World Economy

If Hungary can forget after 25 years why a fence on its border is shameful, disgraceful, and disgusting then I guess we shouldn’t be surprised that the Czech police may forget after 70 years that marking people with numbers on their arms for identification purposes is, well, not something that should be happening. Seriously, WTF.

If you’ve been living under a rock or focusing on US media/most Americans’ FB feeds, you may not even know what’s really going on. This Human Rights Watch piece gives a helpful overview. It also points out why things as they stand don’t work.

Worth noting is this piece from Al Jazeera that makes a very good case for why commentators, very much including the mainstream media, should not be talking about refugees as though they were migrants. They are refugees escaping inexplicable circumstances and we owe them the respect to acknowledge that when we discuss their plight.

It boggles the mind that some people, or in certain cases many people, cannot sympathize with these refugees and have nothing but hatred toward them. Is it history education that has completely failed us? Where is people’s compassion? The source of significant current problems is ISIS, hardly a group with which many in Europe would sympathize. So why is it so hard for people to appreciate that these refugees need help? I guess then it is not surprising that people can’t go the extra step to recognize the potential benefits of welcoming these refugees even if they can’t get on board with the humanitarian need.

There are exceptions, fortunately. Several thousand in Iceland have petitioned their government to take in more Syrian refugees. They get it. Refugees have the potential to contribute significantly to any society. From their letter:

Refugees are our future spouses, best friends, or soulmates, the drummer for the band of our children, our next colleague, Miss Iceland in 2022, the carpenter who finally finished the bathroom, the cook in the cafeteria, the fireman, the computer genius, or the television host.

And to be sure, there are also many volunteers who are helping out on the ground across Europe. This piece has concrete suggestions for how you can help even from afar.

Images, of course, often tell the story better than words. I recommend Budapest seen on Facebook for photographs that do a great job capturing the humanity of the situation, the innocence of the children, and the brutality of the circumstances.

And one more important observation:

What never stops amazing me are people who look at the Holocaust and think that it only holds lessons for Germans & Jews.

— Andrew Stroehlein (@astroehlein) September 2, 2015

The failure of talks in Maui last weeks to reach final agreement on the Trans Pacific Partnership Agreement raises new, if slim, hope that this corporate wishlist may not be delivered after all. Friday was the last chance to get a deal that could be pushed through the US Congress before 2016, when Presidential campaign politics might disrupt everything. If that happened, and the new President opposed the deal it might never happen.

Although there were a bunch of issues that prevented a final deal, the biggest one was the demand for new protection measures for US pharmaceuticals (typical of what are absurdly still called Free Trade Agreements), and the biggest single obstacle was the attitude of an obscure legislative chamber, the Australian Senate. This piece in Inside Story gives some of the background.

I

There is a wonderful passage in Julian Barnes’s Flaubert’s Parrot, in which Barnes expresses his anger at a dismissive critic of Flaubert:

All in all, it seems a magisterial negligence towards a writer who must, one way and another, have paid a lot of her gas bills. Quite simply, it makes me furious. Now do you understand why I hate critics?

I have had this passage in mind while I have been reading Joseph Carens’s book. I have written several articles about Carens’s view of immigration, and much of it has been critical. I take it that Barnes’s point is that we must express a certain sort of respect towards those we make the subject of our critical attentions, given how much we would be at sea without them. This seems exactly right, given how much I owe Carens; I would never have started thinking seriously about immigration had he not thought so seriously, and so well, about it first. One way or another, Carens has paid a lot of my gas bills, and done a lot more besides; he has been more gracious, both in print and in person, than he has ever needed to be. His book summarizes and extends his thinking about immigration, and I have come to respect that view and its creator enormously. It is not my view, but it is the very best the field has produced, and I hope I have not treated it with negligence.

In what follows, I am going to ignore much of the dispute I have had with Carens over the moral permissibility of exclusion, and focus on a topic found primarily within the first half of the book: the idea of social membership, and what rights can be adequately grounded in that idea. My arguments here are going to be similar to those made by Ryan Pevnick in his own post, although I hope I will make them in a slightly different way.
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As a non-expert, I find myself scouring the various news columns and op-eds trying to work out what’s true and false about the situation in the Ukraine, who to believe, what to trust. It isn’t easy, given that the two “sides” (or is that three or four) fail to sort themselves neatly into the mental maps we all have to organize this kind of thing. One such map, beloved of the “decent left” tries to fit everything into a 1938. That’s tempting, but then who is Hitler, who are the Nazis, who are the Sudeten Germans? Things don’t quite line up. And then there’s the narrative of the plucky little insurrectionists against their post-Soviet overlords: Hungary 56, Prague 68? But once again, people aren’t fitting neatly into the little boxes. Then think of those crises, Hungary in particular, or the East German revolt. How many Western leftists tried to read them (and misread them) through the glass of Soviet opposition to Nazism? During the Balkan wars of the 90s my own imaginary had plucky multi-ethnic Bosnia as the incarnation of liberal republicanism, resisting the ethnic tyranny of the Serbs. But there were plenty of of leftists who saw things in terms of the dastardly German-collaborating (and backed) Croats with their UstaÅ¡e past, versus the Serbian partisans. One friend from Northern Ireland said on Facebook that a relative had told him that the key to understanding any conflict was to work out who are the “Protestants” and who are the “Catholics”. I can’t think that’s going to help here (or in Syria for that matter): we all get trapped by these heuristics.

Reading Christopher Clarke’s The Sleepwalkers last night, I came across a discussion (I’ve only just started the book) of Serbia’s Foreign Minister Milovanovic and his predicament in the crisis of 1908: a moderate and pragmatist trapped by the rhetoric of the more extreme nationalists, who could and would denounce any compromise with the enemies of the people. Hard not to think or parallels with Vitali Klitschko and the other opposition leaders who cut a deal with Yanukovych but couldn’t make it stick with the Euromaidan for fear of being howled down as traitors themselves. Presumably they saw that running Yanukovych out of town on the day after the deal would be certain to get a nasty reaction from Putin, but what else could they do? And now here we are, with the Russians in the Crimea, the rouble plummeting and the prospect of a new cold war, with everyone apparently fated to play their allotted roles. Meanwhile, the hapless John Kerry tells us – with no self-awareness whatsoever – that, in the 21st century, you can’t invade foreign countries on trumped-up charges.

For what it’s worth I found Mark Ames useful, Paul Mason insightful and Timothy Snyder propagandistic. And here’s Ben Judah on why Russia no longer fears the West. With my political philosopher hat on, I can say that just states find ways to integrate their citizens across ethnic and linguistic divides, that the boundaries set by history should not be sacrosanct, but that people shouldn’t try to change them by force of arms. Political philosophy will not have much impact on how this all turns out.

Open borders advocates often advance an argument in terms of a duty to help the global poor. Poor people who succeed in making the journey to more advanced economies are usually more productive; those who are locked out of such economies by hard border controls are kept in dire poverty, often within sight of great riches. And those who are admitted are often an important source of income to family left behind. Those who defend border controls and the right of states to exclude often make the following move: they concede a duty to help the poor, but say that such a duty can be discharged in ways other than admitting poor would-be migrants to wealthy countries. In particular, they argue that such a duty could be discharged by supporting the economic development of poor countries via development aid (Christopher Heath Wellman is an example).

But the problem with such an argument is that it has two parts. The first (conditional) part, says that it is false that we must open our borders to discharge our duty of assistance IF we can discharge that duty some other way. The second empirical part is the claim there is another way, because development aid is an effective way of helping the global poor that is comparable in its beneficial effects to (much more) open borders. In other words, the claim by philosophers and political theorists that the duty could be discharged by development aid needs to be backed up by sound economic evidence that development aid really is an effective means of helping the global poor. Economists such as William Easterly are skeptical that we know enough about economic development to make effective use of development aid. They may be wrong, but philosophers and political theorists shouldn’t make the easy argumentative move to development aid as an alternative to (more) open borders without being sure that the economics supports them.

“Paul Krugman yesterday:”:http://krugman.blogs.nytimes.com/2013/12/12/tpp/

I’ve been getting a fair bit of correspondence wondering why I haven’t written about the negotiations for a Trans Pacific Partnership, which many of my correspondents and commenters regard as something both immense and sinister. The answer is that I’ve been having a hard time figuring out why this deal is especially important. … The big talk about TPP isn’t that silly. But my starting point for things like this is that most conventional barriers to trade — tariffs, import quotas, and so on — are already quite low, so that it’s hard to get big effects out of lowering them still further. The deal currently being negotiated involves only 12 countries, several of which already have free trade agreements with each other. It’s roughly, though not exactly, the TPP11 scenario analyzed by Petri et al (pdf). They’re pro-TPP, and in general pro-liberalization, yet even so they can’t get big estimates of gains from that scenario — only around 0.1 percent of GDP. And that’s with a model that includes a lot of non-standard effects.

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Cormac McCarthy used to live in El Paso, just over the border from Cuidad Juarez, Mexico. I kept thinking about this as I read Oscar Martinez’s book The Beast: Riding the Rails and Dodging Narcos on the Migrant Trail (Verso) because the parallels between Martinez’s non-fiction work and McCarthy’s novel The Road were sometimes striking and horrifying. Martinez is a journalist from El Salvador who has taken the courageous step of following the migrant trail that Central Americans would-be migrants to the US take through Mexico. “The Beast” of the (English) title is a reference to the trains that so many of them cling to through days and nights. Each chapter tells a different aspect of the story, from what makes people flee their homes in El Salavador, Guatemala or Honduras to the risky business of how to swim the Rio Grande at the end. Each chapter is different, yet each has the same essential theme: poor and desperate people who are the prey of criminal organizations in Mexico – the drug cartels – with police, the “polleros” and “coyotes” (migrant guides) and others being induced by a mixture of greed and fear (mainly the latter) to act as agents for the cartels (such as the Zetas) or at least to pay the tax they demand.

If you are a woman who undertakes the journey, you will almost certainly be raped, perhaps many times. Maybe this will happen when your are misdirected into an ambush in La Arrocera (near the beginning of the trail), perhaps it will happen on the train, perhaps it will happen when you are kidnapped and held on a ranch with hundreds of others whilst your relatives wire a ransom to the gangs, perhaps near the US border where a “bra tree” displays the underwear of victims as the rapists’ trophies. The stories of mass kidnapping and the warehousing of migrants by the gangs, with torture a regular part of the plan and summary death (in front of the others) for escapees are chilling.
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I’m surprised that there hasn’t been more discussion outside Europe about the Anglo-Irish tapes. A summary from a “review”:http://www.washingtonmonthly.com/features/2010/1005.farrell.html I did a few years ago of Fintan O’Toole’s book on the Irish collapse.

bq. Anglo Irish Bank —Ireland’s third-largest bank and the most spectacular exemplar of the Celtic Tiger’s flameout— bet its future on loans to well-connected property developers. O’Toole suggests that “[i]t may be an exaggeration to call Anglo Irish a private bank for Fianna Fáil’s more flamboyant friends—but only a small one.” Not only did Anglo Irish itself invest heavily in the property market, but it lent more than 100 million euros to its chairman (as well as smaller sums to other directors) to speculate in property on his own account, and then hid the loan on its balance sheet through sleight of hand. The Central Bank–based regulator charged with regulating financial services knew about both the loans and the cover-up but declined to act. To borrow University College Dublin economist Morgan Kelly’s term, Anglo Irish was “too connected to fail”—no serious regulatory response was possible.

bq. When Anglo Irish began to get into trouble, a “golden circle” of ten investors borrowed money from the bank itself to invest in its own shares and hence keep the share price from tanking. Seventy-five percent of the loans were backed by the shares themselves. Six members of the golden circle are known; most of them have strong Fianna Fáil connections. Anglo Irish executives and board members were also allegedly given loans to buy shares to help “counter negative publicity.”

After the failure of Lehmann, Anglo Irish found itself in very serious trouble. The Irish state stepped in first to guarantee the debts of Anglo Irish Bank and other banks, and then to nationalize Anglo Irish. Over the last couple of days, the Irish Independent has been releasing extracts from recorded phone conversations between senior Anglo Irish executives in the lead-up, and they … say interesting things … about the attitude of bailed out bankers. Some of the extracts:

[the problem, as stated to the Irish Central Bank]

bq. To cut a long story short we sort of said. ‘Look, what we need is seven billion euros… what we’re going to give you is our loan collateral so we’re not giving you ECB, we’re giving you the loan clause.

[how the regulator was quoted as responding when he he heard the proposed figure]

bq. Jesus that’s a lot of dosh … Jesus fucking hell and God … well do you know the Central Bank only has €14 billion of total investments so that would be going up 20 … Jesus you’re kind of asking us to play ducks and drakes with the regulations.

[where the 7 billion figure came from]

bq. Just, as Drummer [CEO David Drumm] would say, ‘I picked it out of my arse’.

[why the figure was quoted, even though senior management knew it was inadequate]

bq. That number is seven but the reality is we need more than that. But you know, the strategy here is you pull them [the Central Bank] in, you get them to write a big cheque and they have to keep, they have to support their money, you know.

[response]

bq. They’ve got skin in the game and that’s the key.

[response to the response]

bq. If they saw the enormity of it up front, they might decide they have a choice. You know what I mean? They might say the cost to the taxpayer is too high…if it doesn’t look too big at the outset…if it doesn’t look big, big enough to be important, but not too big that it kind of spoils everything, then, then I think you can have a chance. So I think it can creep up.

bq. So, so … [the €7 billion] is bridged until we can pay you back … which is never. [Loud laughter]”

[when the executives heard that the proposed bailout was causing diplomatic problems with other European states]

bq. So fuckin’ what. Just take it anyway . . . stick the fingers up.”

Also, loud laughter when one executive starts singing “Deutschland Uber Alles” in response to the worry that the saga was causing a rift between Ireland and Germany. As you might imagine, that’s going down a storm with German media.

John Maynard Keynes met Franklin Roosevelt on Monday, May 28, 1934. Both afterward said polite things to Felix Frankfurter, who had urged the two to confer: Keynes described the conversation was “fascinating and illuminating,” while Roosevelt wrote that “I had a grand talk and liked him immensely.”

But the best-known account is probably that of Secretary of Labor Frances Perkins, who wrote in her memoir, The Roosevelt I Knew,

Keynes visited Roosevelt in 1934 rather briefly, and talked lofty economic theory.

Roosevelt told me afterward, “I saw your friend Keynes. He left a whole rigmarole of figures. He must be a mathematician rather than a political economist.”

It was true that Keynes had delivered himself of a mathematical approach to the problems of national income, public and private expenditure, purchasing power, and the fine points of his formula. Coming to my office after his interview with Roosevelt, Keynes repeated his admiration for the actions Roosevelt had taken, but said cautiously that he had “supposed the President was more literate, economically speaking.” He pointed out once more that a dollar spent on relief by the government was a dollar given to the grocer, by the grocer to the wholesaler, and by the wholesaler to the farmer, in payment of supplies. With one dollar paid out for relief or public works or anything else, you have created four dollars’ worth of national income.

I wish he had been as concrete when he talked to Roosevelt, instead of treating him as though he belonged to the higher echelons of economic knowledge.

In Perkins’s story, Roosevelt did not grasp economic theory, and would have done better with a less figure-laden account of Keynes’s prescriptions. Historians often recycle her description as evidence of Roosevelt’s “limited understanding of some of the matters he had to deal with as president,” as Adam Cohen writes.

And yet we have evidence that Roosevelt was quite happy dealing with economic theory and a rigmarole of figures.

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In the recent TLS I have an essay on Benn Steil’s new book on Bretton Woods. Unlike some notices, mine is critical. You can read mine here. If you’re interested in the theory, put forward in Steil’s book, that Harry Dexter White caused US intervention in World War II, read below the fold. If you’re more interested in the late Baroness Thatcher, please carry on down to the other posts for today.

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When going through a jar of old coins during the weekend, I found one that I’d gotten when I lived in Florence in 1999, a kind of proto-euro, issued in Fiesole as a combination test/publicity stunt in the run-up to the real thing. It’s acquired a considerable coat of tarnish in the meantime, which is fitting, and I thought it might be no harm to make a photo of it (together with a number of other similarly verdigrised European coins) available, under a CC license, for anyone who might want to use it for blogposts or the like on the ongoing slow-motion calamity.

Ecco l’Euro! by Henry Farrell is licensed under a Creative Commons Attribution 3.0 Unported License.

That’s the headline for a piece I published in The National Interest last week. Opening paras

Among the unchallenged verities of U.S. politics, the most universally accepted is that of the crucial strategic and economic significance of oil, and particularly Middle Eastern oil. On the right, the need for oil is seen as justifying an expanded and assertive military posture, as well as the removal of restrictions on domestic drilling. On the left, U.S. foreign-policy is seen through the prism of “War for Oil,” while the specter of Peak Oil threatens to bring the whole system down in ruins.
The prosaic reality is that oil is a commodity much like any other. As with every major commodity, oil markets have some special features that affect supply, demand and prices. But oil is no more special or critical than coal, gas or metals—let alone food.

This piece expands on my earlier argument that the US has no national interest at stake in the Middle East, just a set of mutually inconsistent sectional interests and policy agendas. I don’t talk about climate change explicitly, but we’ll never have a sensible debate about climate change until oil is demystified.

Alex Gourevitch, with whom I’m collaborated in the past, has [a piece at Jacobin](http://jacobinmag.com/2012/10/two-hurricanes-2/) that’s somewhat hostile to environmentalism. The piece is written as a provocation, and, indeed, it has successfully provoked at least one person: me. Alex argues that greens substitute science for politics, neglect the social determinants of well-being, would deprive the global poor of technological benefits that could protect them from natural disasters and risk condemning people to lives wasted in drudgery.

No doubt Alex can find plenty of instances of people mouthing the sentiments and opinions he condemns. But the trouble with this sort of writing is exemplified by the endless right-wing blogs that go on about “the left” and then attribute to everyone from Alinsky to the Zapatistas a sympathy for Stalinist labour camps. Just like “the left”, people who care about the environment and consider themselves greens come in a variety of shapes, sizes and flavours. Taking as typical what some random said at some meeting about the virtues of Palestinians generating electricity with bicycles is inherently problematic.
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My last post about migration focused on the predictions of economists about the effects of open borders. Commenter Oliver made the point, surely correctly, that, given social, cultural, economic, and political feedback effects, it is simply impossible to know. But there are other ways of thinking about the issues other than looking at the aggregate consequences. For example, we can focus on the rights of individuals to seek new lives, associates and opportunities and on the rights of groups, peoples, states and nations to exclude outsiders. The unilateral right to exclude is well-represented in the literature, especially be the work of Christopher Heath Wellman (see his contribution to the excellent Debating the Ethics of Immigration: Is There a Right to Exclude? (with Phillip Cole arguing the opposite cases)).

Such works, though, typically address the issues at a somewhat idealized level, asking what rights (properly constituted legitimate democratic) polities do or don’t have. That doesn’t necessarily provide adequate guidance in the actual world; nor does it tell voters who think their state has the right to exclude whether or not to support exclusionary policies. Those strike me as very pertinent questions. Proponents of highly liberalized migration policies are often chastised for being insufficiently alive to the political realities. But a fair response to the self-styled realists is to ask, given the way things are, what they are actually prepared to countenance.
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