Category Archives: Not Europe

i see dominos

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The Jacksonauts make their contribution to public discourse:

MPs were given a stark warning this week: "We've already lost Turkey, Lebanon is gone too" – and now the west can't afford to lose Egypt.

The bearer of this message was Mort Zuckerman, the American newspaper and property mogul. He was in Westminster as a guest of the neoconservative Henry Jackson Society, which boasts Michael Gove and Nick Boles among its supporters.

Well, yeah: thanks for that. Allegra Stratton says that the Tories are divided over Egypt and suspicious of their soft-on-the-muslims coalition chums. Well, probably. It’s not a three line whip issue. Personally I think Cameron has been a distinct improvement on this predecessor but one on this. I heard him yesterday going on about how despicable the violence was and thought he sounded…well, quite sweet, really.

The worst prospect for people like the Henry Jackson Society is if the Egyptian revolution succeeds and doesn’t lead to the Brothers establishing the Nilotic branch caliphate. It’s not a result you’d welcome if your financing and raison d’etre is threat-mongering. A lot of so called anti-jihadists have already flipped over into alternate reality, but that’s not an option if you have pretensions to respectability. Not so much, anyway.

goons of yore

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Mubarak’s goon squads remind me a bit of the countergangs organised by the Indonesian army to try and terrify the population of East Timor into voting against independence in 1999. They’re described at length in Richard Lloyd Parry’s In the time of Madness.

A number of recruits for these outfits – with names like Red and White Iron – were drawn from children orphaned by the TNI in the original round of massacres after the 1975 invasion and raised in Indonesian orphanages. There was a payroll vote, as you’d expect, and criminal elements raised through various rackets run by Kopassus* partly as a means of harvesting street muscle as required. Quite a few were recruited through an organisation called Gardapaski, supposedly a local version of the Grameen Bank. What it actually did was front money to unemployed young men in return for their support when necessary.

Obviously, Mubarrak’s people will have their own channels for getting the meat on the street. I guess the point here is that a reasonably imaginative dictatorship has all sorts of ways to get the people it needs to do the things it wants done while not wearing official uniforms and that we won’t find out what they are until the system that does it is brought to an end.

And it’ll have to end now. A couple of days ago it was pretty clear that if they put Husni on a plane then the policy status quo could stay basically unchanged; that the removal of Mubarrak would carry enough of a symbolic charge to preserve most of the power of the local overclass, though of course things would have to become more inclusive. I thought that was the strategy: make Husni, or his absence, the change we can believe in, and yay reform. But not now. How can you hope to have an even partially fair election in nine months with the power structure that caused today’s carnage still basically in control?

Tunisia

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The developments are too rapid to have much considered to say but it seems clear that there are new features to this uprising.  The role of Wikileaks in showing that the US diplomats didn’t view the political economy of the place much differently than the people in the street.   Nor is this a “colour revolution” of the type from the mid 2000s — it’s not that organized or branded.  And for the first time in a long time, a decision for European and Arab governments about government legitimacy in their own backyard — and how to handle graceful retirement for the former incumbent.  At least two imponderables: the reaction of overseas Tunisians, who would have been forgiven for wondering if things would ever change, and the spillover to Egypt, where some of the political features are similar and succession is already, obliquely, in the air.

Merkel’s Little Ray of Sunshine

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Remember the sunshine option? You might think it was getting some traction. Berthold Huber, the leader of IG Metall, has set some goals ahead of this year’s payround, which opens on the 27th and covers the steel industry. IG Metall is the German metalworkers’ union, which in practice represents most of the industrial economy – the wider importance of the steelworkers’ pay round is that it acts as a price-leader for the rest of the German collective bargaining year. Huber clearly reckons that Germany is recovering well enough that he can insist that the workers get a share of the benefit. Further, he wants to reintegrate some of the short-time or temporary workers, a sector that grew during the Lohnzurückhaltung years and then during the crisis.

Interestingly, someone has gone further and nailed a target to the wall. Peter Bofinger, a member of the German council of economic advisers, has named a figure of 3% earnings growth as necessary to achieve a broad-based recovery. Bofinger has appeared on this blog before; looking back, these remarks are highly telling

If the SGP is regarded as a framework that contributes to price stability, it suffers from the weak link between government deficits and inflation. This is due to the fact that a negative budgetary position can be caused by excessive government spending but also by a dismal growth performance….However, already in the 1990s it should have been obvious that the link between public debt or deficits and inflation is very weak, at least in OECD countries with relatively moderate inflation rates….Together with the depreciation of the dollar this insufficient macroeconomic stabilisation can be regarded as the main reason for the underperformance of the euro area in the last few years.

Bofinger’s words are here, in an interview with the Rheinische Post. Bofinger argues that German employees have seen no growth in their buying power in the last 10 years (the unions’ research group reckons no growth in real wages in 6 years), while exports grew by 70% at constant prices – to put it another way, there’s been a “massive redistribution at the expense of workers”. Of course, the flip side of holding down wages in a major export economy is that somebody has to buy the stuff. He further argues that the Lohnzurückhaltung has contributed to European economies drifting apart: in Der Spiegel, for example.

Anyone who sees this as a virtue must ask themselves whether Germany’s export successes would have been possible if other countries had behaved as “virtuously” as we have. It says a lot about the level of the debate that such simple and fundamental insights are apparently difficult to get across in Berlin.

(Die Zeit has an article about Bofinger and his predecessor on the council, Jürgen Kromphardt, which describes them as the last Keynesians. To read, as a period piece from the distant age of 2004.)

So what’s happening in the other superexporter? Even The Economist has not only noticed Chinese labour activism, but thinks it’s a good thing. Doug Saunders reckons that this is the only lasting gain from the boom.

That’s the theory; the practice is here.

The week-long strike at Honda supplier Atsumitec ended Thursday after workers and management agreed to a 45 percent increase in the basic wage from 980 yuan a month to 1,420 yuan.

The roughly 200 employees at the Foshan plant were, in addition, offered a 250 yuan monthly living allowance and a performance related bonus; a significant victory after management had earlier in the week threatened to fire striking workers and hire replacements if they did not return to work…. The fact that workers are asking for increases of around 50 percent, even higher in some cases, is a clear indication that wages in the Pearl River Delta have been kept far too low for far too long.

As the strikes continue, a high-level delegation from the Guangzhou Federation of Trade Unions arrived in San Francisco, the first leg of a four-city tour of the United States designed to improve relations with American trade unions and labour groups.

Delegation head Chen Weiguang was quoted by the Chinese media as saying American labour groups had already secured a commitment from Apple to improve payments to Foxconn so that wages at that company’s factories in China could be increased.

Even the People’s Daily thinks so, although I’m not sure what to make of this:

Nonetheless, even as these doubts remain over the ACFTU [the official unions, under pressure to demonstrate real representative power - not-ed], it’s not stopping in its “union-building” efforts. The Financial Times reports that it’s unionizing many large foreign investment banks, including Goldman Sachs, JPMorgan, Morgan Stanley and UBS. According to a foreign banker in Suzhou, “(t)hey are actually telling us [to establish union chapters], not asking us…the feeling from everyone was – we just got a 2 per cent tax.”

You can’t expect much from a journalist at that level

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Alex Perry, an Africa correspondent Africa bureau chief for Time magazine, writes on China’s involvement in Africa. In the process, he describes the DRC as a “sucking vortex”, citing the corrupt rule of Mobutu Sese Seko. Julie Hollar at FAIR (Fairness and Accuracy in Reporting) takes Perry to task for failing to mention US / Belgian involvement in the overthrow of Patrice Lumumba (and their subsequent support of Mobutu). Perry then makes the terrible mistake of responding to Hollar in comments while not in full control of his own sense of self-importance. Self-harming behaviour (not to mention Time-harming behaviour) then follows.

Jonathan Schwarz (Tiny Revolution) summarises the Perry / Hollar spat and takes the opportunity to quote an apposite passage from Devlin’s book about his time as CIA station chief in the Congo. It’s good, so I’ll quote it myself here:

We moved onto Ambassador Houghton’s office where we were joined by Ambassador Burden for more detailed talks concerning the Congo and its problems…During our discussions, Tim brought up a delicate matter: “Time magazine plans to do a cover story on Lumumba with his picture on the front of the magazine.” He continued, “Celebrity coverage at home will make him even more difficult to deal with. He’s a first-class headache as it is.”

“Then why don’t you get the story killed?” Burden asked. “Or at least modified?”

“I tried to persuade the Time man in Leopoldville until I was blue in the face,” Tim replied. “But he said there was nothing he could do about it because the story had already been sent to New York.”

“You can’t expect much from a journalist at that level,” Burden said pulling out his address book and flipping through the pages. He picked up the phone and put a call through to the personal assistant of Henry Luce, Time’s owner.

So: Time. Apparently at the beginning it was going to be called Facts. May I just say at this point that if news reporting on the internet as we currently know it should happen to get wound up in favour of dedicated news magazine ‘apps’ running on tightly controlled platforms, then – since you can’t link from the web to the content of a proprietary app – no one will be linking to the bullshit with an explanation of why the bullshit is bullshit. It’s pretty obvious that Steve Jobs is nostalgic for the corporate futurism of the 1960s – only now he gets to implement it, woo-hoo – and it just doesn’t look as though end user selectivity features large in any part of the Jobs vision. You’ll get what you’re given and call it knowledge.

Pretty much the only part of Africa I’ve spent any time in at all is Madagascar. I’ve visited twice. They’ve just celebrated fifty years of independence from France. Andy Rajoelina has failed to gain international recognition since he took over (with the support of the army): for what it’s worth, celebrations are reported to be muted as a consequence. I think you have to give the Malagasy population credit for two things. First, they know a stitch up when they see one. Pre-Rajoelina, a South Korean chaebol had some deal under negotiation where (in broad terms) they’d produce corn and bio-fuel on some immense percentage of Madagascar’s arable land (half of it?) and then get to keep all the corn and all the fuel. In return, the Malagasy at large would get, not rent exactly, but at least the promise of being allowed to work as agricultural labourers for the South Koreans. News of this ‘deal’ prompted the ouster of Ravalomanana. You wonder if even Philip K. Dick could have foreseen it. As it happens, Alex Perry sees good things in the ‘deal-making approach’ for Africa:

For all the heat, IMF officials admit that the Chinese model for African development has some advantages. First, it’s quick. Loan talks with multilateral agencies take years. The China-Angola discussions took weeks. “With the West, there are studies, analyses and bureaucracy,” says the Western official. “The Chinese just ask what the government wants, and they don’t question or comment or judge. They just do it.”

My understanding is that the South Koreans took a similar approach: they just asked the then president what he wanted. Lickety-split …

The other thing about the Malagasy is this. When they have a coup, they generally do it with the minimum of violence and fuss. Madagascar is not a wealthy country but it’s smart enough not to waste too much time and effort on civil war when what’s wanted is a change in the administration.

China: internal revaluation from below

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Geoff Dyer of the FT says that Chinese workers are demanding more money, and that’s nothing but a good thing – there’s even some demographics in there, if you like that sort of thing.

Instead, the salary hikes in Guangdong this week symbolise a broader shift in favour of labour that has accelerated in recent months and is likely to carry on for a number of years. They reflect powerful demographic shifts resulting from the three-decade old one child policy, with the numbers of new potential workers entering the economy dropping quickly. Economists say China has passed or is close to hitting the “Lewis turning point”, when the pool of surplus agricultural labour tapers off, sparking big rises in industrial wages….

Booming consumption will, in turn, lead to smaller external surplus, as China imports more goods from the rest of the world and helps encourage a rebalancing of the global economy. As long as potential spikes in inflation can be controlled without too much cost, China has a lot to gain from higher wages.

China Labour Bulletin has much, much about a new wave of labour activism in China; they report on a strike at a Honda supplier and a “healthy and dynamic system of labour relations”. The people involved are now following up on their success by giving the convenor of their official, and yellow, trade union the boot.

China Media Project reports on the concept of “stability preservation through exerting pressure”, which seems if I catch their meaning to imply that the Chinese authorities at the top level are willing to tolerate the strike wave as a means of imposing a policy aim of moving to broad-based growth on lower-level governments, Party agencies, and businesses that are doing rather well under current arrangements. The mountains may be high, and the Emperor far away, but that also means the troops may be a long time in coming to save you from the next Mass-Group Incident. Do you feel lucky, punk?

And then, of course, at the Davos/Martin Wolf level of these things, the grand speak to the grand. Ahead of the G20 meeting, the People’s Bank has first suggested that it might be resuming the policy of letting the RMB rise gradually, and then walked it back. Of course, a lot of this might be the typical central bankers’ Noh theatre of allusion. But then again, Renmin tielu wei renmin – the People’s Railway is the People’s.

The same may not be true of the People’s Bank. But I’m sure I’ve seen a translated document at AFOE contributor Jamie Kenny’s place which had senior Chinese officials recommending that social conflicts should be resolved by “giving the People the People’s Currency Unit”, i.e the renminbi, or in other words, by leaning on management to give in on their demands in so far as they involve pay rather than politics.

Internal revaluation in Exportland is a viable option. Especially, it’s an improvement over more bubbles.