War spins out of control

Events in Ukraine have taken a tragic turn, and I literally mean tragic, not as a synonym for ‘sad’.

This kind of invasion makes no sense. A puppet government or an occupation would make Ukraine ungovernable except by Soviet methods. The invasion is neither quick nor easy, and it’s about to get much more violent. That’ll backfire in Russia for reasons quite apart from western sanctions. It’s one thing to blow up Muslim guys with beards in Afghanistan. But Ukrainians are supposed to be brothers and Kiev has been the historic capital. WTF are we doing?

I’m not sure if Putin properly planned to invade this way or if it was some kind of forced hand, miscalculation, impulse, or other ‘out of script’ move. I’m impressed by how much not according to plan it appears to be going, and that’s not necessarily a good thing. It’s a sign that even for the aggressor the war is spinning out of control. I didn’t expect Putin to act ethically but I did expect him to take good decisions and now I’m not sure.

I also hear, with worry, that the Ukrainians are unreasonably effective in their defense. Clearly they’re being supplied unlimited amounts of light weapons, which the west doesn’t deny, and I’m guessing they’re also being fed live intel of Russian troop movements. There’s probably a significant covert operation by ‘our side’ on the ground. That’s worries me because the Ukrainians are then pressed to fight a war of attrition, and because the west’s involvement cannot be denied. The conflict is looking more and more like one between Russia and NATO. That’s reckless.

But aren’t they in the right? Would you abandon them? Why should they surrender to a dictator? Of course they’re right. Lots of people are right at different points in history. It’s irrelevant. They’re going to die. Right now we hear they’re doing well, but be careful of cheering the right side in a war. It’s natural because we want ‘good’ to prevail, but very likely the defenders will be violently crushed. Putin and the Russian army are the ruthless ones in this fight and there’s a very real chance Kiev will resemble Sarajevo in Yugoslavia or Aleppo in Syria. I wouldn’t want anyone to fight that. I’d want them to flee or surrender and live another day.

I fear that both sides are now playing forced hands. Putin can’t back down without winning any objectives so what’s his exit plan? A quick strike didn’t work so he has to reinforce. The only endgame is he has to be the bigger mafioso, escalating the atrocities and not caring about casualties until the other side gives in. Zelensky has no exit either. I don’t know if he’s a real hero or if he just plays one on TV, or if there’s a difference in these circumstances. But he chose a path and can’t surrender or call for cease-fire while people are enlisting and allies are providing support. Thus tragic. Both leaders are forced to escalate when it’s not in their interest, and even more so for the soldiers and for the civilians.

I think this war is a reckless miscalculation. All wars are that or else there would be peace, but this one seems especially pointless. Putin probably has some power and succession problems at home, and an idea of a post-Soviet order that’s now out of date. He may have misjudged the west or the state of the Russian army, or had his hand forced if he was to remain in power, or may actually like the idea of spending his final years as outright dictator. I don’t have a moral view of what Putin does, he’s responsible for himself. I’d like to make sense of his actions, and failing.

As for the west where I feel having an opinion is at least relevant, I think we’re being incredibly reckless. Reckless with the Ukrainian people’s lives whom we (mostly America, but we) led down the primrose path so to speak. Yes, go on, antagonize Russia. Yes you can join the EU. Maybe NATO. Yes you’re on the side of freedom. We’ll have your back. We mean we’ll give you weapons. Yes you can fight. We stand with you. Sorry about what happened! It would be morally right, not now but ten years ago, to say you’re in a difficult spot, let’s make a compromise between the big guys so you’re not caught in the middle.

And we’re reckless with how volatile the situation is. Maybe western intelligence calculated that Putin had internal problems, or that his expeditionary army wasn’t in great shape, or that he wouldn’t retaliate against British ships or American aircraft if they’re obviously providing support. That’s an awfully thin safety margin. Based on recent history, I’m not sure the Washington elite are that competent.

Misinterpreting Russia

I continue to maintain that the Anglo-Americans misinterpret Russia. The ‘invasion’ or whatever that was is not beginning. It happened. I expect the new border to be resented for a few years but peacefully become fact, like Crimea.

The west is stuck in a frame of mind where Russia is the geopolitical enemy and therefore look: Putin is the new Stalin. He wants to take over Easter Europe and impose a Communist world order. I don’t think so. I don’t expect tanks to roll over Kiev or anywhere else in Europe. Putin’s speech, which I think is sincere, sounds more like the Century of Humiliation concept that guides Chinese policy. Russia is unhappy with its current settlement, they feel threatened or cornered, and they’re seeking a new deal.

It’s not the 1945 settlement that Putin is going back to, it’s 1990. The disorderly breakup and looting of the Soviet Union left Russia with a ruined economy and a shaky relationship to key assets: The spaceport at Kazakhstan, the military port of Sevastopol in the Black Sea, the Antonov aircraft factory in Ukraine, and others. There’s also the shared sacrifice of Chernobyl and the ancient history of Kiev as the capital of the Russian nation.

In the post 1990 order these were outside of Russia, and while the relevant countries were loosely aligned it didn’t matter. But the west gradually tried to pull Ukraine towards NATO and the EU and in 2014 things took a turn. Ukraine was bankrupt, facing an economic deal from Putin and another (insincere, I think) from the EU. A soft coup took place and a questionable group (fascists) took power. They were immediately America’s darlings and the propaganda of ‘defending Ukraine’ started.

I interpret Russia’s stance as saying “Fine, that’s an unresolved breakup from the 1990s. If Ukraine goes to the enemy camp the border is not gonna be here, it’ll be there”. I understand why Russia took the city of Sevastopol which is home to their Black Sea fleet, and I know nothing about these two border regions. I’m not sure if they matter, or it’s for domestic consumption, or whatever. What I don’t see is some imperialist Russia preparing to roll over Europe.

The mistake, which America shows every sign of making is to say: Russia, you’ve been bad. More humiliation for you! Sanctions don’t work, we clearly need to put military bases on your border. Then Russia has no choice but to boost its military.

What I think Russia wants is normalization of relations with Europe, access to Europe’s energy market, less emphasis on military spending and more opportunities for its civilian aerospace sector that Russia is currently rebuilding. Because of sanctions, Russia has had to develop new engines for its MC-21 passenger aircraft, a hugely costly setback. But Russia wants to develop those industries on its own terms and not simply sell them to Airbus or Boeing, which I think is the actual point of friction with the west.

Russia visions

The problem with Russia is that it wants to be like China: A world power with an independent industry (energy, mining, aerospace, maybe pharmaceuticals). The US wants it to be like Brazil. A harmless 2nd tier state with an open market and maybe one or two industrial gems that Western majors can snap up. I have to say I’m with Russia on that one.

Putin rescued Russia from the pillage of the ’90s, when GDP fell from world 2nd to around 10th place, advanced industry was left to rot, and natural resources went to the mafia oligarchs. The US establishment were ecstatic about that development and the UK sheltered the oligarchs and made them legitimate. Apart from Trump, they’ve not modified this position.

Trump, whether for being an outsider and a petty crook or for other reasons, didn’t care and the problem disappeared. Now it’s back as if on cue, and the English-speaking press are putting out war stories the same clumsy way as they did with Iraq. It looks to me like this crisis is manufactured by our side.

I think Washington sees a proxy war in Europe as a low-cost flex because it’s not in their back yard. It is in ours. We saw the outcome of their efforts in Syria and the Maghreb, where millions of lives were ruined and Europe was left holding the bag. And Russians are Europeans like us. Instead of conflict we want to buy gas from them, rejoin our cultures, and integrate our economies.

The American fixation to decisively win, as opposed to just end, the Cold War is making this impossible. Whatever you think of Putin or challengers like Navalny, Russians are not going to accept a repeat of the Yeltsin years. Cornering Russia guarantees strongman rule for as long as that it the West’s obvious aim.

Vaccine reversals

My opinion of the COVID-19 vaccines has changed slightly. Originally we thought the vaccine would come and end the pandemic, specifically by stopping the spread of the disease. In other words we thought one’s strategy would be like this:

Avoid catching COVID ➔ Everyone get vaccinated ➔ Epidemic ends

Based on that understanding, we urged everyone to get the vaccine for the common good. I personally thought my risk was much lower than the general population, low enough that if no medical progress happened I’d be fine to live my life as normal, but I really didn’t want to give COVID to anyone else. As such I welcomed the vaccine when it arrived.

I also questioned, if the priority is to stop the spread, why did we open schools and why did we start by vaccinating old people? Surely the highest benefit would be to vaccinate young and working age people first since they’re the ones who do the spreading.

That was a reasonable thing to assume based on how other vaccines work. In this case though it seems to be a little different. The various COVID vaccines do not stop infections completely but make them mild. As far as I can tell it’s completely clear that the vaccine makes the disease mild, but unclear if it’s even helpful to stop spreading. You would think probably a better immune response makes people less infectious but it’s not obvious. For example what if it makes more people asymptomatic vectors.

That means the recommendation is still to get everyone vaccinated, but the reason and the arguments you can use to support it are different.

Instead of urging people to get vaccinated for the common good, and claiming you have the right to demand such a thing because the unvaxxed are a danger to you, we now have to suggest that everyone vaccinate to protect themselves. Given the majority of unvaxxed are right wing selfish people suspicious of “the common good”, that argument may carry better.

In the west we’re slowly coming to terms with the idea that the virus won’t be eradicated but it’s going to be endemic. You’re going to encounter it in the wild sooner or later. In China, NZ, etc. they went with a strategy of “keep it out” and I think that’s fragile. They have the problem ahead of them. But in the west it’s behind us. Right now my personal strategy is as follows:

Get vaccinated ➔ Catch a mild COVID ➔ Recover with robust immunity

I’m not going to recommend this for anyone else because I’m not an epidemiologist, and I’m not going out deliberately to seek infection. Also it conflicts with not spreading it. But pragmatically I think the safe thing to do is get exposed to COVID sooner rather than later. I worry that if I get regular boosters and eventually catch a resistant variant when I’m 70 it’ll be a lot worse.

That means our governments have to own up that we’re no longer aiming for eradication but for endemic disease. Everyone should be urged to get vaccinated because after some deadline we’ll drop the masks and all other anti-contagion measures and the virus will circulate freely. The message to the vaccine hesitant should be: We’re not going to force you, but for crying out loud please do it because we’re going to go back to living our lives and we want you to be safe too.

Crucially, the current narrative that the unvaxxed are anti-social idiots putting everyone at risk is wrong. Some of them are idiots, most of them are trying to make rational decisions with bad data and in a system that’s been profoundly untrustworthy. Taking the US as the worst case:

• Initial advice from the government was authoritative but incoherent and often wrong: Wash hands, don’t get masks.
• A healthcare system and pharma that is out to get you, make you dependent and screw you over financially.
• COVID boosters increasingly looking like flu shots, which are a useless if not harmful money spinner.
• Decades of a political system that demonizes “the common good”. If the vaccine is for the common good it must be bad for me, right?
• Good and bad people mentality where we (Tech, Democrats etc.) are the good people and all of you over there are deplorables.

It is no wonder that people rebel under these conditions, and calling them idiots or a public menace does not help. In fact, we have to change the narrative to: We, the vaccinated, wish to go back to normal and we’ll pose a greater risk to you. We’d like you to be safe but also live our lives so will you get vaccinated please?

I also take issue with restaurants, theatres, concert halls, and random well-wishers demanding vaccine passes as a condition of entry to their services. I think that’s based on the out of date idea that vaccination is the route to eradication, as well as no small part of moralizing nudge. In Europe you have to have proof of vaccination to sit anywhere inside and here some big venues are doing it. That’s wrong. If a venue required that you take contraceptives as a condition of entry would you accept it?

The rational compromise here is it’s OK to demand vaccination where you have a duty of care to the person becoming ill under your watch. For example it makes sense to demand vaccination for entry to a country, health system, insurer, island or other remote region, cruise ship where you’ll spend several days, etc. It makes no sense for a restaurant or a theatre unless you base it on the idea that unvaxxed = spreaders or you’re nudging.

Unfortunately I think our governments are stuck in the narrative where vaccination was the path to eradication and that’s no longer accurate. We’re going to end up in vaccination limbo as well as endless performative distancing and mask-wearing unless we move on. We have to switch to a narrative that the virus will be endemic but mild and, awkwardly, the vaccinated will go on to live their lives and put the unvaxxed at risk. Thus we should be kind to people and urge them all to get vaccinated, but use almost the opposite words to what we’re using now.

What were we doing in Afghanistan in the first place?

Americans are processing their withdrawal from Afghanistan in the same galling self-centered way they talk about Vietnam. It’s how did ‘we’ fail, as if war is a sporting competition and what matters is that ‘we’ look good in it.

It was inevitable and arguably right for the US to withdraw. Why were they there in the first place? To catch Bin Laden who was elsewhere? To save Afghans from the Taliban horror? Did anyone in power believe that? Did the military? Did the Afghans who collaborated with the west and now fear for their lives?

The Afghan government fell like a house of cards because it was a puppet regime and the US was only ever there as an occupying force. There was no serious attempt to build a structure that lasts. America could probably export democracy, civil rights, and institutions if it wanted but after the Marshall Plan in Europe they showed no intent, and have no credibility to do so. Very likely the people of Afghanistan, Iraq, Iran and elsewhere would rather live in a modern democracy than a theocratic failed state, but none of them trust they can get that from the US.

Time after time the pattern of US intervention has been to pick the enemy-of-my-enemy in some perceived geopolitical game and call them an ally. Each time this has created a monster. The Assad family of Syria and Saddan Hussein were praised as useful moderates. Then they ‘had to go’ and the resulting civil wars created ISIS. In the 70s the western powers supported the shah of Iran, which led to the islamic revolution and Khomeini. And these Taliban, they’re the successors of the Mujahideen whom the US armed and trained as ‘worthy’ opponents of the Soviets. What were the Soviets even doing in Afghanistan? Why was that worth a proxy war? But I digress.

Naive intervention and picking allies of convenience destroys countries and ruins people’s lives. Often the lives of the people who believe in the same ideals the West half-heartedly promotes. Even if the status quo is dictators and islamist head-cutters, don’t underestimate how much worse we can make life in another country with bombs, sanctions, or a military occupation. The way to make the hellish countries on Earth a little less so is probably to stop threatening them, make them feel safe, lead by example, and then help the better elements inside of them. Kind of the same way you help troubled people.

Scottish Independence: What I think will happen

Why I’m against independence. Election day special. This is where I embarrass myself by making predictions on how things might turn out.

I give predictions in “bits” on a logarithmic scale: 1 bit is about even odds. -2 bits means one in four chance for the thing to happen. +7 bits means more than 99% certain. -10 bits means 1/1000 or less chance to happen. There’s no point trying to call a 1-bit (or 50/50 event) but might be worth differentiating a -2 bit (25%) from a -5 bit (under 5%) risk. So here we go:

+2 bits: Turnout will be at least 60%
+1 bit: The SNP alone wins a majority of seats
+3 bits: The SNP, Greens and Alba together win a majority of seats

I think turnout will be good on both sides as this election is seen as a mandate for independence. Sturgeon’s campaign of stirring up sentiments and appearing on TV every day to read statistics seems to have convinced people that England is a basket case and Scotland is well managed (in fact outcomes are about the same). Opposition is weak. The unusually good conservative leader Ruth Davidson is stepping down and the new leader is uninspiring. Labour has the opposite problem, Anas Sarwar is a good leader but the party is kind of irrelevant, after becoming a Guardian echo chamber and losing the north of England over Brexit. George Galloway may get elected in The Borders and be a thorn on the SNP’s side, but he did not manage to create much of an alliance for unity.

+2 bits: The SNP call a referendum during this parliament term
+2 bits: Referendum terms agreed with UK government
-4 bits: The SNP goes ahead with a hostile Catalonia-style referendum

The SNP practically made the referendum an election promise, but there’s a couple of reasons it might not happen this term. It’s obviously risky to separate while we’re still in a pandemic and economic support, as well as vaccines, are provided by the UK government. Support for independence hovers around 50% according to recent polls. Since a “Yes” vote is not a sure bet, and either way would take the wind out of the SNP’s sails, they might choose to campaign some more and use the independence issue to secure another term in 2025.

Initially I expect Johnson’s government to refuse a referendum arguing that it’s too soon, an already stated position. Eventually though I think London and Edinburgh will agree some terms and a referendum will likely go ahead. If Johnson refuses to grant a referendum there’s a chance Sturgeon might go ahead with a hostile vote, not backed by London, like Catalonia in 2017. However I think that’s unlikely because it’ll seriously rattle domestic support as well as damage the prospects of being admitted in the EU.

+2 bits: The UK government sets terms that are “harsh but fair”
+2 bits: The campaign is based on ideology, not facts
-7 bits: Significant incidents of political violence in Scotland

I think the UK government can and should give Scotland terms that are harsh but fair. That means two or more of the following: No dual citizenship or freedom of movement. Papers and customs at the border, like with France. At least 5% share of UK debt denominated in GBP. Scottish banks move to London or lose their Bank of England license. Since the referendum is kind of hostile at best, the UK ought to say OK, you’re on your own. The reason to be kinder than that would be to avoid galvanizing support for independence or alienating voters in England.

Based on the current conduct of the SNP and their organ “The National” I expect the campaign to be all propaganda and no facts. I’d be amazed if we see a white paper anywhere near the quality and thoroughness of the one Salmond’s team produced in 2014, since placing the full facts on the table would make independence look bad. Instead I expect Sturgeon’s team to wave flags and dodge questions on currency, border, debt etc. Sorry I don’t know how to formally score this prediction.

I think there’s a small but not negligible chance that rioting or political violence may erupt related to independence, and I would condemn that regardless of side.

+1 bit: Independence wins the referendum
If it passes:
+2 bits: Austerity, meaning 4% or more drop in public spending
+3 bits: GDP shrinks 2% or trade drops 10% for a year
If it fails:
+1 bit: The SNP fades and the main UK parties rebound
+1 bit: A new party landscape emerges in Scotland

So the referendum happens and, as mentioned, it’s hard to call the result. If independence loses the issue is dead for many years but I’m not sure what will happen with the parties. The SNP could remodel as a center-left party, or if they keep drumming up nationalism they’ll lose their base. We might go back to the Conservative, Labour, LibDem split or another party landscape might emerge, perhaps the successor to the SNP vs. Alba. I think that would be a good development or healthier than the current situation.

If independence passes there will be a couple of years quiet transition period but eventually the change would have to come and that’ll almost certainly bring short-term economic pain. I think we’ll see austerity as Scotland loses UK fiscal transfers and has to balance its budget. Estimates differ as to how much. Trade and GDP would drop due to border bureaucracy, negative sentiment, uncertainty, or other reasons. Most likely short term pain will turn into long term mild disappointment. I think in economic terms independence is about as bad a decision as Brexit, although the UK got hit by Brexit and Coronavirus at the same time and Scotland might fare better.

And no, independence doesn’t cancel Brexit. It’s just a bad economic decision followed by another.

-2 bits: Scotland’s economy outperforms Ireland by 2030
-3 bits: Scotland negotiates a seamless transition from UK to EU
-4 bits: Scotland finds its joie de vivre and becomes as fun-loving as Ireland

I’ve been pessimistic throughout so let’s consider what might go really well after independence. I think it’s very unlikely, but possible, that independence will drag Scotland out of decades of self-loathing and victimhood, people will feel they’re masters of their own destiny, everyone will roll up their sleeves, confidence will rebound, and so on. That’s what independence supporters probably think will happen. I think it’s pretty unlikely, but who knows.

There’s more ways to succeed economically than socially. It’s a tall order but if Scotland plays its cards right it could negotiate a transition directly from the UK to the EU and from the Pound to the Euro. That would be quite the coup. Scotland does have tech and resources and exports, so if it chooses to be a hard-nosed businesslike place it can do pretty well. It’ll have to be neoliberal and kind of ruthless, exploit property and assets to the full, sell out here or there, but it’s possible. A number of people who are less employable, ironically in places like Glasgow and Dundee that are pro-independence may be left behind, but Scotland as a whole may prosper. People point to Denmark or Finland as models. These are relatively conservative country club places. Scotland can do this, at the cost of throwing away the “socialist” vision that now powers independence. Maybe that painful path to a better future is a white lie that the SNP is selling to the people.

Perhaps in the best possible world Scotland will lose its dour Presbyterian morality and become a much freer fun loving place like Ireland is today. That would make independence worth it. I don’t think it’s likely at all, but hey, you can hope.

Happy New Year

2020 has been a pretty good year for me and those around me. A couple of people got COVID and recovered, and some others were stuck on their own for months, but nobody died and no-one had serious health issues of any kind. We had more family time than I thought we could handle, and even managed some holidays. Quality of life went sharply up. For the first time in my working life I can walk to the bakery or cook a nice meal at midday. I started to appreciate the city and the neighbourhood that I live in. Our son moved to the UK and got into uni, remarkably at 17 for his exceptional skills, which is the path he wanted to follow. We both got our right to stay in the UK post Brexit secured. Having him in the house motivates me to take care of myself and live better. Overall nothing terrible happened, anxieties and risks have been closed, and life plans have moved forward.

I’m not particularly afraid of COVID. I’m afraid of giving it to other people and I’m ordinarily afraid of boring diseases like stroke/heart/cancer especially during lockdown. I’m a lot more afraid that the loss of freedoms we consented to: electronic transactions, travel restrictions, contact tracing, etc. will be very hard to reclaim. My job in tech was less affected than most, but I did get in a bit of a rut for lack of travel. Turns out a big part of my work was to meet and bring together other teams, and with online meetings although we can work it feels like we’re using up relationships we already got. I miss Japan. 

2020 was politically divisive but relatively benign. It’s the last year of Trump. He was unpleasant, but did less damage than any other president since Jimmy Carter. Trump killed a senior Iranian officer by drone in 2020, setting a bad precedent, but that was it in terms of major hostilities throughout his four year term. No wars, no countries of muslim people invaded or destroyed. Persistent attempts by the Republican party to bypass democracy are more concerning. Over the summer we saw a wave of riots in the US for better or worse causes. It’s good that in 2020 America discovers racism, but exporting BLM as a global brand was a mistake. In the big picture, America’s performative outrage is irrelevant. The darkest news of 2020 was the implementation of Hong Kong’s security law, the ongoing strangling of Venezuela, and the passing of David Graeber. Treatment of refugees in Greece, on the EU’s orders, was not great either.

This year has to be the year of peak woke nonsense. The so-called left, rather than offering any positive vision, has been pointing the finger at people and calling them sinners. It’s become normal and even applauded to get people fired or expelled from uni because of what they think, your social media posts will be scanned and used against you, you can only have the approved opinion expressed using the correct new words, and any resistance is guilt by association. Black people are to be celebrated, but only as victims, and if they don’t want to play that part they’re accomplices. Scotland is proposing a Soviet bill where you can be prosecuted for comments made in private. The irony of using these fascist methods is lost on the left because they’re good people fighting for good causes, and those they hope to silence are bad “intolerant” people. The effect will be a society where people tow the party line but don’t share what they actually think. What they think will shift for the worse, and at some point the masks will fall off and we’ll be in a much worse place. I hope this trend peaks and reverses, as enough people call bluff and society comes to its senses.

For 2021 I expect we’ll return to normal but with bumps. The vaccine will be rolled out over the next few months and we might have a “missing bullet holes” moment: Should we be giving it to older people who shelter or to young ones who spread the disease? But at some point everyone will get it and restrictions ought to lift. Will they? We may see governments try to keep surveillance, emergency powers, etc. citing some tragic “for the children” cause. This has to be resisted. In Scotland the government will harp on about another independence referendum. I think it’s a very bad idea and it’ll fail when life post Brexit continues as normal and people look at the costs of a split more soberly. At work I have a new role, which I wanted for some time. I’d like to see my colleagues, as well as travel but not at the pre-crisis level. If this year teaches us anything it should be to keep better work-life balance as well as be more sustainable. Possibly also not to bite off each other’s head too.

I know it’s expected to say how unbelievably terrible this year has been but, well, it hasn’t. It’s been an OK or even pretty good year for me and I just wanted to share this fact for perspective. Maybe I’m especially lucky, or just optimistic. I hope this year has been OK or pretty good for you too, and I wish you an even better 2021.

COVID-19 economic reflection

Some thoughts of the economic crisis we’re currently going through, the likely ways out, and the shape of the economy and society in the aftermath.

Consolidation

It’s a relatively safe prediction that the economy after COVID-19 will end up more consolidated and the balance will shift from SMEs to corporations. As a result of the shutdown lots of small firms and their supply networks will be wiped out, while large global brands expand in their space. That will raise inequality within economies, and between economies. For example middle-income countries with lots of SMEs will lose domestic firms and substitute imports from the same multinationals.

In part that may explain stock prices, where tech stocks are having a V-shaped recovery out of touch with the real economy. Amazon is now above its pre-crisis valuation. Inevitably, these firms will see a few bad quarters because the wider public, if not the middle class, will have less money to spend. But they’ll spend it online or on gadgets instead of at the pub. Global firms will be better placed than small firms or other investments, and as such they may see flat profits but higher Price/Earnings ratio.

Obsolescence

What’s less clear is whether the economy will recover to its pre-crisis state. Of course in the long run it will. But some sectors, notably oil and aviation, are seeing a sudden glut of resources where the operators have to pay to store their oil or maintain their grounded aircraft. With a slow recovery, and climate change round the corner, we may never see the current stock of aircraft, oil infrastructure, hotels, or cruise ships fully back in use. Companies like Airbus or BP will likely survive, but the more traditional products in their portfolio may be retired in favour of new technologies or greener offerings.

In theory, this is a perfect time to invest in green energy, as well as rethink the platform economy. The first phase of AirBnB or Deliveroo has been an inequality machine. But with lots of people out of work, less international travel, and probably less frivolous spending after the crisis, maybe the platform economy can find itself a democratizing role. Providing services to each other at a local level is not inherently exploitative. Perhaps as we look for a more local and more resilient way of life, both green investment and informal services could see an upsurge. Whether they will is another matter.

Locality

The crisis response to COVID-19 has been strikingly local, at the level of European countries, US states, or Chinese provinces. Roughly speaking people organized at the 10M to 100M population scale. Perhaps this tells us something about the natural scale of economic recovery also. After the crisis we may see less global trade but more domestic consumption and domestic tourism. Firms will obviously take advantage of national incentives. How nation-states pay for those incentives will be revealing.

People seem to have learnt a little, perhaps the minimum, from the Global Financial Crisis. This time round the stimulus was quick to come and relatively free of moral lecturing. It’s hard to blame a small business for failing when the government ordered it to close. But attitudes to dealing with the spike in public debt have not changed. The US and Japan are likely to load it on the central bank and deal with it painlessly. Europe is hampered by the Euro and likely headed for another round of austerity. The end result of austerity is the stronger financial capital buying up distressed assets of the periphery.

Reflection

Much is said about whether, once we’re free to go anywhere and sit down in coffee shops, people will revert to their old consumer lifestyles or, thanks to this forced lesson in stoicism, our preferences and consumption patterns will change. It may not be philosophy that drives the change, but certain things that were politely obscured are now laid bare. As economist Marianna Mazzucatto points out, if the “essential” workers keep us alive, how did the “non essential” ones manage to extract so much value, and is that going to change?

The most benign way to deal with the obvious collective redundancy of the middle class is to consider more flexible work-life options, a different balance of formal employment and community work, or a four day week. Europe may deal with lean times this way. In more sink-or-swim economies like the US we may see a wave of forced entrepreneurship, where people are let go from companies and, if they’re above becoming Uber drivers, they start their own micro-brands offering who knows what products and services.

So on one hand consolidation of capital into fewer, bigger corporations that absorb the markets of smaller firms. On the other, depreciation of legacy sectors and investment in green technology likely sooner than iit would otherwise happen. Widely varying debt politics, and different ways to absorb the semi- and unemployed, either through collectivist work sharing or by somewhat desperate and improvised self employment.

What did COVID-19 do for us?

I guess the media coverage of COVID-19 isn’t cheerful enough, so let’s look at all the good things that the pandemic is doing for us.

It’s an awesome wake-up call for global warming and the collective action we’ll be forced to take in a few years. Previously I thought we’re doomed, climate change is going to be as destructive and violent as it gets. Now I think maybe not. There’s enough signs of organized action, especially on the east side of the planet, that maybe we can get our act together and deal with disaster. Even Europe is getting its act together. America, well, we’ll get to that.

The virus shows clearly which governments are competent and which aren’t. In Asia, apart from initial denial in China, pretty good. Singapore and Hong Kong are impressive. Whether by authoritarianism or public consent their response is effective. Europe acted late but is shaping up. The UK, despite having the technical expertise is politically floundering. Europe’s response is all at the national level. The EU bureaucracy is structured in an inanely conservative way that prevents any meaningful action.

In America, to my astonishment, they have local government and it seems to be doing the right things. The federal government is spectacularly useless. Is that a surprise? Their job is to make war and to protect capitalism. Aircraft carriers and central banks don’t help here. America is ideologically opposed to caring for people as a whole, but locally there is support and governance. I hope people remember and appreciate which kinds of organization made a difference.

People are staying at home and the economy so far hasn’t collapsed. It will definitely gdown and large fractions of people will face hardship, but it’s holding up remarkably well. Partly this is goodwill. It’s understood that we’re dealing with an external shock and people aren’t accusing each other of being poor because they’re lazy. So far, a pretty good attitude. I’m positively surprised.

Some people haven’t adjusted or are already craving a return to normality. How will children do without school? – they say. We need lessons over the internet. Well, maybe, or we need to re-evaluate school. Do kids nowadays learn through textbooks? Do they need to spend their weekdays getting used to office life? There’s lots of adjusting and re-thinking to do. Some people are bad at grasping how something universal is going to affect them personally.

As we get used to working at home, we may gradually re-evaluate what jobs are valuable and need doing. Delivering food and fixing infrastructure, pretty important. Bureaucratic and marketing jobs, like mine, eh… Maybe because of need we’ll adjust to less paperwork or working fewer hours. Or for white collar jobs prioritise coders, designers, engineers, etc. to managers. Our economies are overweight with too many value extractors at the top. Maybe a destructive shock will rebalance them.

In all likelihood, the market economy will fail in some sectors and a wartime plan to provide resources will be needed. For example airlines are likely to fail and transport may have to be re-established. Healthcare in some places may need to be nationalized. I think for-profit services are a luxury for good times, and when a serious crisis comes they get replaced by a smaller, more efficient, planned system. After the crisis, that infrastructure creates space for the economy to prosper around it. We’ve seen that after WW2, and it was mainly cars and appliances then. This time it may be green investment.

Tourism and travel will be badly hit. Conferences are cancelled and frankly I don’t think they’ll be missed. I like travelling but I’d like it to be different after the crisis. Less hopping between cities for a weekend, more periods of living in a new place for weeks or months. More fractal, local networks. Entertainment too will be badly hit. I hope if anything the inability to go to concerts will make people appreciate artists and support them properly.

As I said, there’s a lot of adjustment to do. Coronavirus is a terrible thing, but the actions that we’re taking, or that most of the world is taking, are for the better. The spirit of cooperation is holding up, resilience is suddenly valued, greed is shown to be ineffective. People will have to re-evaluate what’s important in life and what is frivolous. I hope that we emerge from the crisis a little better as individual people, and a lot better as a human collective.

It’s now Sanders or Bloomberg

I think Democrats by now have to choose between Sanders and Bloomberg. There’s no time for the smaller names, no-one will vote for them, the rest of the lesser-known candidates should follow Buttigieg and wrap up their campaign.

Biden is the way to lose an election. The centrist candidate is boring and doesn’t stand for anything. Grey candidates lose to Trump.

People say that Elizabeth Warren is the effective politician that you vote for if you want socialist ideals implemented. I’m not so sure any more. Warren is right on most issues but some of her interventions are heavy-handed. She proposes a few % tax on wealth, another few % tax on stock trading, and measures against big banks. These interventions look small but for technical reasons they’re large and disruptive and they will be resisted. The proposals also look simplistic. I have more subtle ideas how to separate billionaires from their wealth and how to reorganize banks, and I’m just an armchair scholar. That’s frustrating because Warren is a woman and also young and energetic. It’s the candidate I’d like to win but I don’t think she can win with such an interventionist program.

Bernie is the well-meaning socialist humanist that America dearly needs. He has a good heart and that counts for a lot when you want to beat Trump. People may not vote for him because they’re stuck in a 1950s “commies are bad” level of political thought. So be it. Everyone else, and especially young people, will. If elected, Sanders will turn the dials of American society a couple of ticks back from the cruel and destructive extreme they’re currently at. That’ll be a good thing. His interventions are very mild. He might get more people under medicare or dampen the rental market in big cities. These policies may turn out more or less effective, but they’re hardly extreme.

Bloomberg looks like he might do to the Democrats what Trump did to the Republicans last time. Stay out of most of the debate and the scuffles, then come on the stage with his own money and media presence and sort of buy the nomination. He’s at some level competent and ethical. Sadly he’s not Bill Gates. If Bill ran I think America would vote for him in a heartbeat. But that’s the choice America has. Either pick the inspiring socialist, which I think is Sanders, or the decent billionaire who runs against Trump.

Politics recap January 2020

Julian Assange is in prison in the UK being tried for extradition to the US on espionage charges. Sweden has dropped its case. But you’re not going to defend Assange, are you, because you learned that “Assange is a rapist”. And who would defend one of them against the all-seeing and benevolent forces of the state? If you think this way, dare I suggest that you’ve been had.

Brexit is happening at the end of this month and nothing will change. No truck queues down south, no shortage of medicines, no mass exodus of business. If Boris Johnson had any sense he would at that point declare victory and extend or go slow with the transition period for as long as possible. It seems the Tories want to press ahead, and I can only assume it’s because some part of British business values deregulation more than the single market. Either way, Brexit is a slow-burn, unwise choice, inconvenient to people like me. It’s not and was never going to be a disaster.

Scottish independence is back in the news, but I don’t think it’s happening. As said Brexit will pass uneventfully and the opportunity to use it politically likewise. I don’t think a referendum would turn out very different than last time, given the uncertainty of exiting both the EU and the UK, having to re-enter the EU and adopting the Euro. I could be persuaded to vote for it but only for cynical immigration reasons. I’d vote for it with my heart if Scotland were to abolish the monarchy and become like Ireland with blue post boxes.

Trump, despite being a pig of a man, has turned out a pretty good president. Being an outsider he recognizes that the time of America offering “protection” around the world, in both senses, is over. Since the 50s the dogma was that spreading capitalism would benefit the US foremost as well as lifting all boats. Now that’s no longer the case and the US needs to adjust to being one of several developed powers, as well as get out of the protection business. For all the alarm in the press, Trump is making the post-superpower transition as peacefully as anyone could have hoped. War in Iran, which many in Washington are thirsty for, keeps failing to materialise. It’s hard to get full facts about Syria, but it’s possible Trump may have killed fewer people than any president since Carter and, although I don’t like him, utilitarian arguments count.

In all likelihood, Trump will get re-elected. Especially if Sanders and Warren fight each other while the press and the middle-class do all they can to nominate a centrist. I think US society is rapidly approaching the point of being beyond repair, and it’s because the so-called progressive elite refuses to check its privilege and accept socialist policies. Beyond repair means the role of the state disintegrates, beyond security, and the US becomes a libertarian -topia. What kind depends on your point of view.

Climate may have been saved in 2019, mainly thanks to Greta Thundberg. We should build the young woman a statue. For the first time there’s wide realization that something has to change, even in the US, and people are vaguely aware that might mean changing their personal habits. Eating less meat and driving less, for example. Maybe accepting the the Earth has seasons and not trying to negate them with air conditioning. Technological change is happening everywhere except the US, where they’re waiting for the prophet Elon Musk. Saving the climate means Bangladesh will be uninhabitable due to floods, and the Arabian peninsula due to heat, but hey we get to survive as a species.

I don’t know much about China, but I’m a more hopeful observer than most. I see them as a threat economically, because they don’t play by the rules and I don’t see them as an evil empire politically. Comparison with the Soviet Union is inept. The Chinese regime, as far as I can tell, prioritises material welfare above all else and that goal is the source of its authoritarianism. I wouldn’t like to live in China, but I think it’s much more benign than a regime based around a strongman or an ideology. The more Chinese society feels economically secure, the more freedom is likely to emerge.

Europe I think is poorly and is unlikely to get a reprieve until 2021 when Merkel, Europe’s most destructive leader since WW2, leaves office. West Europeans need to reflect on the relatively undramatic departure of Britain, discontent and inequality within the block, as well as repairing its relationship with Russia. If the Germans are willing to compromise, Europe could move forward to a federal structure with shared debt, banking, tax and welfare arrangements across the continent. But if the new chancellor continues to block these reforms it’ll be endless crisis management and containment as it is now.

As for me, I intend to get my stupendously named permit “Indefinite Leave to Remain” and figure out what hoops we need to jump through to let my son migrate to Scotland. I think in the long run that means citizenship, and if that could come somehow without a queen I’d have done it already.

UK election 2019 – why the left lost

The left was roundly defeated in Britain’s general election, the one that was supposed to settle the matter of Brexit. The first lesson is clear: Labour should have supported a soft Norway-style Brexit from the beginning. Having a vision for Brexit, and a better one than the Tories, would allow the left to gain the upper hand in the process and hopefully press a better outcome. Instead, a loud middle class refused to accept the result of the referendum and pursued various fantasies: an insulting second referendum, parliamentary obstruction, independent Scotland, and the like. Turns out, Brexit was the people’s mandate for whatever good or bad reasons. The middle class has been out of touch throughout the process and now finally lost.

As an aside, the reasons the middle class has been cheerleading for Europe are not particularly inspiring. Scotland sees the EU as an ally and a better master than England, and if events unfold in that direction Scotland may be disappointed. London is full of ambitious professionals for whom Europe is their oyster. These are selfish reasons that small-town England can’t identify with. If the story was that the EU is a bastion of democracy or inclusivity or the welfare state that would be something to believe in, but the EU has some time ago stopped being for these things. 

Second, the parties of the left should have formed alliances to win seats in the first past the post system. Elections are not opinion polls. They’re procedures to appoint candidates to positions. The right understands this, but on the left we have to thank the LibDems and the Greens for wasting people’s votes. The LibDems actively undermined Labour with their “anyone but Corbyn” campaign, all to facilitate a Tory win. I think the Greens are well-meaning idealists, but also damaging. If you add up the Labour, LibDem, Green, and SNP votes they’d be a majority. I’d like to check seat-by-seat what difference vote splitting made, but remarkably the UK doesn’t publish detailed election data until months later.

The narrative that Labour should have adopted an unambiguous remain stance doesn’t match the facts. Labour lost seats in traditional labour strongholds who voted Leave, while the LibDems and outspoken Remain politicians outside of Scotland did poorly. We can assume that among Labour’s 10 million vote share was a substantial fraction who wanted Leave but just couldn’t bring themselves to vote Tory. If Labour had taken the advice of Guardian columnists to turn Leave into Remain it would have been obliterated. In short Britain voted wrong today but not in the sense that some of us don’t like the outcome. Those who voted Conservative did it right by their choice. The left voted wrong because it doesn’t know how to use the electoral system to achieve collective decisions.

Third, the shift to the left was necessary but should have been done a different way. In the current media climate of sharp messages and limited attention the left ought to focus on 1-2 rallying policies and a unifying vision. Towards the end of the campaign Labour got it right with the message “save our NHS”, but in the run-up it seemed that they were promising more free stuff every week. That comes across as fake or clientelistic, not least in deprived areas where people voted Brexit out of conviction. A left alliance should have run with a clearer platform like “public health, public education, and no time for racism or prejudice of any sort” like the SNP’s successful messaging in Scotland.

The threat of economic intervention spooked people too. It’s necessary to make housing affordable, health and education once again free, and transport a public good. But how to turn these principles into policies in the era of hyper-capitalism? It’s a longer discussion but I think the left needs to focus less on redistribution or protecting things of the past, more on preventing rises of inequality, more investing in the long-term future. Instead of threatening landlords, tax touristification and AirBnB. Nationalizing rail isn’t a terrible idea but it may be more relevant today to electrify road transport and make it free. Scrap universal credit and tuition fees so people don’t start in debt. Offer education and quality of life, instead of undercut wages, as an attraction to businesses.

The last lesson is that the politics of outrage is a losing strategy. The trouble with declaring that things like Brexit or Trump are “unacceptable” is that they get accepted and then you have no leg to stand on. Time and again the left was sure that voters couldn’t possibly support a clown or a bigot, but it didn’t seem to stop them. The right understands, even celebrates, that real people have flaws and accepts them as leaders. Meanwhile the left is busy calling each other out for being behind on LGBT rights, or whatever is the identity issue of the day. The sad fact is elites don’t care. They care about the larger gender, race, and class divisions which affect the economic pie, and they oppress minorities as a form of hostage taking to exhaust and divide us. Don’t play that game. Fight for equal pay and minority rights will automatically follow.

The left will continue to lose elections until it faces up to electoral results it doesn’t like and offers a better alternative. As for the leadership of Jeremy Corbyn, I think he did as well as one could expect and that wasn’t good enough. Corbyn was head and shoulders above others in character and ethos, despite the slander against him, but he didn’t command attention or convince the electorate. I’m guessing the magic that Corbyn didn’t have is the backing of his party. Voters sensed he wasn’t in command of his organization and went for the strongman elsewhere. Too bad. We did not deserve Jeremy Corbyn I guess.

Also, turnout was unremarkable. Slightly lower than the last election. So much for this being a last chance to stop Brexit, avert catastrophe, etc. Clearly despite what you and I might think lots of people simply didn’t care. That must be a good thing, because by definition non-voters are easy to please. If you don’t vote it means you’re content with either outcome.

 

Dear America

Dear America,

Trump is the least of your problems. Sure, he’s a playground bully, petty mafia, or a dirty old man. Take your pick. But he’s not the cause of your troubles. Nor is it the Russians.

Trump didn’t bring fascism to America. That honour belongs to George W. Bush, when you had vindictive war, torture, and indefinite detention. But you were gripped in atavistic fear of 911 so you didn’t notice. The heroes who tried to keep you honest with yourselves in this period are still fugitives in fear of their lives.

You got Trump because you allowed the Republican party to rig districts and buy elections. A few intellectuals made a passionate case to stop this but were ignored. You got Trump because the Democrats, supposedly the good guys, refused to put forward a people’s candidate. Voters looked at the options for who would screw them and went for the more visceral. You’re doing this again.

Your economy doesn’t work. Things are expensive, basics are unaffordable. The middle class lives a life of 24/7 self marketing, fearful or taking vacations and falling behind, or spending too long in a job. Competition doesn’t work. The innovative tech startups of thirty years ago are now monopolies, suppressing or absorbing everyone else. Like half a century ago, you idolize people who go to space but your day to day is an assault of brands and consumerism.

You have a healthcare system that doesn’t work. Your schools don’t work. Transport  doesn’t work, and no Uber is not a reasonable way to provide it. Work doesn’t work, for most people. The gig economy only makes sense because of rampant class divisions. You have no welfare system, and use the army to absorb otherwise bereft young people. Like the Romans.

As a nation “you’re not racist but…” Nobody is foolish enough to claim superiority for whites, but you treat African-Americans as non people. Police is an occupying force. Because you have so many non-people people you can’t conceive of any kind of sharing or collective solutions to problems. Not with them! For fear of the other you curse yourselves to live without public goods.

People pack guns and shoot children in schools, or just each other, and this is somehow normal. The price to pay, apparently, for freedom. Freedom from some imagined socialism or uprising that will never come. Or some supposed existential threat. The existential threat to life on Earth is you and your survivalism. You live in festering, unjustified fear and think yourselves ready to start a revolution, which you don’t do.

Anyway, see you soon!

 

UK election 2019

The election is under way and the UK press is moving earth and water to make sure Labour doesn’t win. That’s predictable. Outside of the Guardian, the press is owned by about three billionaires. Their agenda is 1. That there’s a real “risk” of Labour winning, and 2. That a Labour government would be bad for wealthy interests. I think this level of reaction validates Labour’s policies.

We have a focus on Corbyn, with the ridiculous accusation he’s an anti-Semite. This is either character slander targeted so it’s taboo to defend against; or it’s a statement that Corbyn, unlike previous US/UK leadership, is opposed to Israel’s ethnic cleansing actions in the Middle East. I think it’s the correct moral stance to oppose these actions, and if that makes you an anti-Semite then words have no meaning. There’s no evidence that Corbyn is racist in any way.

Then you have the tactic of vagueness. Johnson is portrayed as strong, clear, and direct. The headlines paint Corbyn as vague, faltering, or lacking a certain something that it takes to be Prime Minister. Notice the disparity of information here. Our side clear, other side bad for vague reasons that we’re not going to talk about. It’s the same tactic whereby the press erased London Mayor Ken Livingstone and Prime Minister Gordon Brown, two very capable leaders who dealt with difficult issues (like the 2008 financial crisis) in an exemplary way. But according to the press they were bad. Why? They were bad, dunno, they just didn’t have it. Not credible options. Look elsewhere.

The attack on people suggests that the policies are correct. The Tories are peddling Brexit as an issue of principle, because otherwise who would vote for less public services and privatising the NHS? Labour is calling for socialist reforms in the spirit of Atlee’s post-war government, which pretty much everyone in Britain views positively. Labour’s position is we’ve swung so far to the right that bringing back some of that socialist agenda is what we need. I agree. Even if Labour achieve 10% of their programme, which is about realistic, I think it’ll be a good thing. I say this as a privileged person who works in tech, never needs public services, and buys posh food from the farmer’s market.

You could quibble with the implementation of Labour’s policies. For example there’s an idea to force private landlords to accept bids by the tenants to buy the flat (disclosure: I’m a tenant, I considered making a bid already and decided against it). There’s a reasonable argument that such policies might take flats off the rental market or have other unintended consequences. Fair, but places like Germany manage to put a damper on the property market and their society is the better for it. The real threat to affordable housing is price speculation and AirBnB, which no-one seems to complain about.

Then there’s Brexit. I live in Scotland, and the answer to everything is independence. Never mind that the cause of Brexit, the condition that made is possible, is by and large social deprivation in England. The English are overcome by a Thatcherite psychosis, so the story goes, and it’s all “Me, me, me, my house, my career, my aspirations of upward mobility”. Are people thinking of London and the south coastal towns inhabited by stockbrokers? Because I don’t think Yorkshire is like that. If the problem is an angry and left-behind England surely the right thing is to fix it, as Labour intends to do, not to create private solutions and more borders. 

In terms of predictions, I think a Labour-SNP government is likely. By likely I mean in the 50% rather than the 25% bracket, I can’t make precise predictions. Whether it happens is largely down to the intentions of the so-called liberal left. If this group wants a return to social democracy then we’ll have one, and if liberals focus on identity issues or hair splitting EU stances then we won’t. I worry the liberal class is too in love with personal vanity, iPhones, Uber, Deliveroo, and other solipsistic utopias to bring out any social conscience. Yes, I think devices and consumerism matter. They isolate people. Steve Jobs was a villain. I should be the last person to be telling you this.

If the Tories win and Brexit concludes, first I think it’ll be mildly bad – about as bad as Cameron’s austerity. Then we’ll have more problems. I think Scottish independence is also likely but not a given, again in the 50% bracket. Independent Scotland applying to the EU with a border in Berwick I think will be bad for Scotland, and very bad for England. It’ll make everyone’s prospects smaller. Also Scotland won’t remain a rebellious province with a one-party socialist agenda. A conservative faction will form and soon we’ll have a microcosm of the same class divisions that we see in the south.

This amount of political strife and isolation is emotionally exhausting. Back in the day we had socially liberal ideas and our incomes were very far from established. It was easy to find issues to be on the right side of, LGBT for instance. I’m sorry to say these issues are free. They have no cost. Gender, race, and class equality has costs, achieving it is a real inconvenience for the elite. Our present politics tends to ignore large divisions and focus on smaller groups, whether to take the virtuous side or to scapegoat. I think this shift of attention from the broad to the narrow is a shift to the right. Even if you’re on the good side, like a company supporting Pride for genuine reasons, identity politics is too convenient for the establishment.

At least I feel that politics is emotionally isolating and exhausting. I’m too old to calibrate my opinions for the approval of anyone else, not that I ever did. I take in new information and my opinions change, of course, but now I feel I can express them like an old curmudgeonly person. “Curmudgeonly…” I like that word.

More than a % tax

There’s a video going around where Bill Gates refuses to say he’ll vote for Warren over Trump. The implication is that billionaires are greedy. I think that’s too simple a take.

 

If Warren says to Gates: You own $100 Billion in assets so pay $50 Billion in cash, that’s a very destructive way to deal with inequality.

 

If she says: You spent $50 million on a private jet so pay $100 million tax (a 67% rate) that’s much more reasonable.

 

If she makes a plan where listed companies as they grow are forced to deposit a portion of their shares in a public wealth fund, say 40%, that’s also worth discussing.

 

It’s urgent to climb own from the insane levels of inequality in modern capitalism, but to do so requires better tools than scaling up a % tax. I think separating the power to consume (CEO pay, personal wealth) from the power to direct firms and investment is a key component. If you do this right, the better companies and billionaires will be on your side.

 

The Left needs to put out articulate policies, which recently they do, and the media has to cover them. Right now there’s media bias casting the Left’s economic plans as vague or unrealistic. I wonder if Gates will visit Warren so she can personally explain her plan.

Nine bad ways of thinking

Logic is the screwdriver of thought. It’s good for solving precise problems, of which there’s more lately, but human thinking through the centuries has developed a much wider set of tools.

Accordingly, here’s some common ways to think poorly. These are not logical fallacies, but broader ways of getting things wrong.

False shortcuts
A shortcut is when you have a large problem to solve, like evaluate many possibilities or consider many factors, and as you try to abstract it in your head you think “X has to have that relationship to Y so the answer can’t be over there”. For example you think two ways are equivalent, or one choice is no better than the other, so there’s no point exploring some part of the space. Well, when you get that abstraction wrong it’s a false shortcut and you make mistakes. Happens to me all the time.

Category arguments
Arguing that X is a Y, or questioning whether X is a real Y, is almost never a helpful philosophical method. There are well meaning situations when we’re trying to be inclusive, but more often than not it’s an attempt to exclude someone for not being a “real” member of a group. It also carries the suspicion of frame shifting. What is it about Y (the frame) that you want to pin on X (the individual) and is that helpful? Could you deal with the question at hand universally, or individually?

Baseline calibration
Making choices is hard. We’re used to ranking alternatives among each other, but do we consider how much difference the choice makes overall? When we scale the options with baseline importance, the difference may be tiny. Like this thing is better than that thing, but how much difference is a thing going to make to my life or my happiness? People make this mistake with money and buy things that are too cheap or too expensive. It’s also in business, politics, and everywhere.

Learnt constraints
A corollary to the false shortcut is when you have a real constraint, such as X isn’t practical, or person Y would never have it, and that used to be true but the constraint isn’t there any more; because you changed, the times changed, or something else. A learnt constraint is the miserable condition when you’ve excluded some possibilities without noticing the constraint isn’t actually there. It holds back people, and it’s also why innovation is difficult.

Taking people at face value
To take people at face value is to process what they say and not why they say it. For example “how is Claire?” means I want information about Claire but also signals that I care about her, or I may be trying to show that I’m a caring person, or feeling unease about something that happened with Claire in the past. Here it’s obvious that there’s a social subtext, but all speech carries subtext all the time. The proper way to parse statement S is to think “Person X is telling me S, and what may be going on in X’s brain to say that?”. Men are especially clumsy with subtext and women better at detecting it. I hope AI is female.

Apparently you’re supposed to take people at face value to avoid the ad hominem attack. That’s nonsense. Ad hominem is to say the witness is a slut. Face value is to ignore that the witness has material interests. An example where the question is irrelevant is to say the lawyer is defending the accused because they’re the lawyer. Of course in trusted situations we can take people at face value, but not all the time.

Toxic topics
One of the worst way to have moral arguments is to bring up examples that make people altogether uncomfortable or unwilling to defend a side. Think of the children, the Nazis, the latest atrocity. That’s obviously prone to manipulation. It also produces a toxic debate between thick-skinned people as those with higher levels of empathy, and often the victims, are driven out. To deal with these issues create a safe space, take good time, focus on patterns rather than specifics, and frequently affirm shared principles.

Wanting to be right
A great way to be wrong is to care about being right, in other words to be emotionally invested in the ideas you already have. You’re likely to think deeply to yourself, avoid sharing or exposing your true beliefs, and seek confirming evidence and like-minded people. In fact being wrong has almost the same symptoms as being intelligent, and there’s no shortage of smart but misguided people. The mistake is valuing thought over experiment.

The right way to be right is to test your ideas by convincing others, applying in practice, or comparing expectations with facts. Drop the ideas that don’t work, that’s the hard part. Then take in some new ideas, combine, and repeat. Intelligence is an evolutionary process, not a mathematical one. The price of being right is you have to face being wrong often, and you have no choice over what you’re right about.

Classical thinking
A less common error is to try to grasp the objective truth about some matter that’s inaccessible. Is this person guilty or good? What transpired behind closed doors? What’s in X’s mind? Well, you don’t know. It’s like quantum mechanics. You can’t probe the truth and all you can do is maintain your knowledge in a superposition of states consistent with the evidence. Person X could be trustworthy or not. The error is not to get a wrong outcome, it’s to think classically that they are one way. Western fiction is classical and Asian cultures understand superposition, it seems.

The unitary intelligence
People don’t interact with the world and with others rationally. We interact, first, emotionally: Do I like this person, these ideas, this situation? When we perceive a new thing we ask all the ideas in our head what they think of it. If our ideas mostly approve, we admit the new information or new argument. Otherwise we exclude it. If our existing ideas rebel, we exclude it violently. Wanting to value facts, question assumptions, or entertain something new are also ideas we might have. They play a big part in what we admit.

We’re not a unitary intelligence, we’re a forum of ideas. The reason your arguments with religious people don’t work is you present ideas that they (their other ideas) don’t like and they don’t carry the ideas of openness or objectivity as strongly as you do. Or they carry only openness and get seduced by quack theories. Once you see people as a forum of ideas it affects discourse and also ethics. Do you write off people or try to get their better ideas to prevail?

 

European conceptions

“The EU has brought peace to Europe”

The theory here is that rival Capitalism causes war, and that’s true but no longer relevant. Moral revulsion and nuclear weapons made a repeat of WW2 unpalatable, while rapidly advancing technology and the politics of the Cold War aligned all of Capitalism into one block. It’s more accurate to say that the EU was an adaptation to peace and technology than that it was a political nudge to stop the French and Germans from fighting. Yes the EU is an architecture for peace, but it’s more a consequence than a cause.

Also as an aside, the EUs anti-war credentials are disappointing. We’ve had war in Europe, in Yugoslavia and Ukraine, and the EUs misguided diplomacy did more to hasten these than to stop them. The EU did nothing to discourage American interventions that destroyed Iraq, Libya, and Syria and only dealt with the migration “problem” as if it was a natural disaster. Now that Capitalism is splitting into rival camps, a result of failing to accept Russia and China as equals, the EU is once again introspective and silent.

“The EU creates shared prosperity”

In many ways an open, peaceful, high technology environment can’t fail to do that, so we have to judge how the EU’s achieves better or worse outcomes than plain economics. Up until the 90s, Europe’s strong welfare states and “four freedoms” scored pretty well. It looked like the EU was set to emulate the Nordic ideal at a larger scale.

But since Maastricht the EU went neoliberal and focused on competition, inside societies and between regions. The Eurozone was set up as a structure that generates winners and losers. It’s a zone with free trade, a fixed gold-like currency, and no shared taxation or welfare systems. This benefits export economies that accumulate all the money, and punishes weker deficit regions that end up gradually stripped of their assets.

There are secondary effects too. A shared currency allows the winners to accumulate bigger surpluses and the losers bigger deficits than they could otherwise. The Euro is sort of guaranteed, but not entirely, leaving just enough risk to cause capital flight from poor to rich areas, and there’s a brain drain in the same direction. Although the rules don’t say “money shall flow from the periphery to the industrial core” the rules ensure that this happens.

“The EU safeguards democracy”

In the early days the EU was a strong modernizing force, especially for peripheral states like Ireland, Spain, or Greece that were struggling to reform their democratic institutions, civil, and family law. There’s a strong sense among their populations of never going back.

However look at the EU now: France has a severe exclusion problem and every few years all the other parties have to ally to prevent a fascist becoming president. Hungary and Poland have nationalist authoritarian leaders. Austria has a far right leader every other term. Italy has far right populist splinter groups. Greece had to choose between the neo-nazis and the idealistic far left, and thankfully we chose well. In Germany and Sweden the elites claim to be in control but hatred simmers underneath. The Brexit faction in the UK is a mere nuisance by comparison.

Nationalism and fascism aren’t like an infectious disease of bad ideology that you cure with an antibiotic of truth. They’re more like an unhealthy diet of inequality, austerity, and lack of prospects subdued by the liquor of a tabloid press. As long as the EU follows a neoliberal path of increasing inequality and “managing” dissent the forces of hatred will persist.

I’m fed up of hearing the liberal middle class, people like me, cry that politics is turning to the right, that the working class is seduced by hateful demagogues, or that people dared to vote Brexit, while that same middle class can’t stomach the left of Corbyn, Podemos, or Varoufakis (or Sanders, Warren, Ocasio-Cortez) claiming that they’re unelectable or too dangerous or indeed “populists” themselves. Well the writing’s on the wall. The longer the middle class clings to a vision of privileged centrism that collapsed in 2008, the more we’ll be handing victories to the merchants of chaos.

GDPR

The GDPR is now the law across Europe. I don’t like it. I think it’s seriously misguided.

It gives me rights and freedoms that I don’t want or care about. Viscerally as a human I’m not concerned what data others have about me. I don’t presume to know or change it, any more than I could reach into their minds and change their thoughts. If some evil magician gave me that power, I would recoil in horror.

I’m now uselessly informed of every way businesses use data. I can’t read a privacy statement any more. Can you? I can withdraw consent, but the other side can withdraw the service or whatever is their side of the deal. The law doesn’t give me anonymity, or discretion, consumer rights, or anything that I care about.

CCTV is everywhere. The phone company tracks me and my calls are logged. My provider knows where I go on the internet. The law does nothing whatsoever to stop state surveillance. It’s privacy theater.

Abusing the law will be fun. Every time I buy something firms ask for my details. I can immediately serve them a notice to erase the data or face millions in fines. I’m sure it’ll be great for European businesses if everyone does that.

Global firms may decide it’s not worth the risk and cut their services from us. Suddenly I face discrimination because of my citizenship, and there’s nothing I can do about it. Good job!

It’s massive jurisdictional overreach and hugely intrusive to enforce. So is copyright and other “worthy” censorship laws, but we need fewer of these not more.

Terrible legislation. Misguided, and I think miss-sold. The GDPR is last century politics, fighting the STASI, or big bad Google whom citizens don’t want fought on their behalf.

Thoughts for Uncle Sam

Hillary is on the Ballot against Trump. Regardless of who wins, that’s already terrible. The two-party system became a one-party system. There is no choice, no democracy.

Everyone should vote for Hillary, even Republicans. Perhaps Republicans even more so. She’s qualified, she’s strong, she’d be the first woman president.

She’s also hawkish and extremely pro-establishment. That’s probably how the first woman president gets there. This is quite sad. We don’t want the glass ceiling to breed another Angela Merkel or Margaret Thatcher. Can we have Elizabeth Warren instead?

Hillary is also married to Bill. She really is very qualified, but are two of the best equipped people to run the country married to each other? How likely is that? How democratic? About as likely and democratic as the Bush father and son team. We have that in Britain, we call it a royal family.

The good candidate was obviously Sanders and the Democratic party buried him. Probably because he had actual New Deal policies. The interesting election would have been Sanders as an idealist Democrat, Clinton or someone like her as a status-quo Republican. We’ve lost that level of sanity.

Trump is a racist clown. At first when he ran I thought he’d be merely a bad Republican, even more incompetent than Ronald Reagan. Since then he went out of his way to insult everyone and paint himself as a racist, semi-facist, unstable guy totally unfit for the role. His behaviour pretty much compels that no-one vote for him. OK, so don’t vote for him!

I wonder if Trump and the Republican party really are tone-deaf dimwits, or if Trump is a calculated bet to force a one-party system. He goes out of his way to test limits, normalise thuggery, and question freedoms so I think the latter. Trump is not playing to win, he’s bringing about one-party rule, successfully.

What is saddest about Trump is not when he says something outlandishly offensive but when he says something sensible. He says a few sensible things, like let’s not attack Russia. Great idea! Only Trump and Jeffery Sachs (an economist, and adviser to Russia during the transition out of communism) dare say this in public. But because it’s Trump, these points which would make a sensible opposition are tainted and buried.

People say that Trump is how fascism comes to America. Not quite so. It’s how crass hatred and bigotry comes to America. Fascism already came to America with 9/11 and George Bush the son. We already have mass surveillance, extra-judicial indefinite detention, and torture. Snowden and Assange are still exiles. Manning is still in solitary confinement somewhere. Flawed heroes? Loony rebels? How we would think of these people if they were Soviet dissidents.

Fascism and hatred are not the same thing, although they often go together. Fascism is the doctrine of the all knowing, all powerful state that demands full submission from its subjects. Intolerance comes with fascism as part of it’s demand for absolute loyalty. Racism and thuggery are second-rate demons that go along for the ride.

Could Trump win? I don’t know. Unlikely, but a realistic chance. I’d give him about a 25% chance to win. Why so high? Don’t underestimate to what extent the US is about supremacy of white Anglo-Saxon men. In its better moments the US tries to be diverse or inclusive, but you have only to look at black America or the Middle East to see how much it’s still about white supremacy.

Supremacy or even existential survivalism. In the 60s this group would rather blow up all life on Earth than accept an inconvenient political system for a generation or two. Pause to think about that, and then ask can we trust Trump with the nukes? In theory the president is allowed to do wth the nukes as they see fit. I hope that’s not actually so, that sane officers in the US and Russia get to stop the apocalypse.

So Trump may start WW3 by mistake. Clinton is on track to start a war with Russia deliberately. Obviously between the two Clinton with her slow, choking destruction of the Middle East and controlled escalation of hostilities with Russia is the better choice. I mean obviously! Who would want to go into such misadventures carelessly… But really? This is the choice we get?

What do I care about the US election. We all live in the Anglosphere to some extent, I feel if you’re part of the culture you get an opinion. But more materially as Europeans we’ll pay a large fraction of the cost of what the US does. We’d rather not go to war with Russia, they’re people like us. Also last summer hundreds of thousands of refugees passed through our town escaping the destruction of Syria. They’re people like us too.

When I accuse Clinton of being hawkish, it’s not her. The US as a system is on a war path, courting a war with Russia as well as stepping up destruction of the Middle east. Japan is belligerent on the US side. Russia has been re-arming for a decade, and China is asserting itself too. Some form of war is ahead. Why? Probably a shift from unipolar to multipolar power balance, with the US resisting to give up it’s exceptional role. Also, a war would reset financial markets and allow a new cycle of destruction and growth to begin.

If Trump wins, and doesn’t blow us up, he’ll be very unpleasant and otherwise he’ll be like Reagan. A foolish king, while some neocon think-tank actually runs the show. After the shift to the intolerant right becomes norm, they may even paint his eulogy as a great president.

Meanwhile if Hillary wins we’ll have a one-party centre-right, meaning for the rich, system but women, gay people, and non-pale rich people will be allowed in. Syria and the middle east will continue to be destroyed. We’ll have the long-planned low-intensity war with Russia. We’ll have our stock market crash and rebound. I’d rather have Hillary lead us into a dark storm than Trump, no question, but into a dark storm we go.

Please go out today and vote for her…

The two sensible choices

There are two sensible and realistic choices for solving the Euro crisis. The sensible and realistic choices are:

• Surplus areas like Germany give deficit areas like Greece free money, indefinitely, or,
• Weak economies like Greece and Spain leave the Eurozone.

These really are the sensible and realistic choices. You need one of these if you want roughly equal purchasing power across the Eurozone. Otherwise, money will flow from unproductive deficit areas to productive surplus areas, people in surplus countries will get steadily richer, people in deficit countries will get continually poorer, and eventually this will come to a head by revolt or other radical means.

Free money recycles this flow, exchange rates stop it. Economically the first is better because more flow of goods and services and money turns the economy forward and makes everyone consume more in aggregate. The latter choice aims for fairness, sacrificing total volume of trade and industry in the process.

Right now we’re still discussing the free money idea. Free money could be given as tax-and-transfer grants like most states do internally, as endless monetary expansion like the US, or by recurrent debt default and restructuring. The only advantage of the third option is it makes a policy look like an accident.

If free money won’t fly, leaving the Eurozone is the choice. Greece should have left the Eurozone… any time from 2001 till tonight would be good. Cynics would say stay until 2011 while the free money vision of Europe looked ascendant, but certainly Greece should have dropped after that. Greece should leave now.

Dropping out of the currency union has only advantages for the weaker economy. The disadvantages for the stronger economy are that it stops the flow of funds from the poor to the rich and removes demand for their exports. Germany selfishly wants the Euro. Greeks are stupidly attached to it because they equate the Euro with the EU and three decades of progress.

There are also a couple of totally fantastical choices that people might believe would fix the Eurozone, but they won’t work.

• Economies like Germany and Greece become similarly productive any time soon.
• Regions fix trade imbalances through fiscal discipline and austerity.

These are myths. It would be great if Greece was a bit more prosperous like Germany and that would take a venture investment ethos, congenial labour relations, an orientation to global markets, nourishing a boutique economy, branding, IP rights, stability and democracy. Well, at least Greece has democracy.

Different economies may become more alike, but they won’t become the same. The Mississippi delta is less productive than Silicon Valley and that’s why the meagre social policies of the US transfer funds indefinitely from rich Californians to poor Louisianan’s. Convergence doesn’t remove the need for transfers, it makes them smaller.

As for austerity, austerity is the null policy. Austerity means to just accept the dynamic of unproductive regions being steadily poorer and productive regions being steadily richer without asking for free money to mitigate it. And fiscal discipline means don’t try the free money by monetary expansion or default routes.

Until 2011 it looked like Europe was going to work like a superstate using free money transfers. This would have been better for all, including Germans. This idea now looks dead. Weak economies should ditch the Eurozone, now.

What Grexit looks like

Now that Greece voted No in the referendum it’s likely the institutions will seek a quick compromise to avoid serious damage to themselves and the Euro. In that case we’re looking at a more reasonable bankruptcy negotiation between Greece and the creditors, within the Euro. There will be capital controls for a while, like Cyprus, but eventually they’d be lifted.

The alternative is the Grexit scenario. However Grexit doesn’t mean that Euro deposits get redenominated to drachmas overnight. There’s no legal basis to do that. Euro deposits are obligations of Greek banks to individual depositors. They’re supposed to be guaranteed by the ECB, except last week the ECB decided to stop honoring that obligation. That decision will bite them, but it’s another matter.

Anyway Euro deposits are not the business of the Greek state or the bank of Greece. They could not redenominate Euros to drachmas, except by seizure. Also, there’s no incentive to do so. When the ECB withdraws its guarantee, Euros in Greece are precious hard currency like gold coins. Whatever Euros Greeks have, they’ll want to keep. Why would you convert perfectly good Euros to less valuable drachmas?

So on Monday, after a no vote, we have a scenario where Greek banks have Euro liabilities (deposits) and outstanding Euro loans, and they’re not guaranteed. There’s no lender of last resort for Euros in Greece. Banks would have to be super-prudential about handling Euros in this scenario, with deposits equal to reserves or close. Any MFI creation of Euros through loans would be extremely risky.

Of course banks are much more exposed than this. Soon, because of bad loans or the ongoing bank run, Greek banks go insolvent in Euros. At that point, the Bank of Greece steps in and guarantees deposits, but in Drachmas. And that’s how the conversion happens.

There’s a haircut on deposits until the Euro accounts of banks drop to the super-prudential level they’d need to be to operate safely. That means deposits equal reserves plus really safe loans. Greek banks continue to operate Euro accounts in this way thereafter, to facilitate transactions in tourism, import/export, etc. Euro loans will be hard to make and they’d only be made to businesses with good short-term collateral such as outstanding invoices. Not mortgages. Euro will effectively stay in Greece as a business currency.

The remainder (the amount that was haircut) gets converted to drachmas. So if you had €1000 in the bank and after haircut you’re left with €600, you also get the equivalent of €400 in drachmas, courtesy of the Bank of Greece. People can’t really complain about this change, because it’s the big bad ECB that haircut your Euros and the Greek state (Bank of Greece) saved you by giving you drachmas in compensation.

Thereafter the two currencies exist in parallel. Banks operate both types of accounts. Euros are not guaranteed, hence super-prudential: hard to get Euro loans, no Euro credit cards. The Banks of Greece acts as lender of last resort for drachmas, like a normal central bank. Drachmas operate with all banking services immediately and eventually notes and coins are introduced. Businesses that deal with tourism or import/export will surely maintain both Euro and drachma accounts. Everyone will have to declare their Euro and their drachma income separately and pay taxes in each.

Ordinary people like pensioners and dentists will either run out of Euros eventually, or they’ll use them for savings (bad idea, not guaranteed), or they’ll accept some offer to close their Euro account and convert to drachma. Pensions, salaries, house purchases, utility bills, and other big domestic prices will be negotiated in drachmas. Shops will post two prices, at least for a few months.

Eventually anything that’s related to tourism or imports, like electronics, will post both prices. Everyday domestic trade like street markets for food, plumbers, English lessons, hairdressers etc. will transact pretty much only in Drachmas. The Drachma has to be the official currency and there’s enough need for money for it to be accepted. The Euro just has to be legal to circulate, it doesn’t need any encouragement.

And then life will be good!

Having your own currency does three things: It makes imports expensive relative to domestic goods; it lets you pursue monetary policy; and it lets you devalue to make your exports price-competitive. The first two are crucial for Greece. The third is moot.

Greece is in a mess with external Euro debt because individuals prefer to buy imports than to pay taxes and so Euros leave the country. After the switch, businesses that earn Euros will have Euros to spend and they’ll have to be responsible because Euro loans will be super hard to get. Everyone else will face a Euro/Drachma exchange rate when buying imported goods. It’ll make iPhones expensive if you’re not directly earning Euros, and that’s really the worst part of the whole transition to drachmas thing.

The macro effect is Greeks will be buying more basics such as food, housing, and services which are predominantly domestic. They’ll be buying fewer discretionaries such as cars or electronics which are imports. Some essentials such as oil, clothing, and medicines require imports but currently those imports are cheap and there’s some production capacity in Greece for these sectors. That’s a very fortunate configuration for Greece’s balance of trade.

More importantly, the Bank of Greece will finally be able to run monetary policy in a way that fits Greece and not the gold standard delusions of Germany. Obviously it’ll be an expansionary Keynesian policy and the drachma will drop, but not alarmingly. Greece’s economy isn’t a basket case because of inflationary tendencies, By now it’s in a hard currency straitjacket.

Greece has massive unemployment, it’s demand-side limited, and there’s a huge amount of informal debt because of lack of liquidity. The plumber owes the teacher, the teacher owes the dentist, etc. and no-one has any money. As soon as money of any kind flows into the economy people will start paying their bills and the economy will pick up be amenable to taxation. Even if the Greek state makes up a few percent of fiscal spending with monetary easing that’s unlikely to yield so much drachma inflation to be a problem.

The third aspect of having a weak floating currency is that Greece could devalue it, deliberately or by letting it slide, to make its exports more attractive. If only Greece had exports, that would be a great idea. Greece makes its Euros from tourism and in the Grexit scenario that income would be the same or slightly less. Tourism is price sensitive but it’s not that scalable. If you have capacity for a million visitors you can’t bring in two million by being slightly cheaper the way you can scale up industrial production.

Greece’s other exports are oil product (basically running a refinery, it has no wells) and things like ore and agricultural goods. Again, what is Greece going to do? Grow twice as many tomatoes? Greece’s competitiveness problem is not having industrial, not that they’re expensive. The idea of being more competitive by devaluing the currency is beside the point for Greece. Greece’s long term competitiveness needs to come from things like boutique exports and tech startups, and there’s nothing about Grexit that works against these. Sweden is not in the Euro and full of tech startups.

Overall the supposedly disastrous scenario of Greece leaving the Euro won’t be disastrous. For Greece. It may be disastrous for the Euro, or for the careers of some politicians and mainstream economists because Greece will be doing spectacularly better almost immediately and various parties will begin to question what benefits the Euro really delivers.

Γιατί ψηφίζω όχι

Μετά απο πολλή σκέψη θα ήθελα να γράψω τα παρακάτω. Εν συντομία πιστεύω οτι το όχι είναι η μόνη σωστή, θετική, αναπτυξιακή απάντηση για την Ελλάδα και για την Ευρώπη. Αλλά όποιο και να ’ναι το αποτέλεσμα την επόμενη μέρα είμαστε όλοι μαζί το αποδεχόμαστε και το υλοποιούμε.

Είναι καλό που έγινε το δημοψήφισμα; Τι σημάινει το ναι;

Το δημοψήφισμα είναι αναμφισβήτητα μια θετική και απολύτως σωστή αντιμετώπιση του διλλήματος. Όπως είπαμε, εγώ πιστεύω πως πρέπει να ψηφίσουμε όχι. ‘Αν όμως βγει το ναι, και πάλι θα αποτελεί μια καταληκτική λύση. Μα θα έχουμε συνέχεια λιτότητα για χρόνια. Μα θα υπάρχει ανεργία και οι μόνες δουλειές θα είναι το σερβίρισμα. Θα είναι όμως επιλογή μας. Αν ψηφίσουμε ναι δε δικαιούμαστε μετα να διαμαρτυρόμαστε, να κάνουμε απεργίες, να διεκδικούμε. Θα είμαστε λοιπόν μια φτώχη χώρα με χαμηλούς μισθους και χαζές δουλειές αλλά θα έχουμε πάρει απόφαση οτι αυτή είναι η πραγματικότητα. Οπότε βάζουμε κάτω το κεφάλι και δε φωνάζουμε. Σύμφωνοι;

Παρενθετικά, ίσως τα παραπανω να εξηγούν γιατί το ναι σαν απάντηση είναι τόσο αγαπητό στους επιχειρηματίες και τα μέσα που χρηματοδοτούν αυτά τα χαρούμενα σποτάκια λες και διαφημίζουν μπύρα. Σκεφτείτε και αποφασίστε.

Τι σημαίνει το όχι;

Το μύνημα του όχι είναι οτι αυτό το Ευρωπαίκό μοντέλλο οικονομίας και αναπτυξης (ή μη ανάπτυξης) που έχει επικρατήσει δεν είναι καλό. Ίσως βοηθά τη Γερμανία και καμμιά δυο άλλες χώρες, αλλά αμφιβάλλω. Μάλλον βοηθά μεγάλα οικονομικά (βιομηχανικά και τραπεζικά) συμφέροντα σ’αυτές τις χώρες. Για τους περισσότερους Ευρωπαίους πολίτες, και τους βόρειους, το μοντέλλο είναι επιζήμιο.

• Είναι επιζήμιο γιατί παρατείνει τα προβλήματα χρέους και οικονομικής κρίσης.
• Γιατί δε δημιουργεί ανάπτυξη, πέρα απο χρηματιστηριακές αξίες.
• Γιατί κρατά τους μισθούς χαμηλά, ακόμα και της Γερμανίας.
• Γιατί δε φέρνει εξίσωση του βοιοτικού επιπέδου αλλά ανισότητα.
• Γιατί δε φέρνει τους λαούς της Ευρώπης ουσιαστικά πιο κοντά αλλά τους χωρίζει.

Πώς το ξέρουμε οτι το μοντέλλο δεν είναι καλό; Συγκρίνετε Ευρώπη και Αμερική. Η Αμερική βγήκε απο την κρίση το 2007 σε δυο-τρία χρόνια. Η Ευρώπη, με το πεισματικά λάθος μοντέλλο ανάπτυξης που έχει, δεν έχει βγεί ακόμα. Ζούμε ακόμα τον απόηχο το 2007.

Τι είναι ένα καλύτερο όραμα για την Ευρώπη; Το όραμα της δεκαετίας του 80, που ενθουσιωδώς η Ελλάδα ήθελε να συμμετέχει, προσαρμοσμένο στη σύγχρονη πραγματικότητα:

• Ολο και πιο κοντά, με συνεχή σύγκλιση του βοιοτικού επιπέδου.
• Με κοινούς θεσμούς, δημοκρατικούς, και πίστη σε αυτούς.
• Με κοινό νόμισμα, αλλά σωστά οργανωμένο.
• Με σταθερότητα και οικονομική άνοδο για όλους.
• Με κοινωνική συνείδηση και κοινωνικό κράτος, “όχι σαν Αμερική”.

Τα θυμάστε; Αυτό ήταν το όραμα της Ευρώπης που θέλαμε, και ακόμα θέλουμε, να συμμετέχουμε. Λέγαμε μάλιστα, εμείς θέλουμε κοινωνικό κράτος, παιδεία, υγεία, κλπ. σε όλη την Ευρώπη, όχι σαν την Αμερική που αφήνει τους ανθρώπους στο έλεος της αγοράς και του κατ’ ιδίαν πλούτου ή φτώχειας του καθενός.

Όλα αυτά τα ξέχασε η Ευρώπη τότε που έγινε η σηνθήκη το Μάαστριχτ. Απο τότε δεν πάμε πια προς μια όλο και πιο κοντά κοινωνική ήπειρο. Πάμε σ’ένα καθαρά νεοφιλελεύθερο μοντέλλο που τα κράτη πλουτίζουν ή πτωχέυουν το καθένα μόνο του, κοινωνική πρόνοια διαμέσου των χωρών δεν υπάρχει ούτε επιδιώκεται, και το μόνο που έχει σημασία είναι το ισχυρό νόμισμα και η τήρηση των εμπορικών συμφωνιών και των χρεών.

Αν είν’ έτσι να τη βράσω την Ευρώπη. Ανοικτές αγορές έχει πια όλος ο κόσμος. Η Ευρώπη έχει νόημα σαν μια πολιτική και κοινωνική δομή. Αν δέν έχει, και είμαστε όλοι χύμα στη διεθνή αγορά, κάτι έχουμε χάσει και πρέπει να το ξαναβρούμε. Το ξέρετε οτι η Αμερική είναι τώρα πιο κοινωνικό κράτος απ οτι η Ευρωπαική Ένωση; Όταν πέφτει έξω το Ντητρόιτ ή το Πόρτο Ρίκο ή κάποια άλλη περιοχή, που συμβαίνει συχνά, τους ξελασπώνει και τους καλύπτει τους ανέργους η ομοσπονδιακή κυβέρνηση. Η Ευρώπη γιατί δε θέλει να γίνει τόσο σοσιαλιστική όσο η Αμερική;

Το όχι λοιπόν λέει όχι στο ξερό νεοφιλελεύθερο μοντέλλο Ευρώπης που έχει επικρατήσει τυπικά μετα το Μάαστριχτ και ουσιαστικά μετά την ανάδειξη της κυβέρνησης Μέρκελ, ναι στο κοινωνικο και συνδετικό όραμα της Ευρώπης που όλοι θέλαμε πρίν και που για να μη λέμε οτι μας φταίνε οι Γερμανοί πρώτος και καλύτερος το οραματίζονταν ο Χέλμουτ Κόλ.

Τι θα γίνει αν βγεί το όχι;

Θα τα χερειαστούν οι θεσμοί και οι κραταιές δυνάμεις της Ευρωπαικής Ένωσης, δηλαδή αυτά τα πρόσωπα και κόμματα που τώρα κυβερνουν. Μετά θα αρχίσουν να μας βαρούν για λίγο ή περισσότερο καιρό. Αυτό όμως (δηλαδή το να μας βαρούν με μέτρα όπως να κλείνουν οι τράπεζες) κλυδωνίζει το οικοδόμημα το Ευρώ και δεν είναι κάτι που θέλουν να συνεχίζεται.

Η κα. Μέρκελ και το Ευρωπαικό κεφάλαιο δεν θέλουν το Ευρώ να αποτύχει είτε γιατί χώρες σαν την Ελλάδα αρχίζουν να φεύγουν είτε γιατί μένουν με τόσο προφανή καταπιεστικά μέτρα που οι υπόλοιπές χώρες ή τα αριστερά κόμματα (και τα δεξιά τα οποία αντιπαθώ) σ’αυτές της χώρες δείχνουν τάσεις φυγής. Πιστεύω λοιπόν οτι θα βρεθεί κάπου είδους συμβιβασμός. Δεν ξέρω ποιος, αλλά μπορούμε να δούμε σενάρια απ’ το καλύτερο ως το χειρότερο.

Στην καλύτερη περίπτωση οι θεσμοί το παίρνουν απόφαση οτι ο ΣΥΡΙΖΑ είναι κυβέρνηση που εκπροσωπεί σωστά το λαό, σταματουν την τακτική να θέλουν να τον ξηλώσουν, και προσφέρουν μια συμφωνία σχετικά καλύτερη απ’ τις μέχρι τώρα. Φαντάζομαι δηλαδή μικρή παραγραφή χρέους σαν αυτή που προτείνει το ΔΝΤ, μικρότερα πλεονάσματα, και κυρίως την ευχέρεια να αποφασίζει η Ελληνική κυβέρνηση τις προτεραιότητές της. Αν δηλαδή θα κόψει τις χαμηλότερες συντάξεις ή θα φορολογήσει κάπου αλλού.

Αυτό θα είναι ένα ικανοποιητικό αποτέλεσμα. Δεν πρόκειται να μας τα χαρίσουν, αλλά να μπεί ένα πρόγραμμα με το οποίο να διαφαίνεται ανάπτυξη και κάποτε επιστροφή σε μια νορμάλ ισότιμη σχέση με την Ευρώπη. Αυτό συμφέρει τους εταίρους γιατί έτσι διαχειρίζονται την κρίση, εξομαλύνονται οι σχέσεις και δε φτάνουμε σε μεγαλύτερη ρήξη και αμφισβήτηση. Όταν ο Τσίπρας και ο Βαρουφάκης λένε οτι το όχι μας δίνει ισχυρότερη διαπραγματευτική ικανότητα, αυτό προσδοκούν.

Τι θα γίνει έτσι και βρεθούμε εκτός Ευρώ; Υπάρχει περίπτωση;

Ας δούμε τωρα και το χειρότερο δυνατό σενάριο. Αυτό που λεει οτι οι θεσμοί μετα το όχι παν να μας καταστρέψουν για να παραδειγματίσουν τους Ισπανούς, ή απλά να μας ξεφορτωθούν. Αυτό το σενάριο τελικά οδηγεί σε μερική έξοδο απ’ το Ευρώ. Όμως, έτσι τουλάχιστον πιστεύω μετά απο σκέψη αλλά χωρίς να έχω τίποτε μυστικές πληροφορίες, οτι εξοδος απ το Ευρώ δε σημαίνει οτι ένα βράδυ ολονών οι καταθέσεις σε Ευρώ μετονομάζονται σε δραχμές. Αν γίνει, θα γι΄νει κάτι άλλο πιο ομαλό. Ας το δούμε.

Για να δούμε τα πράγματα καθαρά, οσα Ευρώ έχουμε στην Ελλάδα, αυτά έχουμε. Δε μας τα δημιουργεί το Ελληνικό κράτος, όπως έκανε με τις δραχμές, αλλά η Ευρωπαική Κεντρική Τράπεζα. Δεν υπάρχει κάποιος νόμιμος τρόπος αυτά τα Ευρώ να μετονομαστούν σε δραχμές, ούτε τα χαρτονομίσματα ούτε οι καταθέσεις. Επίσης κανείς δεν επιδιώκει κάτι τέτοιο. Αυτά τα Ευρώ που έχουμε στην Ελλάδα, όσα είναι, είναι πολύτιμα. Ούτε ο κάθε Έλληνας ούτε ο Βαρουφάκης δεν έχει κανένα συμφέρον να ανταλλάξει τα υπάρχοντα Ευρω με δραχμές.

Αλλά τότε τι; Η Ευρωπαική Κεντρική Τραπεζα αν είναι κακοπροαίρετη (που είναι) μπορεί να αποσύρει τις εγγυήσεις της προς τις Ελληνικές τράπεζες, αυτό που λέμε ELA. Το αποτέλεσμα είναι οτι οι τράπεζες δεν έχουν πιά κανένα κράτος να τις εγγυάται σε Ευρώ και πρέπει να επιπλέουν μόνες τους. Θεωρητικά, άν οι Έλληνες συνεχίζουν να πληρώνουν κανονικά τις δόσεις απο δάνεια σε Ευρώ οι τράπεζες επιπλέουν. Στην πράξη αργά ή γρήγορα ένα μέρος απ τα δάνεια θα βγούν προβληματικά και κάποιος θα πρέπει να ξελασπώσει τις Ελληνικές τραπεζες.

Αυτό δε θα μπορεί να το κανει (μετα τη ρήξη) η Τραπεζα της Ελλάδας με Ευρώ. Θα το κάνει σε δραχμές. Αν λοπόν φτάσουμε σ’αυτό το σενάριο, και η ΕΚΤ μας ξεκόψει (θυμηθείτε οτι αυτό συνεπάγεται μεγάλο κόστος για την ίδια) και μετά χρειάζονται βοήθεια οι Ελληνικές τράπεζες τότε μάλλον θα κουρευτεί μέρος των καταθέσεων σε Ευρώ, τόσο ώστε τα Ευρώ ταμειακά να ‘ρθουν στα ίσια τους, και το ποσό που κουρεύτηκε θα το καλύψει το Ελληνικό κράτος σε δραχμές. Θα αρχίσουν δηλαδή Ευρώ και δραχμές να κυκλοφορούν παράλληλα. Κάτι τέτοιο φαντάζομαι.

Είναι φυσικό να ανησυχεί κανείς για τέτοιες μεγάλες πιθανές αλλαγές, αλλά η ζωή μ’αυτό το σενάριο δε θα είναι κακή. Θυμηθείτε οτι ένα στοκ απο Ευρώ υπάρχει και κυκλοφορεί στην Ελλάδα και αυτά παραμένουν, μείον τα τζούφια δάνεια. Θα έχουμε λοιπόν κάμποσα Ευρώ μέσα στη χώρα και όσοι εισπράτουν Ευρώ απο τουρισμό ή άλλες δουλειές με ξένους θα συνεχίσουν να τα εισπράττουν. Θεωρώ προφανές οτι κάθε είδους επαγγελματίες θα διατηρήσουν τραπεζικύς λογαριασμούς και χαρτονομίσματα σε Ευρώ για την ευκολία των συναλλαγών. Πρακτικά, θα έχουμε ακόμα (και) Ευρώ.

Τώρα ηλικιωμένοι, μισθωτοί, υδραυλικοί, οδοντογιατροί και άλλοι που δε συνδιαλέγονται με ξένους, σιγά σιγά θα τους τελειώσουν τα Ευρώ και θα εξυπηρετούνται με δραχμές, όπως παλιά. Στις καθαρά εγχώριες συναλλαγές θα χρησιμοποιούμε κυρίως δραχμες. Με τη διαφορά οτι το Ελληνικό κράτος θα μπορεί επιτέλους να ασκεί οικονομική πολιτική που να ταιριάζει σ’αυτή τη χώρα και όχι στις φαντασιώσεις της Γερμανίας, κι έτσι θα έχουμε δραχμές αντί για Ευρώ που ήδη δεν έχουμε.

Το τελικό αποτέλεσμα είναι οτι δραχμές για να αγοράσουμε ντομάτες και φέτα, να νοικιάσουμε δωμάτια το καλοκαίρι, να πληρώσουμε γιατρούς, δασκάλους για τα παιδιά μας, κλπ. θα έχουμε. Ευρώ για να αγοράσουμε iPhone θα τα μετράμε. Αυτά τα είδη θα είναι σχετικά πιο ακριβά για όποιον πληρώνεται με δραχμές. Ε τι να σας πω, αποφασίστε κατά τη συνείδησή σας. Τι Είναι πιο σημαντικό για την κατάσταση που είμαστε τώρα; Αφθονία σε σίτιση, στέγαση, υπηρεσίες και άλλες βασικές αναγκες ή φθηνότερα κινητά;

Και καλά στη λαική οι ντομάτες θα έχουν δυο τιμές, σε Ευρώ και σε δραχμές; Ναι, όπως το 2001. Θύμάστε που λέγαμε οτι οι γιαγιάδες αποκλείεται αυτή την αλλαγή να τη συνηθίσουν; Τη συνήθισαν σε μερικές βδομάδες, και θα συνηθίσουν και τις νέες δραχμές. Μπορεί και να τους αρέσει.

Ομως έχουμε καταφέρει τόσα πολλά, θα πάμε πίσω;

Δε θα πάμε πίσω με το όχι. Έχετε πάρει χαμπάρι πόσο έχει πάει η χώρα πίσω τα τελευταία πέντε χρόνια που ακολουθείται η πολιτική του ναι; Έχουμε 25% συρρίκνωση της οικονομίας, κλειστές δουλειές, κλειστά μαγαζιά, τεράστια ανεργία, ανοικτές τάσεις φασισμού, πείνα. Τώρα πηγαίνουμε πίσω και επιβάλλεται να σταματήσουμε.

Μη μπερδεύετε την πρόδο με το ημερολόγιο. Απο το 1981 που μπήκαμε στην Ευρωπαική Ένωση (τότε ΕΟΚ) ως τώρα έχουν συμβεί τεράστιες θετικές, εκσυγχρονιστικές αλλαγές στη χώρα μας. Οι κάθε είδους υπηρεσίες που πρίν ήταν μπάχαλο τώρα σε γενικές γραμμές δουλεύουν. Οι επιχειρήσεις έχουν δομές ορθολογικές και παρόμοιες με τις δομές που συναντάμε στον υπόλοιπο δυτικό κόσμο. Η γνώση, τα προιόντα στην αγορά, και η επαφή μας με την Ευρώπη και τον κόσμο βρίσκονται σε άλλα επίπεδα. Τίποτε απ’ αυτά δεν πάει πίσω με το όχι, είτε με μια εντός ευρώ μερική πτώχευση είτε με μερική έξοδο. Δεν είναι το Ευρώ το τοτέμ της προόδου και του εκσυγχρονισμού. Αυτά τα πετύχαμε μόνοι μας και τα κρατάμε.

Και να σας πώ κάτί; Οι χώρες που ανήκουν στην Ευρωπαική Ένωση και για τους χ.ψ. λόγους επέλεξαν να μείνουν εκτός Ευρώ είναι η Βρεττανία, η Σουηδία, και η Δανία. Αυτές περνάν άσχημα ή μήπως έιναι τίποτε οπισθοδρομικές μπανανίες; Ακόμα η Ελβετία, η Νορβηγία, και η μικρή Ισλανδία έχουν τα θεσμικά δικαιώματα της Ευρωπαικής Ένωσης, όπως ελευθερία μετανάστευσης απ’ τη μια χώρα στην άλλη, ελεύθερο εμπόριο κλπ. χωρίς να είναι τυπικά μέλη. Ούτε εκεί βλέπετε καμμιά καταστροφή. Η Ισλανδία μάλιστα, χάρις στη δημοκρατία και χωρίς τους περιορισμούς του Ευρώ βγήκε γρήγορα απ’ την κρίση του 2007-2008.

Λένε κάποιοι σχολιαστές, όπως ο Αρίστος Δοξιάδης που βρίσκω πως κάνει μια πολύ καλή ανάλυση των ιδιαιτεροτήτων της Ελληνικής οικονομίας αν και διαφωνώ με την κατάληξή του στο ναι, οτι το μόνο που θα πάει τη χώρα ουσιαστικά μπροστά είναι οι επιχειρήσεις. Συμφώνώ. Κι εγώ θα ήθελα να έχει ή Ελλάδα δημουργικό επενδυτικό κεφάλαιο, και να στήνονται τεχνολογικά startup που μετά να τα αγοράζουν για υπέρογκα ποσά η Google και το Facebook. Εγώ τουλάχιστον δε βλέπω στο ΣΥΡΙΖΑ κάτι αντίθετο σ’αυτά. Και η Σουηδία που είναι εκτός Ευρώ είναι γεμάτη μικρές τεχνολογικές εταιρείες, το ίδιο και η Βρεττανία. Δεν τα μποκάρει το όχι αυτα.

Τι το ψειρίζουμε λοιπόν. Έξοδο απ’ το Ευρώ δεν επιδιώκει κανείς, αλλά κι αν συμβεί δεν θα είναι η καταστροφή που τρομοκρατούν. Το να είμαστε μεσα στην Ευρωπαική Ένωση είναι δεδομένο. Δε γίνεται λόγος για κάτι άλλο. Δε θέλουμε να γυρίσουμε την πλάτη στην Ευρώπη, θέλουμε να τη φτιάξουμε.

Όχι λοιπόν σε φαύλες συμφωνίες που μας παγιδεύουν και μας πάνε πίσω, βρίσκουμε καλύτερες και πάμε προστά. Και το παράδειγμα προς τους άλλους Ευρωπαίους λαούς ειναι οτι πάμε όλοι μαζί μπροστά.

Υστερόγραφο: Γράφω το παραπάνω στο πρώτο πρόσωπο για να διαβάζεται, εγώ όμως περνάω τη μισή μου ζωή εκτός Ελλάδας. Δουλεύω σε μια διεθνή εταιρεία στη Σκωτία, με πολλά ταξίδια. Η σύντοφός μου δουλεύει στην Ελλαδα και το παιδί μας μεγαλώνει εδώ. Αυτά έχω υποχρέωση να τα αναφέρω για να μην υπάρχει θέμα ειλικρίνειας.

The ECB broke the Euro, already

Can we get something straight? Euro deposits in Eurozone banks are liabilities of Eurosystem to individual EU citizens. Euro deposits in Greek banks are liabilities of those banks, and indirectly of the ECB, to individual depositors who live in Greece. Not to the Greek state. The Greek state is not part of this contract. If Greek banks were drachma banks they’d be the responsibility of the Bank of Greece. Now that they’re Euro banks they’re the responsibility of the ECB.

This is a contract of trust between the ECB and individual residents of EU states, including the Greeks. The Greek state is another actor, in essence a very large bankrupt business. The ECB is justified to be angry that the Greek state is threatening non-payment of its debt to the ECB, but that’s a dispute between a bankrupt business called the Greek state and the ECB. Because the ECB is unhappy with the Greek state, it decided to breach its contract with individual Greek citizens and refuse to honor their deposits. Sure enough, Greek citizens have a say in what the Greek state does but in the supposedly professional world of banking and contracts the individuals and the state are not the same thing.

To put this in perspective it’s like JP Morgan, the US bank, seizing the deposits of its customers in Detroit because it is owed money by Ford, Chrysler, etc. where these same people work. JP Morgan would then say “Ford employees refused to waive their pension claims in order to give Ford money to pay us, so we’re grabbing the deposits of these same employees directly”. Americans, how does that sound? I thought so. You cannot seize one person’s private property to recover the debt of another entity, however related. Well, you can if you are a political sovereign, but not with any pretence of legality.

Spaniards, how would you like it if the ECB decided not to honour your deposits after September because you voted Podemos?

Scots, what if your country voted Yes on independence and a few months down the line the Sottish state had a falling out with England? Inconceivable, I know. What if then the Bank of England refused to honour the deposits of individual RBS customers?

Germans, your banks now have tens of billions of liabilities to Greeks, Cypriots, Spaniards, etc. who decided as individuals to transfer their deposits to Germany. In the world of banking every liability requires a corresponding asset and in the Euro system the asset is something called TARGET2 balance from Greek to German banks. The asset behind that is Euro loans of Greek citizens to Greek banks. If you let the ECB seize deposits in Greece, Euro loans in Greece will go bad, Greek banks will fail, and said TARGET2 balances would be worth nothing.

German banks will then have tens of billions of Euros of liability to individual people, many of whom happen to be Greeks and Cypriots, with no corresponding asset. What solution will you legislate for that? Will you let your banks honour individual deposits or not based on the passport of the account holder? Will you haircut all deposits in Germany? Will you bail the banks out?

The rules of the game are that he ECB is responsible for all Euro accounts. It has accounts more or less directly with states – states are treated like very large businesses. The faith of the ECB also stands behind private banks, so that the private banks can honour Euro accounts of individuals. With Cyprus, and now with Greece, the ECB has decided to price in default risk, country by country, by refusing to honour the full value of the accounts of individuals.

If that is so the Euro has already failed. It is not one currency, it is already three: Cypriot Euro, Greek Euro, and the rest. If this policy line continues soon there will be a fourth, fifth, and more currencies all called Euro but having different net present value depending on in which country they exist as bank deposits. This is not a single currency system, it is a failure.

Ranking outcomes

Greece and the creditors are in last last-ditch negotiations where the creditors aim to keep Greece in the Eurozone and avert default. Greece aims to secure a bankruptcy deal that’s friendly to the poor and which makes growth possible. In subtext, the creditors want Greece to surrender unconditionally to the institutions to discourage similar movements elsewhere, while Greece aims for sovereignty to carry out a democratic mandate.

Recently it looks like a deal might be reached. Would that be a good outcome? I don’t think so. In my opinion the situation has deteriorated enough that walking away is better. Also we must not lose sight of better outcomes that are currently closed, opportunities that are squandered. To keep everything in context, here’s my ranking of possible outcomes from best to worst.

1. A better model for the Eurozone

The best possible outcome would be to change the architecture of the Eurozone to one that suits all economies. Currently the Euro is architected like the Deutschmark, a strong currency with very tight monetary policy similar to the gold standard and strict fiscal discipline. That has been a German political demand, but such an architecture doesn’t suit the UK (who opted out), Latin countries, and least of all weak undisciplined economies like Ireland and Greece. If the Euro were changed to be a weaker and more volatile currency like the dollar, and the ECB pursued loose monetary policy at times of trouble like the US Federal Reserve, weak economies would be better performing in general and would get out of crises easily. I’m not sure how a weak Euro would hurt Germany except psychologically.

2. A Europe with social transfers

The next best thing, if loose monetary policy and moderate inflation are out of the question, is a Europe with social transfers. A hard currency and strict fiscal discipline for governments, but a European safety net to bail out people (rather than governments) when times are bad. These would be things like EU-wide basic pensions, unemployment, and poverty line income support. Really basic stuff. Right now this is anathema in Europe, as relatively well off taxpayers in relatively prosperous economies resent paying social benefits to poorly off taxpayers in weak economies. But this is exactly the system in the United States. Individual US states and large cities routinely go bankrupt, but federal programs like food stamps and Medicaid support their poorest citizens. Is Europe really unwilling to offer the meagre social benefits that the US does?

3. Positive reform for Greece (a good deal)

After several years of deceit and mismanagement, Greek voters managed to fire the corrupt political dynasties that took turns in power and bring in outsiders (SYRIZA) intent on serious reform. Inexplicably, the creditors decided that they’d rather deal with the old guard that committed financial fraud at their expense and proceeded to undermine SYRIZA at every step. This is a squandered opportunity. For the first time in decades Greece has a morally sound government with a strong mandate and a credible agenda for reform. The same reform that Europe wants: Modern public administration, effective tax collection, making it easy to start a business. If the creditors would take Greece’s proposals seriously and engage in good faith, rapid progress would be made. Except success would look bad and Podemos in Spain would want the same.

4. Leaving the Euro and staying in the EU (no deal)

The best outcome currently open, in my view, is for Greece to walk away from negotiations and leave the Eurozone while staying in the EU. Dropping the Euro and introducing a national currency does two things: It lets the state create and circulate money in the domestic economy, and it makes imports expensive relative to domestic goods. For Greece that means the domestic economy will quickly return to health and poverty will be quickly alleviated. Food, housing, and services will be cheaper as they’re domestic. Technology imports and foreign services such as studying abroad will be expensive. The standard of living, which is mainly supported by domestic goods, will rise but Greece will feel a little backward for lack of imports. People will be able to consume more tomatoes and fewer iPhones. Greeks won’t like that because they love their iPhones, but right now tomatoes are more important.

Some common misconceptions about the impact of Greece leaving the Euro:

Greece’s debt is a separate matter from staying in the Euro. Greece owes more Euros than it can realistically pay, so in the end it’ll realistically pay less. If Greece stays in the Euro the creditors have more leverage to ruin Greece, making repayment harder. If it leaves, Greece has more prospects to recover and could decide to default with fewer consequences. Leaving the Euro is not the same thing as defaulting on debt.

In economic textbooks, leaving a currency union and devaluing is good for competitiveness. That works for an industrial economy whose output can scale a lot with small differences in producer prices. Greece produces olive oil and tourism. Tourism is price-sensitive, but it already faces strong market discipline and it’s not that scalable. If Greece drops the Euro it’ll become cheaper, it’ll sell a few more more holidays and foods, and overall it’ll make a bit less in Euros. The competitiveness argument is moot.

If Greece leaves the Euro the financial fallout will be small. The Anglo-Saxon investors already took their losses and generally acted businesslike in this drama. European governments bailed out their investors and are now holding the bulk of Greece’s debt. Because Greece’s economy imploded, this debt is worth less than face value. If Greece leaves European governments can realise this loss, they can continue to hide it, or they can reflate it with ECB money creation – the same choices they face now.

On the other hand if Greece leaves the political fallout will be large. Being in the EU or EEA but outside the Euro is increasingly looking like the better option. It’s where the UK, Denmark, Norway, and Iceland chose to be. If Greece makes the transition relatively painlessly other countries will sooner or later follow and the Euro will either unravel or lose many of its members and become a new Deutschmark for countries west of the Rhine. For Germany, this will be a large political failure.

5. Parallel currencies

Various technical proposals are being floated about Greece issuing some currency in addition to the Euro. The idea is you’d have Euros and Drachmas in your wallet and you could use either, but Drachmas would be easier to come by and worth less. These proposals aim to quit the Euro in substance while retaining it for morale, for appearances, or for the convenience of travellers. Most view them as temporary measures. Parallel currencies are a risky proposition. They work well at small scale. At large scale they’ve been tried by Latin American countries in crisis, with mixed and hard to disentangle results. Overall, depending on the technical details, parallel currencies work out about the same as leaving the Euro or significantly worse. They’re a great plaything for economists, though.

6. Continued austerity (a bad deal)

If Greece accepts the creditor’s demands it will be a bad outcome for all sides. The creditors insist on austerity and prioritising debt repayments over growth, as they have for the past five years. Continuing on this path will keep Greece impoverished and heavily indebted for the foreseeable future, and will bring further suffering and extremism. The creditors appear less concerned with fostering growth or ending the crisis, and more intent to prevent any country from going bankrupt in the Eurozone and then recovering. It’s Europe of debt servitude. The only good thing about this outcome is that it’s pacified. The empire wins, the rebels are crushed, and there’s an unhappy stability. Greece will still be broke and recurrent debt crisis will be the new normal.

7. Capital controls (like Cyprus)

One officially sponsored outcome that’s worse than austerity is what happened to Cyprus. people in Cyprus use a currency that’s called Euro and looks like the Euro, but a Euro in a Cypriot bank or in your pocket is worth less than a Euro in France or Germany because you can’t take it out of Cyprus. What happened to Cyprus is a remarkably cynical way to fracture a currency union and punish a state (for accepting the money of rich Russians) while claiming your shiny currency union is intact. After seeing the kindness of Europe, Cypriots probably wish they’d stayed a British possession.

8. Continued uncertainty

A marginally worse outcome is continuing the uncertainty that we’ve had since January. Since SYRIZA was elected, creditors have been refusing to roll over Greece’s debts and instead are asking Greece to pay them off as they come due. The ECB cut off one form of finance to Greek banks and is reviewing the other kind (ELA) on a regular basis, effectively inciting a bank run. It’s like the US Fed announcing that Michigan state banks could go belly-up any moment now. This strategy aims to damage Greece’s finances and banking system so that Greece will more easily pay its debts, presumably.

9. Leaving the EU

There’s much good in the EU besides an ill-conceived and damaging single currency system. For poor and troubled nations like Greece the EU brings stronger human rights, freedom to settle and work in any member state, and an open market which for ordinary people means freedom from profiteering of various sorts. The great achievement of the EU is that we can be in each other’s countries as citizens, not as barely tolerated guests. We put up with stupid bureaucratic rulings on bananas and cookies to retain this privilege. It is important not to throw the EU out with the Eurozone.

10. Political meltdown

The worst possible outcome for Greece is a disorderly collapse of SYRIZA and the rise of the nazi Golden Dawn party as “national savours”. Greece is closest to the abyss, but throughout Europe the social damage of the new order of austerity is fuelling far-right parties. In France, Le Pen is on the rise. In the UK, UKIP. It would be a sad legacy for Ms. Merkel, our de-facto European president to bring about the rise of fascism everywhere but in Germany.

As said, I think the best outcome currently within reach is number 4, leaving the Eurozone. Taking a bad deal, such as the creditors insist, is currently a worse outcome, and there are many worse ones. There are also better outcomes that would be possible. Currently, the three best outcomes for Europe are politically blocked by Germany.

Why can’t Greece just agree to the creditor’s terms?

Talks between Greece and its creditors collapsed over the weekend with both parties appearing intransigent. The sticking point is pensions. Greece spends 16% of GDP on pensions and the IMF wants Greece to cut this. Greece. refuses. Why does the Greek state have this large pension burden in the fist place?

The answer is Greek pensions are of the “defined benefits” tax and transfer variety. The state taxes the current working generation and transfers the money to pensioners. It’s a passthrough mechanism, not an investment fund. As the economy has collapsed, tax revenues from the active economy have dropped and the pension burden is harder to bear. It’s a very similar situation to Detroit.

That might conjure up a bloated state sector with stalinist factories building tanks or a comically uncompetitive airline. OK, Greece had these two. They’re gone. For the most part though the high pension burden IS NOT indicative of a state sector that needs purging. The majority of pensioners were either private employees such as bank tellers where the state is acting as their collective insurer, or they were relatively uncontroversial state employees such as teachers and bus drivers.

Why are Greek pensions organised this way? Why aren’t they stock market investments like in the Anglo-Saxon world. For a start, the Anglo-Saxon model is a lousy deal for all income groups except the very wealthy. If you assume continuity of a sovereign state, a tax-and-transfer scheme limits downside better than market investments. The Euro ended monetary sovereignty for Greece, so for pensioners that was a miscalculation.

Secondly Greek capitalism (the portion of the economy in publicly traded companies) is too small to support pensions. Greek pension funds would have had to invest internationally. That would have been quite a leap of faith, and the pension funds did not. Another miscalculation, but understandable, I think. You have to remember people who are now pensioners put their trust on the continuity of the Greek state decades ago.

Alright, so if Greece doesn’t have the money to pay the pensions why doesn’t it cut anyway? What other outcome could one hope for? Well, if Greece left the Euro it could once again print money to partly fund pension obligations. This generates inflation, as was common before the Euro, and inflation acts as an indirect tax. It also causes currency devaluation, which makes imports expensive relative to domestic goods. Guess what: Greek pensioners consume more food and services (domestic goods) than iPhones.

A much better outcome would be for Europe to shoulder some of the social burden of these pensions. Why should they? For the same reason the US has federal food stamps that people disproportionately consume in Detroit. The “unruly” Greek government would much more readily agree to fiscal conditionality in the Euro if it wasn’t solely responsible for the welfare of its citizens. Remember these are people who bet on national sovereignty decades ago, then it was taken away with the Euro and the Europe that transpired is now unwilling to honor their benefits.

European integration would have gone much more smoothly if harmonisation of social welfare across states had been part of the project sooner (or at all). This doesn’t mean giving Swedish benefits to Greek pensioners – you get what you pay for. But it is at least arguable that Europe as a whole should not cut a nation’s pensioners out of their own modest level of benefits.