lost in theory. It is okay to sooth people not to worry too much, but intellectuals should present effective approaches rather than fairy tales.

The so-called “four waves”

Jeffrey Kaplan summarizes (and then proceeds in adding his own fifth wave) (while Dutch readers can check Edwin Ruis’s review of March 13):

“Rapoport’s theory, first published on the web before finally finding a home in a printed anthology, posited four distinct waves of modern terrorism (anarchist, nationalist, 1960s leftist, and the current religious wave). Each wave had a precipitating event, lasted about 40 years before receding, and, with some overlap, faded as another wave rose to take center stage. Most terrorist groups would gradually disappear, a few (the Irish Republican Army for example) proved more durable. Rapoport’s theory was elegant, simple, inclusive, and had a high degree of explanatory power. In short, it provides a good academic model.” (Kaplan 2008).

Jeffrey D. Simon holds (and wonders about a fifth wave too):

“David Rapoport’s “The Four Waves of Modern Terrorism” is one of the most important pieces ever written in the vast literature on terrorism (Rapoport 2004).  What Rapoport did in his classic study was take the complex phenomenon of terrorism and put it in a historical context that not only explained different periods of international terrorism, but also set forth theories and concepts that can be used to attempt to anticipate the future of terrorism.  That is no easy task.  There haven’t been many assessments and articles written about Rapoprt’s “Four Waves” theory, although this volume of papers initiates a discourse about his important thesis (See Thompson and Rasler, this volume).  Despite the numbers of scholars, policymakers, and others who have joined the field of terrorism studies after the 9/11 attacks, there does not appear to be a great deal of interest in the history of terrorism.  In today’s instant access and information-overload society, we are inundated with analyses of current affairs but pay scant attention to what we may learn from what has transpired in the past.” (J.D. Simon on the Lone Wolf, likely 2010)

I googled to find some criticism, but didn’t see much, though perhaps I didn’t google well. I noticed a critical text by Ericka Durgahee. I didn’t have time to look into this, and the following are my own common sense short remarks.

The anarchists 1880-1920

The dynasties of Hohenzollern, Romanov and Habsburg collapsed. Perhaps the anarchists didn’t really win because we don’t have anarchy now, but those anarchists were replaced by communists and fascists, and we ended up with two world wars, which isn’t quite “die out”.

Anti-colonialism 1920-1960

The anti-colonialists won. Winning isn’t quite “die out”.

Leftists 1960-1989

Leftism became impopular because of the Great Stagflation (unfavourable unemployment and inflation) and the collapse of the Berlin Wall. Young radicals were more motivated by Ronald Reagan and Margaret Thatcher.

In Germany, the police managed to isolate the Rote Armee Fraktion (RAF). In another article, Beatrice de Graaf explains how the Dutch radicals (Rode Jeugd, Krakersbeweging) lost their motivation by incompetence of the Dutch police. The Dutch police intended to adopt the tough German approach, but mismanaged this, and both radicals and the general population got the impression of an atmosphere of tolerance and dialogue. In that atmosphere, potential supporters saw no need for radicalisation, and radicals had the example of the dead-end street in Germany.

These events rather concern the transformation of European society after World War 2. There are pockets of terrorism, but there doesn’t seem much difference between RAF and other groups like IRA and ETA: except that each group requires specific attention for its idiosyncracies.

Religious terrorism 1979-now

Religious violence is of all times. There is no reason to predict that it will pass. This is no wave.

Alternative approach

Terrorists tend to be higher educated who are frustrated w.r.t. opportunities in society. They may feel sympathy with the unprivileged. They may adopt any ideology to recruit others in the resistance against the establishment. To counter this, one must look at society as a whole, create fair opportunity, and encourage people to participate. My own work contains aspects that are key to reduce terrorism.

  • Create a social welfare state that works. See DRGTPE.
  • Make democracy work. See VTFD.
  • Provide for good education, e.g. re-engineer mathematics. See EWS.
  • Let people learn how to deal with the human capacity for abstraction. See SMOJ.
Beatrice de Graaf, soothing Dutch viewers that a wave dies out

Beatrice de Graaf, soothing Dutch viewers that a wave of terrorism dies out

 

H.J. (Johannes) Witteveen (1921) is best known as managing director of the IMF in 1973-1978.

Please note that the Bretton Woods Institutions IMF and Worldbank have wrong names. J.M. Keynes already complained to the Americans: “The Fund is a bank and the Bank is a fund !” (no exact quote). It would be better that the IMF is renamed to World Central Bank and the Worldbank into World Investment Bank, since this would strengthen their role and position also in public perception and discussion.

Following the First Oil Crisis 1973-74 Witteveen created the Supplementary Financing Facility, unofficially known as the Witteveen facility, to channel revenues from oil producers back to the consuming countries, to prevent a liquidity crisis amongst those consumers. The IMF book by James Boughton The silent revolutionassigns a later major role to Witteveen’s successors Jacques de Larosiere and Michel Camessus, but underestimates how Witteveen paved the way.

In the current crisis of 2007+, Witteveen pointed to requirements for a New Bretton Woods (Nov 20 2008, Financial Times). For Europe he advised a similar “facility” again by the IMF rather than the ECB (Aug 22 2011, Financial times, Business Insider).

Recently, Witteveen looked at the Dutch export surplus and the need for an investment strategy in The Netherlands itself.

We can observe that the Dutch surplus exists since 1981. When Germany started copying that, Southern Europe got into problems. I tend to agree with Witteveen on IS-LM but advise at the level of each nation: (a) an Economic Supreme Court, (b) National Investment Banks (NIBs), (c) the overall approach to reduce unemployment as discussed in my book DRGTPE.

My pre-crisis book is Definition & Reality in the General Theory of Political Economy (DRGTPE). My 2007+ papers on the crisis are collected in Common Sense: Boycott Holland (CSBH). A boycott of Holland is warranted because of the censorship of economic science by the Dutch government. That censorship pertains to the issue discussed below, and professor Witteveen’s discussion suffers seriously from not having the material under censorship.

Witteveen had been professor at Erasmus University since 1948. Apparently he never got time for an official farewell, and last week the old fox took the opportunity of a Valedictory Lecture to gather an audience and to present his analysis on that Dutch investment strategy (May 15 2014). The Lecture was published by the Dutch economics journal Economisch Statistische Berichten (ESB May 17 2014 p294-298). I thank the editors for permission to reproduce the lecture with my comments.

Cllick here to read the lecture and my comments on my website.

Witteveen also wrote books on universal sufism (not to be confused with islamic sufism), see his personal website. As a personal remark on my side: my father is also from 1921 but has stopped reading and writing. I am much impressed by Witteveen’s command of economics. Admittedly, Keynes solved these issues by IS-LM itself already in 1936 and by his proposal for an international trade currency (bancor). Our main problem since 1945 has been that politicians arrogantly proclaim to know it better.

Witteveen’s Valedictory Lecture is a major event in economics. It deserves to be treated with much respect and critical comment. It shows that the problem is not lack of knowledge from economic science but that the problem lies in the structure of decision making about economic policy.