We're back to the 1930s politics of anger and, yes, appeasement

["Dave Farber" <farber () gmail com>]

Begin forwarded message:

> From: Dewayne Hendricks <dewayne () warpspeed com>
> Date: December 20, 2018 at 7:02:14 PM GMT+9
> To: Multiple recipients of Dewayne-Net <dewayne-net () warpspeed com>
> Subject: [Dewayne-Net] We're back to the 1930s politics of anger and, yes, appeasement
> Reply-To: dewayne-net () warpspeed com
>
> We’re back to the 1930s politics of anger and, yes, appeasement
> Echoes of a horrific decade are getting louder, and the UN climate accord is the equivalent of Chamberlain’s piece of 
> paper
> By Larry Elliott
> Dec 20 2018
> <https://www.theguardian.com/commentisfree/2018/dec/20/1930s-politics-appeasement-un-climate-accord>
>
> More than any other decade, the 1930s act as a reference point for just how bad things can get. Mass unemployment, 
> totalitarianism, war: a repeat of these horrors is to be avoided at all costs. Eighty years after Neville Chamberlain 
> agreed to Hitler’s demands over the Sudetenland, there is still no greater insult than to dub a politician an 
> “appeaser”.
>
> The determination in policy circles to avoid a return to the 30s helps explain why up until now it has never 
> happened. Central banks slashed interest rates and turned on the electronic printing presses a decade ago because 
> they feared a second Great Depression. Welfare states are more generous than they were when John Steinbeck was 
> writing The Grapes of Wrath. Decades of growth have made societies wealthier; advances in medical science have made 
> them healthier.
>
> That said, the world is currently closer to a return to the 30s than it has ever been. The echoes are loud and 
> getting louder.
>
> Let’s start with the obvious. As it did in the period between the two world wars, something has gone seriously wrong 
> with the global economy. The story of the past 20 years has been that of an unsustainable boom followed by a deep 
> recession and the weakest recovery in history.
>
> Central banks have applauded themselves for preventing Great Depression 2.0, but what they never admit is that they 
> did so by creating asset bubbles. A prolonged period of ultra-low interest rates and quantitative easing – the 
> bond-buying process that boosts the supply of money – led to a speculative frenzy for commodities, shares and 
> property. Those bubbles are now starting to pop. Oil prices are crashing, house prices are flat, shares on Wall 
> Street are on course to have their worst December since 1931.
>
> In the 1920s and early 30s, there was a reluctance to give up on a conservative model of political economy: the gold 
> standard, balanced budgets, a limited role for government and a belief that markets would deliver the best of all 
> possible outcomes if left unhindered. Eventually, stark evidence of failure forced a rethink. Starting with Britain, 
> countries came off the gold standard. Franklin Roosevelt introduced the New Deal. John Maynard Keynes explained why 
> it was possible for unemployment to remain high. The economic problems of the 20s had prevented the full flowering of 
> the technologies that appeared in the first few decades of the 20th century. It required a paradigm shift to full 
> employment, capital controls and a fairer division of the spoils for that to happen.
>
> No such reassessment has taken place since the global economy’s near-death experience of a decade ago. Governments 
> are supposed to balance their budgets, money is free to go where it will, the banking system remains largely 
> untouched, and the imbalance of power between capital and labour remains unaddressed. Growth has only been possible 
> because of a buildup of debt. This proved unsustainable in the past and will do so again.
>
> To make matters worse, the distribution of income and wealth has mirrored that of the period between the wars. Real 
> wages – adjusted for inflation – have barely risen for those on low and middle incomes; such growth as there has been 
> has been snaffled by the better off. If you own a home or own shares, the past decade has been good for you. If you 
> are in a low-wage job with only modest savings, life has not been nearly so comfortable.
>
> All these factors – economic underperformance, the return to business as usual and the sense that we are not all in 
> this together – have given rise to a different sort of politics: nationalistic, populist and angry. People in the 30s 
> were susceptible to the cult of the strongman leader because parties of the centre-left and centre-right seemed 
> impotent in the face of a financial crisis, triggered by the Wall Street crash. Now that cult – Putin in Russia; Modi 
> in India; Erdoğan in Turkey; Trump in the US; Bolsonaro in Brazil – is back and for the same reason. Voters are no 
> longer convinced that mainstream politics can deliver.
>
> Protectionism is back, and, although Trump’s trade war with China is so far more of a trade skirmish, the direction 
> of travel is clear. “America first” is the modern-day equivalent of US isolationism in the 20s and 30s. Governments 
> that pledge to look after their own – through tariffs or immigration controls – have tapped into a genuine sense of 
> unease about how the fruits of globalisation have been divvied up.
>
> The 40s and 50s saw the creation of a network of multilateral organisations designed to prevent a return to the 
> beggar-thy-neighbour world of the 30s and to embed the new social democratic order. These institutions – the 
> International Monetary Fund, the World Bank, the World Trade Organization (conceived in the 1940s but created decades 
> later) and the European Union – have all to a greater or lesser extent been captured by neoliberal ideology and by 
> big business interests. Faith in international cooperation has frayed.
>
> One seeming difference between the 2010s and the 1930s is the absence of an ideological clash. During the Great 
> Depression, there were plenty of people in the west who saw Stalin’s five-year plans as a credible alternative to 
> free-market capitalism. That struggle ended with the collapse of the Soviet Union and the spread of the market to 
> parts of the world where it had previously been off limits.
>
> In fact, there is a challenge to free-market capitalism and it is coming from environmentalism. On the one hand, 
> there is an ideology that prioritises growth; on the other a belief system that sees the obsession with growth as an 
> existential threat to the planet.
>
> [snip]
>
> Dewayne-Net RSS Feed: http://dewaynenet.wordpress.com/feed/
> Twitter: https://twitter.com/wa8dzp



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