The Living Room

Cui bono* ?

Posted on July 10, 2011 by Michaela

By Joseph E Stiglitz

Just a few years ago, a powerful ideology – the belief in free and unfettered markets – brought the world to the brink of ruin. Even in its hey-day, from the early 1980s until 2007, US-style deregulated capitalism brought greater material well-being only to the very richest in the richest country of the world.

Indeed, over the course of this ideology’s 30-year ascendance, most Americans saw their incomes decline or stagnate year after year.

Moreover, output growth in the United States was not economically sustainable. With so much of US national income going to so few, growth could continue only through consumption financed by a mounting pile of debt.

I was among those who hoped that, somehow, the financial crisis would teach Americans (and others) a lesson about the need for greater equality, stronger regulation, and a better balance between the market and government.

Alas, that has not been the case.

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Posted in The world we live in Now | Tagged Economic, Economic growth, Economy and the New Earth, European Central Bank, European Union, International Monetary Fund, United States | Leave a comment

The ceiling and the abyss

Posted on July 10, 2011 by Michaela

From the Economist

GIDEON RACHMAN had a good thumb-sucker in yesterday’s Financial Times arguing that the current political-economic crises in America and Europe are basically two sides of the same crisis. “In Washington they are arguing about a debt ceiling; in Brussels they are staring into a debt abyss. But the basic problem is the same. Both the US and the European Union have public finances that are out of control and political systems that are too dysfunctional to fix the problem,” Mr Rachman writes. I have some quibbles about the way he frames the economic issues as a generalised problem of “an unsustainable and dangerous boom in credit”, viz homeowner credit in America and the overdrawn borrowing of Greece and Italy in Europe. This seems to smooth over a lot of differences a bit too easily; the American housing bubble was fueled by CDOs, but the economic problems in Europe aren’t about an asset bubble caused by Greek or Italian government borrowing, and to the extent that the problems are due not to asset bubbles but to financial interconnectedness, the interconnectedness caused by private-sector issuance of CDOs and CDSs isn’t really the same as the interconnectedness caused by the adoption of the euro across 17 countries.

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Posted in The world we live in Now | Tagged Debt, Economic growth, European Union, Financial crisis, Government, United States | Leave a comment

Life after Capitalism

Posted on July 9, 2011 by Michaela

By Robert Skidelsky

In 1995, I published a book called The World After Communism. Today, I wonder whether there will be a world after capitalism.

That question is not prompted by the worst economic slump since the 1930s. Capitalism has always had crises, and will go on having them. Rather, it comes from the feeling that Western civilization is increasingly unsatisfying, saddled with a system of incentives that are essential for accumulating wealth, but that undermine our capacity to enjoy it. Capitalism may be close to exhausting its potential to create a better life – at least in the world’s rich countries.

By “better”, I mean better ethically, not materially. Material gains may continue, though evidence shows that they no longer make people happier. My discontent is with the quality of a civilization in which the production and consumption of unnecessary goods has become most people’s main occupation.

This is not to denigrate capitalism. It was, and is, a superb system for overcoming scarcity. By organising production efficiently, and directing it to the pursuit of welfare rather than power, it has lifted a large part of the world out of poverty.

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Posted in The world we live in Now | Tagged Capitalism, John Maynard Keynes, Wealth of Nations | 4 Comments

Enjoy the ride

Posted on July 8, 2011 by Michaela

The most important priority in a time of uncertainty is to learn to become comfortable with uncertainty.

” That is easier said than done” you may say. But truly – what is so difficult about it ?

We are living in a time of phenomenal and accelerated change. It feels like whitewater rafting, and thats the pointer right there: Know what you are doing, but enjoy the ride.

My own analogy is learning to ride my bike hands off. I never could do that, too many stories in my mind about falling on the face and breaking one’s nose, or teeth. So even the thought of removing my hands from the handle caused me to tighten up and go into contraction. And so I prevented my body to do what it knows how to do – ride a bike. With or without hands.

At a certain point on this journey I knew I had lost my desire to feel safe. I simply did not give a damn anymore whether or not something would turn out in the way I envisioned – even if this meant unpleasant or bad. And then, two things happened the very next instance: I became aware of all sorts of unknown, and previously labelled unpleasant, feelings. Secondly, I suddenly rode my bike hands off the handle.

And I observe and keep thinking – my body does this all by itself, I don’t even have to think about it. In fact it could do this, even if I forgot everything I know. My body still would remember how to ride a bike.

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Posted in The world we live in Now | Tagged fear, Preparation, Thought | 3 Comments

Most revolutions have been about debt

Posted on July 7, 2011 by Michaela

More than 750,000 British public sector workers staged a 24-hour strike Thursday in a stand-off with the government’s plans to reform public sector pensions. The reforms come as the government tries to trim its deficit and would require public workers to work longer, pay more toward their pension and receive less upon retirement. Meanwhile in Greece, thousands of workers staged a 48-hour strike and many took to the streets after the Greek Parliament approved a raft of austerity measures that include spending cuts, tax increases and privatizations as a condition for a massive bailout to avert the Eurozone’s first default. “There is a common theme to the protests that are taking place across Europe, and that is not just the public sector workers defending their pension rights, but also a generation of young people for whom quite a stark picture is being painted of their future,” says our guest Paul Mason, an economics editor for BBC Newsnight who just returned from reporting in Greece. We also speak with David Graeber, author of “Debt: The First 5,000 Years.” “Most revolutions in our history have been about debt,” says Graeber. “It is a perennial tool by those who are powerful to make the victims of structural inequalities feel that it is somehow their fault.” [Includes rush transcript]

Hundreds of Thousands of Greek and British Workers Stage Strikes As Governments Push Austerity Cuts.

Source: Democracy Now