Category Archives: Politics

Books Politics

German manufacturing

Notes from Germany’s Economic Renaissance: Lessons for the United States, by Jack Ewing

p.162 – “95% of all German companies with fewer than 500 employees are family owned, and 85% are managed by the owner.. The German managers in the book, and many others whom I have met over the years, take a palpable joy in making things. … Money is important, but it is not what gets them out of bed in the morning. … They take pleasure and pride in creating livelihoods for the people who work for them, in supporting their local economies, and above all in creating an institution that will outlive them.”

p. 163 “In Germany, almost any company with more than a few dozen workers is likely to have an employee council with a right to be consulted on major changes in working conditions. With no choice but to deal with workers, German managers have learned to use employee councils as a forum to get workers to buy into the program. The legal requirements aside, German companies have a strong incentive to retain their people, because of their dependence on highly skilled workers and their investment in training.”

p. 164 “Another German innovation… is the work-time account, where workers bank overtime in the form of hours rather than cash. When times are slow, they work fewer hours, but take home the same pay by drawing from the work-time accounts. The system makes it easier for companies to hold onto their workers during a temporary downturn, preserving the investment that has been made in their training. And of course, it spares the workers the trauma of unemployment.”

Books Environmental politics Politics

Notes from The Sustainable Economics of Elinor Ostrom by Derek Wall

p. 186-7 “Elinor Ostrum, and indeed Vincent, viewed ecological matters as fundamental to their political economy from the early days of both of their respective careers. Vincent and Elinor had observed how democratic structures had been used to manage real-life environmental problems, such as the dilemma of how to share grazing land or water basins. Yet Hardin [of Tragedy of the Commons] ac=dvocated largely top-down, and potentially authoritarian, solutions to these environmental problems… Elinor Ostrum, to her credit, worked very hard to challenge it. Bu doing so she has helped to promote environmental sustainability and the rights of collective resources owners – from indigenous people to peasant farmers to free/open source software designers.

The reality is that there is a spectrum, or kaleidoscope, of property rights. When we move beyond the idea of the binary of state and private property, the alternative is not simply the commons. The notion of commons, both as a resource and a property right, is an advance over the binary. Commons, rather than being unowned non-property, have been identified as collectively managed resources. Yet Elinor Ostrom’s work points to a conception of property beyond the commons. Items can be owned in a variety of ways and, as more sophisticated legal theorists have long understood, even privately owned items contain a bundle of rights. The insights gained from John R Commons that property systems are diverse further opens up a new economic and legal understanding. This enhances concepts such as usufruct, the right to access a resource on the condition that it is maintained and not degraded, which are essential to creating more environmentally sustainable systems of governance. ..

The norms and rules of usufruct are the norms and rules of sustainability. An economics of social sharing, whilst not investigated by the Ostroms, fits well with their research. With the social sharing of physical goods it is possible to cut the knot of prosperity versus environment dilemma, and have access to more physical goods than we need, while reducing other use of resources. Neither usufrust nor social sharing automatically solve sustainability problems, but they are useful tools that make them easier to face. More fundamentally, the Ostroms’ concern with self-governance suggests that grassroots popular design can be promoted as a means of dealing with a range of ecological problems, including climate change.

Elinor Ostrom’s approach to sustainability, therefore, cannot be reduced to a calculation of costs, or governmental regulation, or any other panaceas. Social-ecological systems are complex, and purely cost considerations, or centrally imposed regulatory measures are inadequate to their maintenance. The seven-generation rule is helpful in understanding her perspective … however, she did not believe a normative commitment to sustainability was sufficient, but that practical policies had to be worked out. Policies that were developed democratically were more likely to be effective, and people needed to see practical gains from such policies.

Books Environmental politics Politics

Notes from The Poverty of Capitalism by John Hilary

p. 17 “Studies of the functional distribution of income between capital and labour have shown how comprehensively the working class has been excluded from the benefits of growth in the era of corporate globalisation.Far from keeping pace with growth, in three quarters of all countries for which data were available the share of national income going to wages declined between 1985 and 2006. The most precipitous fall occurred in Latin America and the Caribbean, where the share of income going to wages decreased by 13 percentage points in just 10 years, while dramatic declines were also experienced in Asia (10pc), the industrialised north (9 pc) and sub-Saharan Africa. … Wage levels for full-time male earners in the USA are well known to have stagnated in real terms over the past 40 years, even while per capita GDP more than doubled … yet when increases in unemployment are taken into account in addition to inflation, the median wage for all working-age men in the USA actually declined by 28pc between 1969 and 2009.”

p. 37 “Shortly after Germany’s newly revised Atomic Energy Act had passed into law, the Swedish energy company Vattenfall, which operated two of Germany’s oldest nuclear power plants, gave notice of its intention to sue the German government as a result of the decision not to extend their operating life. According to Vattenfall, the reduced book value of the two plants required the company to register an impairment loss in its 2011 accounts of just under 1.2 billion euro, including provision for dismantling the plants, and as a foreign investor it claimed the right to pursue the government for #compensation under the terms of the multilateral Energy Charter Treaty, which Germany ratified in 1997. That treaty was ostensibly designed to protect foreign investors in the energy sector from political risks such as discrimination and expropriation, in keeping with many other bilateral and multilateral treaties introduced in the 1990s. … the treaty had handed investors unprecedented power to challenge the authority of sovereign states and their democratic structures. … Vattenfall’s suit … was formally registered in May 2012 at the World Bank’s International Centre for Settlement and Investment Disputes (ICSID) … it had already been successful in a prior claim brought under the terms of the same Energy Charter Treat three years earlier. The case had centred on the city of Hamburg’s environmental regulations for the River Elbe, where Vattenfall had been granted a permit to construct its new Moorburg coal0fired power plant on condition that it meet the water quality standards required of industry along the river. Vattenfall argued that these requirements made their investment ‘unviable and sued the German government… for 1.4 billion euros plus costs and interest. The case was settled between the two partied in early 2011, and although the details of the settlement were kept secret, insiders remarked that Vattenfall could consider the outcome a ‘complete success’. The company was granted a new permit to continue its construction of the Moorburg power plant, duly revised in favour to include less demanding environmental conditions.”

P. 42 “By means of intense bullying and brinkmanship in the shadow of the US-led invasion of Afghanistan, a new round of international trade negotiations was launched at the WTO’s ministerial conference held in Doha in November 2001. .. the US managed to engineer the inclusion of the four Singapore issues (investment, government procurement, competition policy and trade facilitation) in the Doha round’s work programme at the 11th hour a coup widely credited to the personal persistence of the EU Trade Commissioner Pascal Lamy, who would four years later be appointed Director-General of the WTO itself. “… this led to the collapse of the Doha Round in 2003.

p. 47 Bilateral Investment Treaties commonly identify the forum (or forums) in which international arbitration is to take place, as well as the procedural rules to be followed… BITs commonly grant foreign investors the choice between bringing claims first before national courts or going directly to international arbitration – an innovation which breaches the customary rule that local remedies must be exhausted before foreign investors have recourse to international forums. Secondly, investors can disguise or switch their home country so as to take advantage of these powers, as in the infamous case of the failed water privatisation in Cochabamba, Bolivia, where Bechtel subsidiary Aguas del Tunari was able to take advantage of the Netherlands-Bolivia BIT by virtue of having inserted Dutch holding companies into its ownership structure…. an ICSID tribunal in 2004granted the ‘Lithuania’ company Tokios Tokeles permission to bring a claim against Ukraine under the Lithuania-Ukraine BIT even though … the company was 99pc owned by Ukrainians”.

p. 54 “the annulment of a number of high profile ICSID awards in recent years has further undermined the legitimacy of the investment arbitration system. In June 2010, an ICSID review panel overturned an earlier award of $128 million against Argentina in favour of California-based company Sempra Energy, on the grounds that the original ICSID tribunal had failed to deal properly with Argentina’s ‘necessity’ defence in taking the emergency measures it did in the financial crisis of 2001…. In 2007, Bolivia became the first country to withdraw from ICSID, followed by Ecuador in 2009 and Venezuela in 2012; by the beginning of 2013, Argentina had also indicated its intention to leave. In April 2011, the Australian government announced that it would no longer include provisions for investor-state dispute settlement in future bilateral or regional trade agreements; one motivating factor behind the decision may have been the UNCITRAL claim brought against the state by US tobacco company Philip Morris, under the terms of the Australia-Hong Kong BIT, for lossess “potentially amounting to billions of dollars” as a result of Australia’s decision to require all tobacco products to be sold in plain packaging’.”

p. 56 “the growing rejection of investor-state dispute settlemennt is consonant with states’ increasing confidence in re-establishing control over foreign investment by the means of new regulations. In 2000, fully 98 pc of all investment policy measures introduced at the national level served to liberalise the investment regime in host countries, while just 2pc introduced new regulations or restrictions on investors. In 2010… 32% of measures introduced new regulations on inward investment…. This rebalancing was most apparent in the the extractive industries, where 93pc of regulatory changes introduced in 2010 were restrictive, … in the agricultural sector … 62 pc of regulations introduced during 2010 were restrictive. .. business has responded by calling on the G20 to create an international framework agreement on investment that would guarantee transnational capital open access and protection in cross-border activities, including the permanent right to investor-state dispute settlement. … the B20 business lobby still identifies the WTO as its preferred forum for international rules and standards on investments.”

p101 “Intensified competition at the international level has played a role in undermining the prospect of positive outcomes in the garment sector, particularly as a result of the phasing out of the Multi-Fibre Arrangement in 2005. The MFA was originally designed in the early 1970s as a protectionist shield for clothing manufacturers in the global North in the face of competition from new producers in the SOuth, especially China and India… a further consequence was companies … were forced to look to new production bases in a broader range of countries if they wished to take advantage of the increasing opportunities to supply Western consumers… the full effects of the MFa phase out… leading to significant job losses as factories closed in export bases such as Costa Rica, Guatemala, Mexico and Honduras. In the Dominican Republic, one in three factories closed and 70,000 jobs were lost in the garment sector between 2004 and 2007, while South Africa saw the value of its garment exports to the EU and USA crash by 75 pc over the same period…. within the first year alone, Kenya recorded job losses in the garment sector of almost 10 pc, Lesotho of 26 pc and Swaziland a catastrophic 43pc. Women were particularly affected … in Mauritius, 88 of the country’s 292 garment factories closed between 2004-2009, with a loss of over 17,000 jobs … the unemployment rate for women soared to 16.5pc… IN Cambodia, Vietnam and Sri Lanka, the differential between women’s and men’s wage widened in the immediate post-MFA period, surging to a 55pc gender gap in the case of Sri Lanka. Even while total employment in the garments sector increased in Bangladesh, Cambodia, India and Pakistan after 2004, working conditions were found to have declined for women in all four countries.”

p. 106 ” aggressive cost-cutting by brand buyers has been a dramatic decline over the past two decades in the unit price of clothes leaving the factory floor. The factory price for cotton knit shirts, for instance, was driven down by over 20 pc in Mexico, El Salvador, Pakistan, Peru, Turkey and Bangladesh during 1994-2004, by over 30pc in Haiti, Guatemala, Domitian Republic and Egypt, and by over 50pc in Honduras and Nicaragua. … as sales began to be hit by financial crisis and recession from 2008 onwards, Western retailers embarked on their own discount campaigns in an attempt to offset declines in consumer spending… in Bangladesh, according to the country’s Export Promotion Bureau, the average price for woven and knitted garments fell another 3 pc between 2010 and 2011 as a result of this downwards pressure from retailers, while production costs increased by around 10oc. … to consumers in the West, this meant ever cheaper clothing over a sustained 20-year period, defying inflation and gibing rise to a throw-away fashion culture unknown to previous generations.In the USA, the price of women’s clothing fell by over 17 pc between 1992 and 2010, compared to a 55pc rise in the consumer price index as a whole. The UK clothing sector experienced significant price deflation in the first decade of the 21st century, as supermarket tripled their share of the clothes market and other ‘value’ retailers such as Primark burst on to the scene, leading to a 23 pc fall in the retail price of clothing and footwear in the 10 years to 2008 (and a 38pc fall in the case of women’s clothes. Brands and retailers at all points of the spectrum have seen vastly increased profits … Gap for instance posted sales of around $14.5 billion in both 2002 and 2010, but saw its profits increase two and a half times from $478 million to $1.2 billion in the same period. Nike’s profits more than tripled from $663 million in 2002 to $2.1 billion in 2011, with its profit margin increasing in the same period from 6.7pc to 10.2 pc. .. Primark … increased sales from £654 million in 2002 to £3 billion in 2011, and profits from £72 million to £309 million. The world’s largest fashion retailer Inditex… quadrupled its profits from 438 million euros in 2002 to 1.9 billion euros in 2011.”
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Books History Politics Women's history

An astonishing veil of royal protection

What’s really most astonishing about The Mystery of Princess Louise: Queen Victoria’s Rebellious Daughter is what’s missing. That’s no fault of the author, Lucinda Hawksley, but she has to leave large gaps in her biography, for documents relating to Princess Louise, who died in 1939, and her husband, who may have had his own secrets, as a homosexual in an intolerant age, remain classified and closed away.

We’re not talking about matters of state here, some deep secret about the First World War and relations with Germany that might somehow, distantly, have modern ramifications, or impact on anyone alive today – what we’re talking about are documents that probably, Hawksley concludes, show that Louise had an illegitimate child.

But when she went to the Royal Archives,she found a brick wall: “We regret that Princess Louise’s files are closed.” And she found that archivists in the National Gallery, Royal Academ and the V&A, as well as overseas collections in Malta, Bermuda and Canada, we bemused to find that material they expected to hold had been removed to the Royal archive.

Hawksley traces that probable child, adopted by the Queen’s accoucher, and family. She reports how his descendant, Nick Locock, tried to get his grandfather’s body exhumed, from a family mausoleum in Kent to establish that through DNA tests, which would have involved drilling through the coffin and removing a fragment of bone. A long legal battle ended with that being denied on the basis of “the sanctity of Christian burial”. “As Nick commented to me with a wry smile a few years after losing the court case: ‘I wouldn’t have minded so much if the very same church hadn’t recently moved about 200 bodies to make way for a coffee shop in the crypt!” (p. 93)

And the records of Queen Victoria – her volumninous letters and diaries are apparently available, but as Hawksley notes, not what they seem. For they aren’t the originals, but were heavily edited by Princess Beatrice. Given how much of a nasty, self-centred, vindictive character the Queen appears, it’s hard to imagine just how bad the originals are, Hawksley concludes.

Despite her upbringing, Louise was, for a royal, an interesting character. She tried to support Josephine Butler’s campaign against the Contagious Diseases Act – and although she was stopped from that on the basis of “this is politics”, she maintained a friendship with Butler, as well as many deeply “unsuitable”campaigners and artists. Perhaps not surprising that a central London pub was named after her.

This is definitely worth a read for a glimpse into another world – and a perspective on current debates on child abuse and neglect – for Queen Victoria certainly treated her children in a way that would count as emotional abuse under proposed new laws. Of course whether she’d get arrested would be another question…

Books History Politics

Behind our unwritten constitution…

Little known facts: ” The 1713 Place Bill, which would have taken all government ministers out of parliament and split the executive from the legislature, failed to get on the statute book only because the vote on the third reading in the Lords was tied. The Reform Act of 1832 was later thought so good they named it Great, but on its second reading in 1831 was carried in the Commons by a single vote, as was the vote of no-confidence in Jim Callaghan in 1979 that led to Mrs Thatcher’s first election victory.” (p5)

“Sir William Paxton … bought his Carmarthenshire seat with 11,070 breakfasts, 36,091 dinners and 25,275 gallons of ale, carried on treating the electorate with food and booze until a series of Corrupt Practice Acts in 1854, 1883 and 1885.” (p. 11)

From Parliament: The Biography, Volume 1, by Chris Bryant.

Books Politics

Notes from Diane Coyle’s “GDP: A Brief but Affectionate History”

A short and worthwhile one-sitting read – she can’t help in the end being an economist of her time and place, but she’s at least a critical one…

p. 13-14 Simon Kuznets in the US during the Depression was trying to calculate national income – his figures in January 1934 showed it had halved 1929 to 1932. But he saw his task as trying to measure welfare rather than just output. Quoting him “It would be of great value to have national income estimates that would remove from the total elements which, from the standpoint of a more enlightened social philosophy than that of an acquisitive society represent dis-service rather than service. Such estimates would subtract from the present national income totals all expenses on armaments, most of the outlays on advertising, a great many of the expenses involved in financial and speculative activities, and what is perhaps more important, the outlays that have been made necessary in order to overcome difficulties that are, properly speaking, costs implicit in our economic civilization. All the gigantic outlays in our urban civilisation, subways, expensive housing etc,… do not really represent net services to the individual comprising the nation but are, from their viewpoint, an evil necessary in order to be able to make a living.”

But of course there was a war coming …

P45
“It is startling to look back over the decades and realise how recent consumerism is. … it wasn’t until 1950 that 75% of US households had a washing machine, and the same benchmark wasn’t reached in Europe until 1970. Cars did not reach three-quarters of the US population until the 1970s but the European countries didn’t catch up until the late 1990s.”

p51
Many of the critics of PPP [purchasing power parity] conversions also argue there is an ideological bias, although usually entirely unconscious, in the process. taking the PPP-based GDP comparisons on this basis at face value makes the trends in world poverty levels and income distribution look more encouraging than they really are. And if poverty has been declining rapidly and inequality between countries not getting wider but rather possibly diminishing, as the comparisons suggest, then there is no reason to worry about the process of globalization of international trade and investment that characterised the 1990s and 2000s. This is obviously a pretty fundamental question … To some extent the answer is obvious from the way everyday life in Chinese cities has visibly changed: there has certainly been a big increase in living standards for a large proportion of China’s urban population, and that’s enough to affect the global picture. Beyond that, though, the answer does depend on how the GDP of different countries is converted on the same basis.”

p. 62
“By 1968 there had been a quarter century of absolutely extraordinary growth. … Western living standards had approximately trebled since 1950… There was a job for everyone who wanted one… A man could act as a breadwinner for the whole family, reasonably secure in his job and well paid with a secure pension.’

p. 78
“Until relatively recently, there was very little evidence on which economists could base their views about how economics grow. The number of countries for which GDP data were available increased slowly, and only reach 60 as late as 1985. For many of these, the data were of poor quality. … Even those who had been gathering some kind of national income statistics for a long period did not have data series that were consistent over time … the empirical work … was augmented by historical studies using data on GDP for a range of countries going back to the year 1000. Angus Maddison … extraordinary International Comparison Project undertook the immense task of finding from a wide range of historical sources all the raw statistics needed to construct GDP, on its modern definition, backwards through history .. now an essential resource…(but) economists now use Maddison’s statistics blithely, without the due caution required… involved a lot of assumptions and clever guesswork.

p. 82 “Wal-Mart is the leading example of how a business can transform its productivity using their technologies. McKinsey estimated that Wal-Mart on its own accounted for a substantial proportion of the pickup of American productivity in the late 1990s. To achieve this, the company developed a model of sourcing goods from China and other low-cost countries, through an extremely sophisticated logistics operation, and retailing the goods in massive out-of-town stores.” [To which of course I'd add, massive external costs not accounted for, from the health care of their workers, met by the government, to the emissions from transport and pollution from production of those goods.... and more...]
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