The Duran’s Alex Christoforou and Editor-in-Chief Alexander Mercouris discuss the tariff deal reached between the United States and Mexico to “stem the tide of migration”. Donald Trump announced that the tariff threat in response to a surge in illegals from Mexico to the US has been suspended. Both men emphasize this fine detail. For its part, the Mexican Government has agreed to restrain migration through its territory and toward the Southern Border. House leader Nancy Pelosi had her own thoughts on Trump’s big PR win, saying: “Threats and temper tantrums are no way to negotiate.” Christoforou and Mercouris also discuss the past trade relationship between the US and China, pointing out that while American blue collar workers suffered as China’s trade surplus with the US grew, the US political establishment saw this and did nothing.
My Comment: Alexander Mercouris is exactly right that US elites [republicans and democrats] did nothing to protect blue collar workers from cheap Chinese imports. This graph clearly illustrates this, and, like Mercouris pointed out, it wasn’t China’s fault. Big US capital was happy to profit.
As the Chinese were selling more and more net wealth to the US in exchange for US dollars, this not only impacted the quantity of trade, but also the composition of trade, the makeup of domestic industry, its associated labor segment and remuneration. It’s also important to note that, even with fewer labor inputs, US manufacturing output did grow over time.
And despite Trump’s bogus claims that the economy is booming like never before, the country’s output capacity has yet to recover to pre GFC levels. This next graph shows us that.
The relative good economy now is due to private debt growth, not anything else. By the by, dollar reserves obtained by China [earned through trade and unearned via interest from US treasury bonds] even though being owned by the Chinese central bank, these dollar accounts sit at the Federal Reserve’s ledger. In case of serious conflict or just whim [like in the case of Venezuela], the US central bank can freeze these accounts or delete them outright, which would deny China’s ability to use these funds to purchase output [from vendors legally allowed to sell to Chinese firms]. No amount of tariffs, however, can replace domestic investment in infrastructure, R&D, and education.
Many people think the Chinese got the competitive advantage because they allowed foreign capital to come in, rape the environment, neglect workers’ rights and labor conditions and pay them slave wages. But there are other countries on the globe that do the exact same things, yet they are not manufacturing powerhouses. The key difference is that the Chinese state invested in education and infrastructure, including hospitals. And at long last, it seems the Chinese leadership is determined to focus more on domestic consumption, rather than exports.
The Duran’s Alex Christoforou and Editor-in-Chief Alexander Mercouris discuss the US President’s trip to the UK. Trump sounded off on Brexit, he declined to meet with Labour Party leader Jeremy Corbyn who then spoke at an anti-Trump rally. Conservative leader front runner, Boris Johnson, snubbed a meeting with the US President, saying he was too busy. Brexit Party leader Nigel Farage did meet with Trump who is a “believer in Brexit.”
London’s SJW mayor Sadiq Khan had a public meltdown over Trump’s visit, for which Trump tweeted at Khan, ridiculing his track record and height. And then there was the ‘scandal’ that erupted because Donald Trump touched the Queen. Christoforou and Mercouris go on to discuss the UK’s dependency on the United States and its fate outside the EU with respect to the hegemon and its blacklisted companies like Huawei.
My comment: I agree with Alexander Mercouris that Trump isn’t interested in a neoliberal world order, but I disagree that Trump is interested in a world of sovereign states that negotiate hard with each other. If a country negotiates hard, instead of caving in to the US, the war hawks in power [less concerned with euphemistic language] go on to blacklist foreign companies [Huawei, Gazprom, the National Iranian Oil Company, Petróleos de Venezuela S.A. and others], government institutions [the IRGC] and heads of state [Nicolas Maduro].
Trump is interested in a world of client states obedient first and foremost to Washington, and not anyone else. To contrast it to Obama’s stance of – hey, UK, stick in the EU, because we negotiate with the EU, and if you exit, you’ll be pushed down the list of priorities… Trump says, if the EU as a political organization won’t bend to Washington’s demands [demands, not requests, because requests don’t have threats associated with them], then we’ll negotiate directly with the EU member states [and their parties] to oppose the EU from within.
There’s nothing wrong with bilateralism, but we can clearly see that Washington is trying to keep the European states economically and militarily dependent on the US – while demanding they take a belligerent stance against Russia, China, Iran, Venezuela, and to a lesser extent Turkey, at least for now. Should Britain get a more independent PM, his or her foreign policy will have to be that of bringing the influence of other great powers in the region, in order to shrink the USA’s grip over it.
John Maynard Keynes, as a young adviser to the UK Treasury, successfully predicted another great conflict in Europe after what transpired at the so-called peace of Versailles. In preparation for the conference, Keynes argued that it would be better for Germany to owe no reparations, or a maximum of 2 million pound sterling at the most. He was in favor of a general forgiveness of war debts, including for Britain. Lastly, he wanted the US Government to begin a large credit program to quickly restore Europe to prosperity. But the Allies argued differently, and here is what they insisted on in Article 231 of the Versailles treaty on war debt (1919).
“The Allied and Associated Governments affirm and Germany accepts the responsibility of Germany and her allies forcausingall the loss and damage to which the Allied and Associated Governments and their nationals have been subjected as a consequence of the war imposed upon them by the aggression of Germany and her allies.”
Let’s compare the cold sentiments of Versailles to the peace of Westphalia from 1648, which put an end to the Thirty Years’ War.
Article I: “[…] And this Peace must be so honest and seriously guarded and nourished that each part furthers the advantage, honor, and benefit of the other… A faithful neighborhood should be renewed and flourish for peace and friendship, and flourish again.”
Article II: “On both sides, all should be forever forgotten and forgiven. What has from the beginning of the unrest, no matter how or where, from one side or the other, happened in terms of hostility, so that neither because of that, nor because of any other reason or pretext, should commit, or allow to happen, any hostility, unfriendliness, difficulty, or obstacle in respect to persons, the status, goods, or security himself, or through others, secretly or openly, directly or indirectly, under the pretense of the authority of the law, or by the way of violence within the Kingdom, or anywhere outside of it, and any earlier contradictory treaties should not stand against this. Instead, all and every, from here as well as from there, both before as well as during the war, committed insults, violent acts, hostilities, damages, and costs, without regard of the person or the issue, should be completely put aside, so that everything, whatever the one could demand from the other under his name, will be forgotten in eternity.”
Keynes described the Versailles conference as a clash of values and world views among the principal leaders, “the cynical traditions of European power politics [vs] the promise of a more enlightened order.” Keynes held Woodrow Wilson as the game maker. “When President Wilson left Washington he enjoyed a prestige and a moral influence throughout the world unequalled in history. […] The enemy peoples trusted him to carry out the compact he had made with them; and the Allied peoples acknowledged him not as a victor only but almost as a prophet. In addition to this moral influence the realities of power were in his hands.”
In 1919, Keynes wrote The Economic Consequences of the Peace in which he criticized the Versailles treaty and its authors, while accurately predicting its grave socio-economic and political effects: high inflation, stagnation, and revanchism. He had two main points: that the treaty made it economically impossible for Europe to revive itself, and that the Allies had betrayed the tenets of the Armistice, in which they pledged to the defeated side a degree of fairness with regard to territorial and economic impositions. He judged these violations as a stain on the honor of the Allies and a primary cause for a future conflict. His prediction, that another war would begin in the next twenty years, was surgically precise.
“Lenin is said to have declared that the best way to destroy the Capitalist System was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth. […] Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose. […] Economic privation proceeds by easy stages, and so long as men suffer it patiently the outside world cares very little. Physical efficiency and resistance to disease slowly diminish, but life proceeds somehow, until the limit of human endurance is reached at last and counsels of despair and madness stir the sufferers from the lethargy which precedes the crisis. The man shakes himself, and the bonds of custom are loosed. The power of ideas is sovereign, and he listens to whatever instruction of hope, illusion, or revenge is carried to them in the air. […] But who can say how much is endurable, or in what direction men will seek at last to escape from their misfortunes?”
Woodrow Wilson’s Fourteen Points [of the Armistice] had been widely disseminated in Germany prior to the end of the war, and were well known by the German public. Sadly, these promises turned out to be nothing but propaganda. The clear gap between this document and the final treaty of Versailles caused great anger in Germany and fueled ultra nationalist sentiments.
There’s a prevalent myth out there, which states that the nazis came to power in Germany due to hyperinflation. It can be easily debunked through the following observations…
Germany did experience hyperinflation in the early 1920s. By October 1922, the mark stood at 130 billion to the dollar. Marks had to be carried in wheelbarrows and life savings were wiped out. Yet the inflationary spiral was brought under control in November 1923 largely through the efforts of Hjalmar Schacht, currency commissioner and president of the Reichsbank and Finance Minister Hans Luther. For an in depth explanation of their policies, see this previous article.
With inflation in check by 1924, Germany entered a time of relative growth. Hitler, while active in German politics, was consigned to the political fringe. Beginning in late 1929, the German economy fell victim to the Great Depression. Industrial production, employment, and sales fell in the early ’30s , while Hitler’s support increased. Price inflation was nonexistent. Rather, by 1933, when Hitler became Chancellor, prices were going down as a result of collapsing demand. Price deflation is good when nominal economic growth is positive, not negative. Tight credit and tremendous unemployment left millions of people with very few marks to spend on anything.
What brought the nazis to power if not hyperinflation? Austerity! During the years of skyrocketing prices, the percentage of the nazis [NSDAP] ranged below 4 percent (see the 1928 elections). The Government imposed harsh austerity measures in the early 1930s [after the hyperinflation had been reined in]; this increased unemployment drastically and it also gave the nazis their first success (18.5 percent in September 1930). Two years later, the ever growing levels of unemployment and poverty drove Hitler to 37.2 percent in the 1932 elections. This graph speaks for itself.
In 5 years time (between ’33 and ’38), the Nazi Government rebuilt the army, built industries and infrastructure, eliminated unemployment, real wage growth was in the double digits – and all of this in a climate of price stability. As such, contrary to popular mythology, the hyperinflation years didn’t bring the nazis to power. What brought them to power was private debt deflation in combination with harsh fiscal austerity. The end of WW1 wasn’t the end of ‘the war to end all wars.’ Sadly, it was the groundwork for a new one, far deadlier than the first.
In an interview with William Buckley, the founder of the British Union of Fascists, Oswald Mosley, explained why Hitler got into power in Germany and why he didn’t in the UK.
“When I began, in the following six years, right until Roosevelt’s doubling of the price of gold and many other things of that sort, unemployment in Britain was halved. Those six years before Hitler came to power, unemployment in Germany was quadrupled. Now, all those things, and your analysis of the English character, simply depend on the economic situation. Neither fascism, communism, nor any new policy, whether decent, humane, or not, will succeed ever, unless you have a grave economic crisis. That’s the only thing which moves people at all.”
Liberals are so terrified of the profound psycho-political impact of economic crises [second only to war itself and similar in some ways], they dare not speak of such phenomena even when they are happening, nor admit that crises, even unmediated, have severe psychological consequences. The liberals practice this fetishistic disavowal. That’s why the status quo [the so-called center left and center right] is so dangerous to public order and peace itself. It’s a paradox, and paradoxes are nature’s way of telling us [observers] that we’re missing something, that something new waits to be discovered. By shunning alternate points of view and trying to silence them outright, the center misses the dialectic and loses the moral legitimacy in the eyes of increasingly larger sections of the population. I personally hold the creditors of the Versailles treaty, Britain, France, and the US, responsible for nurturing what was to become the most devastating conflict in human history.
Edward Harrison wrote a short entry on his blog about 19th century economist Henry George and why he wishes to spread the word of Georgism to today’s audience. He shared it on twitter too. I salute Mr. Harrison’s ambition and hope his efforts will be well-received.
I must point out, though, that in his blog post, Mr. Harrison is wrong about George and Georgism focusing only on land-rents and not on patents too. Here’s what George wrote in 1888 on the subject of copyrights and patents. I’ll cite just a paragraph; the reader can see the rest by visiting the cooperative individualism website, linked earlier.
“The patent, on the other hand, prohibits any one from doing a similar thing, and involves, usually for a specified time, an interference with the equal liberty on which the right of ownership rests. The copyright is therefore in accordance with the moral law–it gives to the man who has expended the intangible labor required to write a particular book or paint a picture security against the copying of that identical thing. The patent is in defiance of this natural right. It prohibits others from doing what has been already attempted. Every one has a moral right to think what I think, or to perceive what I perceive, or to do what I do–no matter whether be gets the hint from me or independently of me. Discovery can give no right of ownership, for whatever is discovered must have been already here to be discovered. If a man make a wheelbarrow, or a book, or a picture, he has a moral right to that particular wheelbarrow, or book, or picture, but no right to ask that others be prevented from making similar things. Such a prohibition, though given for the purpose of stimulating discovery and invention, really in the long run operates as a check upon them.”
Clearly patents are just another form of rent-seeking, and nations ought to abolish them… In his blog post, Mr. Harrison quotes a man’s opinion on land-value taxation, albeit it’s beyond me what Tyler Cohen from George Mason University has to bring to the discussion table, since he’s a deficit dove and clearly not an authority on Georgism, given his shallow take on the subject matter, evident in the passages Harrison quoted from him. I think it’s better to cite the wise dead in the aim of popularizing taxation of wealth extraction and untaxing wealth creation, than relying on the psuedo-understanding of contemporary self-seeking economists. Just my two cents. Lots of luck, Mr. Harrison, and welcome to the club.
This documentary by Lilian Franck shines a light on how industry lobbies have infiltrated the World Health Organization and asks whether the organisation can be trusted to keep the public healthy. They WHO officials have to depend on scientists, and these scientists are supplied by the WTO’s sponsors [i.e. there is a clear and growing conflict of interest involved]. Many of these scientists, who also serve as salesmen, gave advice and made decisions that benefited the pharmaceutical industry. They even went so far as to change the criteria of what constitutes a pandemic.
“At the time of the swine flu outbreak, I was WHO general-secretary in the Department of Public Health, Intellectual Property and Medication. Nobody there was afraid,” says German Velasquez, who currently works with the Green Climate Fund (GCF). “I didn’t know anyone at the WHO who had himself vaccinated, including the director-general, who told journalists in response to their questions that she hadn’t had time but would get herself vaccinated later.”
It’s precisely this type of corruption, combined with arrogance, that feeds skepticism among the public when it comes to the opinions of so-called experts. To those excusing themselves and the WTO’s self-serving actions by invoking the transparency aspect of funding, that doesn’t solve anything and it doesn’t prove they are acting in good faith. Make time to watch this documentary, it’s well worth your time.