About End and Means

Evil Be Thou My Evil

by Theodore Dalrymple 
Often I read more than one book at a time. When I tire of one I fly to another. This is because the world has always seemed to me so various and so interesting in all its aspects that I have not been able to confine my mind to a single subject or object for very long; therefore I am not, never have been, and never will be the scholar of anything. My mind is magpie-like, attracted by what shines for a moment; I try to persuade myself that this quality of superficiality has its compensations, in breadth of interest, for example.

Be that as it may, I recently spent a day reading two books and constantly switching between them; the first Mao’s Secret Famine, by Frank Dikotter, a professor of Chinese at the London School of Oriental and African Studies, and the second Beyond Evil, by Nathan Yates, a journalist on the British tabloid newspaper, the Daily Mirror.

The famine of Dokotter’s title was that brought about by the Great Leap Forward in China between 1959 and 1962; the thing which was beyond evil was the murder of two little girls in the Cambridgeshire village of Soham, whose disappearance for a time captured the attention of the world.

The famine was probably the worst in world history, at least as measured by the absolute number of victims; according to Dikotter, there were 45,000,000 of them. Other famines have been worse relative to the total population: it is sobering to recall, for example, that the population of Ireland is still only 70 per cent of what it was before the great potato famine of the 1840s, when some in Britain regarded it coldheartedly as a Malthusian winnowing of the surplus population ordained by God.

Officially reported and reconstructed mortality in China, 1950-90 (famine period is shaded)

Nevertheless, there seems something peculiarly dreadful about the famine caused by the Great Leap Forward: from its complete predictability from previous human experience of such great leaps to the utter indifference of Mao Tse-tung to the deaths of scores of millions of his compatriots and to the suffering of hundreds of millions of more of them.

Of course, Mao could not have produced the famine single-handedly, but the other authors of the catastrophe acted mainly from cowardice or sycophancy, unattractive but nevertheless human qualities that few of us have never exhibited in the course of our lives.

One finishes Dikotter’s book with a visceral loathing of Mao, whose preparedness to contemplate seriously the deaths of hundreds of millions of people if only his dim and half-baked ideas about the good society might be put into practice places him among the select company of true moral monsters of the Twentieth Century, for example Lenin and Hitler. The only lesson that Mao drew from the Great Leap Forward and its terrible associated famine was that he should revenge himself on Liu Shao-chi, who did much to bring it to an end. Mao duly took his revenge on Liu during the Cultural Revolution, again at the cost of untold suffering and destruction. Mao cared about as much for humanity as most of us do for ants in the kitchen.         

By comparison with the deaths of 45,000,000 people, those of the two little girls in Soham might seem insignificant. What are two to set against so many? The culprit was a man called Ian Huntley, who had a long history of dubious sexual relations, including with 12 year-old girls. But though he had been reported to or investigated by the police several times (many witnesses, including the mother of a 12 year-old girl whom he had sexually assaulted, refused to testify against him), he had no convictions and therefore no criminal record; thus, when he applied for a job as school caretaker there was no official record of anything that he had done that precluded him from taking up the job. What amounts, legally-speaking, to tittle-tattle cannot be allowed to stand in a man’s way.

The two girls whom he murdered went for a walk one evening, and he asked him into his house. They suspected no ill of him because they already knew him from their school. What happened next is known only to him, who has never told anyone the truth of what he did. Probably he assaulted one or both of them sexually and then, realising that each would be a witness to any allegations made by the other, he killed them both, taking their bodies under cover of night to a distant ditch where he later burnt them beyond recognition.

When a hue and cry for the missing girls was raised he played to psychopathic perfection the part of a concerned person and good neighbour. With all the other villagers, he searched high and low for the two girls, though of course he knew all along where they were. He even uttered words of comfort to the distressed parents.

The question I asked myself as I read the two books, switching from one to another, is ‘How and on what scale do you compare the evil of the two men, Mao Tse-tung and Ian Huntley?’ It hardly seems satisfactory to say that Mao was 22.5 million times worse than Huntley because he was responsible for that many more deaths than he. And yet to utter the two names in the same breath seems almost to indulge in bathos.

Huntley probably did not set out to kill the two girls. He had been violent to women and adolescent girls before, but not so as to cause them permanent physical injury. The chances are that in killing them he was only trying to get rid of the evidence. He preferred their deaths to his exposure as a sex criminal.

Likewise, Mao did not set out to kill millions, but he much preferred to do so than have to back-pedal or re-think his ideas, a back-pedalling that would have cost him his power. If the implementation of his ideas led to disaster, therefore, it proved to him only that there were saboteurs, class traitors and capitalist-roaders still at large, enemies to be destroyed. Never could he admit that his ideas were wrong, and moreover wrong for obvious reasons that anyone of average intelligence ought to have been able to see. Let the heavens fall, he said to himself, so long as I preserve my power.

It is clear that the evil of these two men cannot be compared using a linear scale, and the same goes for the suffering of their victims. Who would expect the parents of the murdered girls to be consoled by the thought that at least the murder of their children was not the Great Leap Forward, that at least Huntley killed only two to Mao’s millions, and that, everyone else they knew apart from the girls had survived, which was certainly not the case during the Great Leap Forward, when every survivor knew of scores who had died? And what would one think of a defence lawyer who argued in court that Huntley was not as bad as many others in history that he could name if he wanted?

Huntley and Mao did what evil they could within their own spheres. Mao’s sphere, alas, was the largest population in the world, while Huntley was confined to a small village in England. Only one of them – Mao – got away with it. But both conscientiously did the worst they could.

The urge or temptation to place people in a league table of evil is very strong, as if evil were measureable on a linear scale, like height or weight. Was Stalin as bad as Hitler, and if not, by what percentage was he less bad? Twenty per cent, forty per cent? Serious arguments are held on this question; I have had them myself, as if something depended upon the answer, as if indeed there were an answer; likewise the comparison of communism with Nazism.

Protagonists of the view that communism was at least as bad as Nazism point to the fact that it killed more people. Protagonists of the opposite view say that, while this might be so, communism lasted seventy years, while Nazism lasted only twelve, as if a longer rule implied almost a right, or an excuse, to kill more victims. If one divides the number of victims by the number of years in power, Nazism was probably worse than communism, even if it is not always entirely clear who was the victim of which ideology. Therefore, goes the argument, Nazism was the worse.

Then, of course, there is the argument about intentions. Communism may have been responsible for more deaths than Nazism, but at least it killed in the name of a universal ideal, not in pursuit of the supposed benefit of only a small portion of mankind. This is a distinction that has always seemed to me rather odd. Who would be much consoled by being asked whether he would prefer to be brutally murdered in the name of a universal ideal or merely because he was a member of a hated racial or religious group? Is it better to be killed as a bourgeois, as a kulak or as a Jew?

In opposing evil, of course, we often commit acts that, in other contexts, would themselves be evil. We are tempted to suppose that the end justifies the means – which sometimes it must, of course, but not always, if for no other reason than that the connection between ends and means is inherently an uncertain one.

And there is another trap that awaits us: there is nothing more delightful to the human mind, or at least to many human minds, than to do evil in the name of good. The number of sadists is legion, and the impulse grows with its satisfaction. Even the dullest of understandings is lightning-quick in its capacity to rationalise sadistic urges in the language of morality. We can thereby come easily to resemble, even if in only attenuated form, those whom we so fiercely oppose and claim to abhor.

There was a remarkable instance of this in the book about the Soham murderer, Ian Huntley. When he was brought to court for his trial, a mob had gathered outside to hurl execration at him. Most in the mob were women, and many had their young children with them. These children screamed in terror as their mothers threatened the culprit (still technically innocent) with physical violence. There is little doubt that, had it not been for the presence of the police, the accused would have been torn limb from limb, children or no children.

But it is morally certain that these Mesdames Defarge lived lives that were not beyond reproach as far as their upbringing of their children was concerned. At the very least, the example of public behaviour that they set was appalling, and their disregard of the terror of their own children in itself a form of abuse. Almost certainly some of them were the kind of women who would have refused to cooperate with the police in the days before Huntley turned murderer. If reproached for their behaviour, they would, with that quickness of mind to which I have already referred, have returned the reproach to its sender by saying that he who made it was a sympathiser with Huntley, and therefore some kind of accomplice of his.

The mob that howled at Huntley resembled that which howled at the victims of the Cultural Revolution. It is true that, unlike the victims of the latter, Huntley had committed a real and terrible evil, but it was an evil so self-evident that it required no howling mob to make evident or to condemn it; those who suffered most from it were certainly not among the mob baying for (among other things) his death. 

Delight in evil is very widespread, even if it is not quite universal, and it takes many forms. I do not exclude myself from these strictures, for I have sometimes enjoyed inflicting suffering on others, even if only of a comparatively mild kind. I have even sometimes suspected that I have enjoyed living among, and reading about, evil in order to assure myself that I am a jolly good fellow, at least comparatively-speaking, using a linear measure of evil of course.   

The politics of Denial

New Year Looks No Less Dysfunctional Than The Old

By MARK STEYN

Ring out the new, ring in the old. No, hang on, that should be the other way around, shouldn't it?

Not as far as 2011 was concerned. The year began with a tea-powered Republican caucus taking control of the House of Representatives and pledging to rein in spendaholic government. It ended with President Obama making a pro forma request for a mere $1.2 trillion increase in the debt ceiling. This will raise government debt to $16.4 trillion — a new world record! If only until he demands the next debt-ceiling increase in three months' time.

At the end of 2011, America, like much of the rest of the western world, has dug deeper into a cocoon of denial. Tens of millions of Americans remain unaware that this nation is broke — broker than any nation has ever been.

A few days before Christmas, we sailed across the psychological Rubicon and joined the club of nations whose government debt now exceeds their total GDP. It barely raised a murmur — and those who took the trouble to address the issue noted complacently that our 100% debt-to-GDP ratio is a mere two-thirds of Greece's.

That's true, but at a certain point per capita comparisons are less relevant than the sheer hard dollar sums: Greece owes a few rinky-dink billions; America owes more money than anyone has ever owed anybody ever.

Public debt has increased by 67% over the last three years, and too many Americans refuse even to see it as a problem. For most of us, "$16.4 trillion" has no real meaning, any more than "$17.9 trillion" or "$28.3 trillion" or "$147.8 bazillion." It doesn't even have much meaning for the guys spending the dough.

Look into the eyes of Barack Obama or Harry Reid or Barney Frank, and you realize that, even as they're borrowing all this money, they have no serious intention of paying any of it back. That's to say, there is no politically plausible scenario under which the $16.4 trillion is reduced to $13.7 trillion, and then $7.9 trillion, and eventually 173 dollars and 48 cents.

At the deepest levels within our governing structures, we are committed to living beyond our means on a scale no civilization has ever done. Our most enlightened citizens think it's rather vulgar and boorish to obsess about debt. The urbane, educated, Western progressive would rather "save the planet," a cause which offers the grandiose narcissism that, say, reforming Medicare lacks.

So, for example, a pipeline delivering Canadian energy from Alberta to Texas is blocked by the president on no grounds whatsoever except that the very thought of it is an aesthetic affront to the moneyed Sierra Club types who infest his fundraisers.

The offending energy, of course, does not simply get mothballed in the Canadian attic: The Dominion's prime minister has already pointed out that Canada will sell it to the Chinese, whose politburo lacks our exquisitely refined revulsion at economic dynamism, and indeed seems increasingly amused by it. Pace the ecopalyptics, the planet will be just fine: Would it kill you to try saving your country, or state, or municipality?

Last January, the BBC's Brian Milligan inaugurated the New Year by driving an electric Mini from London to Edinburgh, taking advantage of the many government-subsidized charge posts en route. It took him four days, which works out to an average speed of 6 mph — or longer than it would have taken on a stagecoach in the mid-19th century. This was hailed as a great triumph by the environmentalists. I mean, c'mon, what's the hurry?

What indeed? In September, the 10th anniversary of a murderous strike at the heart of America's most glittering city was commemorated at a building site: The Empire State Building was finished in 18 months during the Depression, but in the 21st century the global superpower cannot put up two replacement skyscrapers within a decade.

The 9/11 memorial museum was supposed to open on the 11th anniversary, this coming September. On Thursday, Mayor Michael Bloomberg announced there is "no chance of it being open on time." No big deal. What's one more endlessly delayed, inefficient, over-bureaucratized construction project in a sclerotic republic?

Barely had the 9/11 observances ended than America's gilded if somewhat long-in-the-tooth youth took to the streets of Lower Manhattan to launch "Occupy Wall Street." The young certainly should be mad about something. After all, it's their future that got looted to bribe the present.

As things stand, they'll end their days in an impoverished, violent, disease-ridden swamp of dysfunction that would be all but unrecognizable to Americans of the mid-20th century — and, if that's not reason to take to the streets, what is?

Alas, our somnolent youth are also laboring under the misapprehension that advanced Western societies still have somebody to stick it to. The total combined wealth of the Forbes 400 richest Americans is $1.5 trillion. So, if you confiscated the lot, it would barely cover one Obama debt-ceiling increase.

Nevertheless, America's student princes' main demand was that someone else should pick up the six-figure tab for their leisurely half-decade varsity of social justice studies. Lest sticking it to the Man by demanding the Man write them a large check sound insufficiently idealistic, they also wanted a trillion dollars for "ecological restoration."

Hey, why not? What difference is another lousy trill gonna make?

Underneath the patchouli and pneumatic drumming, the starry-eyed young share the same cobwebbed parochial assumptions of permanence as their grandparents: We're gayer, greener and groovier, but other than that it's still 1950 and we've got more money than anybody else on the planet, so why get hung up about a few trillion here and a few trillion there?

In a mere half-century, the richest nation on earth became the brokest nation in history, but the attitudes and assumptions of half the population and 90% of the ruling class remain unchanged.

Auld acquaintance can be forgot, for a while. But eventually even the most complacent and myopic societies get re-acquainted with reality. For anyone who cares about the future of America and the broader West, the most important task in 2012 is to puncture the cocoon of denial.

Instead, the governing class obsesses on trivia. Just to pluck at random from recent Californian legislative proposals, a ban on non-fitted sheets in motels, mandatory gay history for first graders, car seats for children up to the age of 8. Why not up to the age of 38? Just to be on the safe side. And all this in an ever more insolvent jurisdiction that every year drives ever more of its productive class to flee its borders.

Tens of millions of Americans have yet to understand that they can no longer be kicked down the road, because we're all out of road. The pavement ends, and there's just a long drop into the abyss. And, even in a state-compliant car seat, you'll land with a bump.

At this stage in a critical election cycle, we ought to be arguing about how many government departments to close, how many government programs to end, how many millions of government regulations to do away with. Instead, one party remains committed to encrusting even more barnacles to America's rusting hulk, while the other is far too wary of harshing the electorate's mellow.

The sooner we recognize the 20th century entitlement state is over, the sooner we can ring in something new. The longer we delay ringing out the old, the worse it will be. Happy New Year?

Starve the Beast

The Laffer Curve And Austrian School Economics

By Keith Weiner

Jude Wanniski, a writer for the Wall Street Journal, coined the term “Laffer Curve” after a concept promoted by economist Art Laffer. Laffer himself says the idea goes back to the 14^th century

 The idea is that if one wants to maximize the government’s tax revenue, there is an optimal tax rate. (Ignore for the moment whether or not you think this makes good economics in the long run, or whether or not you think this is even moral.)

 Laffer noted that if the tax rate is zero, then the government gets no revenue. But likewise, if the rate is set at 100%, the government also gets no tax revenue. Mainstreamers say that there is no incentive to produce income at 100% tax rate, and this is true. But even more importantly, there is no means: a 100% tax rate is pure capital destruction.

 The “Laffer Maxima”, i.e. the tax rate which maximizes the tax take, is somewhere between 0% and 100%. The Wikipedia article shows a picture of a Laffer Maxima at 70%, and implies that although it’s somewhat controversial this may be the right number.

 There are two points about the Laffer Curve that are important to consider.

 First, what in the world makes any economist think that he can gin up some differential equations and compute the right value for this Maxima? In the first place, every market is composed of an integer number of people transacting an integer number of trades, and each of those trades consists of an integer number of goods. People do not behave like particles in an ideal gas—they have reason and volition. The very idea of modeling a large number of people with equations is preposterous. Never mind that degrees are awarded every year to economists who purportedly do just that.

 Second, what makes anyone think that the Laffer Maxima is a constant?

 Let’s do a thought experiment that is in the vein of the Austrian School of economics. Let’s consider the boom-bust cycle, or what Austrians note is really the credit cycle. The central bank first expands credit, which flows into wealth-creating as well as wealth-destroying activities (malinvestment). As the expansion ages, an even greater proportion of credit funds wealth-destroying activities. Sooner or later the boom turns to bust. Malinvestments are liquidated, people are laid off from their jobs, portfolios take big losses, tax revenues decline, etc.

 One clue can be found right there, in my description of the bust: tax revenues decline.

 OK, maybe the Laffer Curve remains static and the only thing that changes is the absolute tax dollars?

 Let’s continue comparing the boom and the bust phases. In the boom phase what’s happening is that economic activity is being stimulated, i.e. beyond what it would naturally have been. This fuels demand for everything: commodities, labor, construction, fuel, professional services, etc. And all of the people hired in the boom are demanding everything too. It feeds on itself synergistically, for a while.

 At this stage, the frictional cost of taxes may be masked by the lubricant and fuel of credit expansion. This is especially so when everyone feels richer and richer on paper. People spend freely and we saw this in spades in the most recent boom that ended in 2007.

 Now let’s look at the bust phase. The net worth of most people is falling sharply. Many are laid off, their careers, and sometimes lives, shattered. A huge component of the marginal bid for everything is withdrawn. People struggle to make ends meet. Budgets are stretched to the max.

 I submit for the consideration of the reader that in the bust phase, any change in the tax rate drives a big change at the margin of economic activity. The tax rate is more significant in the bust phase than it was in the boom phase. The Laffer Maxima is not a hard-wired, intrinsic value of 70 (or 42 for fans of Douglas Adams). Like everything else in the market, it moves around. It is subject to the forces of the markets.

 I will close with an example. Consider the marginal restaurant. Let’s say it is generating $25,000 per month in gross revenues. Net of $24,700 in expenses, it is generating positive cash flow of $300 per month. Why would the owner even keep it open? Well, times may get better…

Now, let’s say the tax rate goes up a little, say 100 basis points. The restaurant, making little money, pays essentially no taxes anyway. So this does not cause a direct impact. But what about the patrons of the restaurant? If their blended tax rate was 25%, then an increase of 100 basis points (i.e., to 26%) is a tax increase of 4%. These people will have to reduce their budget by 4%.

 One logical place to cut is eating out. Suppose that they reduce their spending in the restaurant by $1,000, in aggregate.  Now our restaurant has $24,000 per month in gross revenues. But its fixed costs cannot be reduced. And even the labor can’t be reduced in this case. The only reduction will be food supplies. So let’s say food supplies are reduced 1/3 of $1,000, or $333. So now the restaurant has expenses of $24,367. Whereas it formerly made $300 profit per month, now it makes a loss of $367 per month.

 The owner can’t continue this very long. And so he closes shop. He defaults on the loans on the fixtures and tenant improvements, lays off 8 people, leaves the electric and gas companies with fixed infrastructure which no longer produces revenue for them, etc.

 The impact to the economy (and hence to the total taxes collected) is negative and disproportionate to the tax increase.

It is happening right now

Greek Lender Of Last Resort - Iran?

by Tyler Durden

A fascinating article by Reuters really brings to bear the reality that Greece faces as lenders and trade creditors refuse to help (and why should they realistically) with energy needs. 

The harsh reality that Iran (yes that nuclearized Iran) is the main provider of Greek oil needs surely puts into perspective what seemingly unlikely events can occur when a person, corporation, country, gets desperate. 

Perhaps we should reflect the other way, that while all the world's bankers and money-men refuse to lend Greece money, Iran has truly become the lender of last resort for Greek survival - as it strikes us that energy needs will/should trump a coupon payment any day.

(Reuters) - Greece is relying on Iran for most of its oil as traders pull the plug on supplies and banks refuse to provide financing for fear that Athens will default on its debt.

Traders said Greece has turned to Iran as the supplier of last resort despite rising pressure from Washington and Brussels to stifle trade as part of a campaign against Tehran's nuclear program.

The near paralysis of oil dealings with Greece, which has four refineries, shows how trade in Europe could stall due to a breakdown in trust caused by the euro zone debt crisis, which is threatening to spread to further countries.

"Companies like us cannot deal with them. There is too much risk. Maybe independent traders are more geared up for that," said a trader with a major international oil company.

"Our finance department just refuses to deal with them. Not that they didn't pay. It is just a precaution," said a trader with a major trading house.

"We couldn't find any bank willing to finance us. No bank wants to finance a deal for them. We missed some good opportunities there," said a third trader.

More than two dozen European traders contacted by Reuters at oil majors and trading houses said the lack of bank financing has forced Greece to stop purchasing crude from Russia, Azerbaijan and Kazakhstan in recent months.

Greece, with no domestic production, relies on oil imports and in 2010 imported 46 percent of its crude from Russia and 16 percent from Iran.Saudi Arabia and Kazakhstan provided 10 percent each, Libya 9 percent and Iraq 7 percent, according to data from the European Union.

"They are really making no secret when you speak to them and say they are surviving on Iranian stuff because others will simply not sell to them in the current environment," one trader in the Mediterranean said.

Leading Greek refiner Hellenic Petroleum denied having any difficulty in buying crude and declined to comment on the exact breakdown of oil supplies. Greece's second biggest refiner Motor Oil Hellas declined to comment.

Greece's four refineries, belonging to Hellenic and Motor Oil, together can process around 400,000 barrels per day. That figure has fallen to around 330,000 bpd in recent months due to maintenances and upgrades.

"Our crude slate is broadly unchanged over the last few months and we are always viewing to optimize our refining operations," a Hellenic spokesman said.

"Our supply agreements are based on purely commercial considerations, no other factors interfering," he said.

Shipping data obtained by Reuters showed four cargoes taking crude from the Middle East outlet of Sidi Kerir on the Egyptian Mediterranean to Greece in September. Three sailed in October. Traders said all carried Iranian Heavy crude and more was coming in November.

"Iran is the only one who might be working on an "open credit" basis right now, given its own difficulty in selling crude," one trader said.

Imports of Iranian oil to the United States are subject to sanctions but are still fully legal to Europe and Asia. The European Union said this week it may consider oil sanctions against Iran within weeks, after a U.N. agency said Tehran had worked to design nuclear bombs.

Iran denies trying to build atom bombs and an Iranian official, who declined to be named, said Tehran has no difficulty in selling its oil.

However, shipping sources said that interest in Iranian crude, which is cheaper than competing Russian grades but politically sensitive, has prompted the country to continue storing crude in the Red Sea, to make it available for swift delivery.

The rest of the oil industry drastically cut crude storage last year after forward prices for crude moved to a discount to prompt, making such operation loss-making.

Iran is storing crude in four very large crude carriers (VLCCs) in the Red Sea.

Most. Tragic. Species. Ever.

And a Happy New Year

"Family working in the Tifton Cotton Mill. Mrs. A.J. Young works in mill and at home. Nell (oldest girl) alternates in mill with mother. Mammy (next girl) runs 2 sides. Mary (next) runs 1,5 sides. Elic (oldest boy) works regularly. Eddie (next girl) helps in mill, sticks on bobbins. Four smallest children not working yet. Mother said she earns $4.50 a week and all the children earn $4.50 a week. Husband died and left her with 11 children. Two of them went off and got married. The family left the farm two years ago to work in the mill."

Lewis Wickes Hine, The Youngs January 22, 1909. Tifton, Georgia. 

By Nicole M. Foss

We're supposed to be celebrating the birth and the life of the man whose only ever act of aggression was he threw the money changers out of the temple, right? 

Just checking. 

It's just that I can't seem to find much of anything that reminds me of that.

Looks to me as if the money changers won after all, to be honest. Looks like they've made the man who threw them out of the temple just another pawn in their game. And his followers. All in good faith. Thirty pieces of silver for everyone. 

So what do we see happening in 2012? I'm going to have to say that I see a lot of credit downgrades, sovereigns, banks, and precious few upgrades. One or more countries leaving the Eurozone, which will then become very hard to keep intact. 

A lot of potential mayhem, and negatives, and tons of lies too. I know some will say that's what I see every year. Well, yes, I do. And it all gets worse every year. You just don't necessarily see it in your personal lives yet. Others do though. 

It sneaks up on them when they least expect it. And then they find themselves out of a job, a home, a pension. It will sneak up on you too. Unless you can safely count yourself among the 1%. Then something else will sneak up on you. That may take us beyond 2012, but it will come to pass.

A series of articles in this week's Daily Telegraph provides a good take on the topic, and leads us quite fluently into the next, and bigger, set of problems. First: what already has been and is being lost, according to Paul Farrow:

Average UK family household income falls 8.4% this year

The latest Asda Income Tracker has revealed that family spending power fell by £15 a week in November 2011, leaving the average UK family with £161 of weekly disposable income – 8.4 per cent down from this time last year.

If the average family(!) has only $250 per week to feed and clothe itself, we may just have a slight problem. 

Austerity measures are only now starting to kick in for real in Britain, and lots of people have bought homes at prices that won't last much longer. Hence, millions that have just £161 in weekly disposable income today will be further squeezed, and mercilessly so. You buy a home in a bubble, you lose it in the bust. 

Our societies are being increasingly gutted, cut to the bone. This is not something that will hit only some people, in some areas, it will affect everybody, and all over the western world. Japan, too, is on the verge of implosion. And China .. well, with home prices dropping dozens of percentage points in just one or two months, China may well be on the verge of an explosion.

2012 may be the year for increasing large-scale conflicts, such as another US attack in the Middle East. There's a lot of chest-thumping going on, and plenty of theaters to choose from. Iran, Syria, Egypt and more. I would be surprised though if it happens that soon, though I'm sure it will eventually. 

War is simply too good a way to deflect attention from domestic mayhem, and solidly proven, for politicians to ignore. But I don't really see Obama invading any country yet in order to save his career or his campaign. Not yet.

Don't see it in Europe either. 2012 looks too early there too, though that may change if things get out of hand, too fast. We will see a further run-up to what we at TAE call the Balkanization of Europe: the re-surfacing of age-old conflicts and prejudices. As a truly deeper political union looks completely out of reach, a truly deeper division looks all but inevitable.

Europe doesn't have either the political nor the financial means to "save" its periphery. It can sweep Greece, Portugal, Ireland under the carpet for a while, but that's about it. Handing out half a trillion euros to 523 banks in exchange for already shredded paper assets will prove to be nothing but counterproductive. 

It doesn't make any bank more solvent, it only puts more pressure on both the financial position of every European citizen, and on the ties that have bound their respective countries closer together for 50 years. Today, all major banks, and all countries too, are preparing scenarios for a Eurozone break-up. 

What may be worse than all of this is a conflict that is brewing, slowly simmering, and that will tear our societies apart from within. It happens slow enough to perhaps not be much noticed next year, but that is not a good thing: it would be better to put out the fire before it spreads. Unfortunately, there is no way in sight to put it out. It looks like it will have to burn it course before it fades. This one will pit parents against their own children and grandchildren. That's how you tear a society apart.

Again from the Telegraph, this time Ian Cowie:

Baby boomers with 80% of UK wealth shouldn’t feel guilty about younger generations' problems

Baby boomers shouldn’t feel guilty about being better-off than younger generations, because people aged over 50 today saved harder and spent less when they were young than is the case today.

That’s the conclusion of analysis of more than 2,000 people by the Chartered Insurance Institute (CII). The study acknowledges that baby boomers – or those born within 20 years of the end of World War II – were fortunate to enjoy easy mortgage availability and decades of house price inflation plus final salary or defined benefit pensions denied to most young adults today.

As a result, about 80% of the Britain's net personal wealth of £6.7trn or £6,700bn is owned by people aged over 50 while younger folk often have no savings, substantial debts and little hope of becoming homeowners any time soon.

The average age of first-time buyers is now 37 or about 10 years later than two decades ago.

But the CII claims that 'generation rent' are partly to blame for their own misfortune because many fail to follow their elders’ example by starting to save early. They have come to expect regular foreign holidays, among other treats once regarded as luxuries, often funded by credit cards taken out earlier than their parents did.

A third of the people surveyed who are now in their thirties spent more than half their net income on leisure and entertainment when they were in their twenties, compared to a fifth of those who are now in their fifties and sixties.

Most of the younger generation now expect to holiday abroad an average of 2.5 times a year, whereas a quarter of baby boomers never travelled overseas in their twenties. [..]

"While some of this can be baby boomers received undeniable financial advantages during their working lives, there's no doubt that their financial security today is also due to a more frugal mentality in their youth. Today's generation spends more and saves less when compared to the baby boomers, and while people should enjoy their youth and live for today they should not do so at the expense of planning for their tomorrow." [..]

People who start to save young are far more likely to achieve an acceptable outcome than those who wait until later because of compound interest. Pensions are not the only way to save for retirement but they do enjoy substantial tax reliefs. Youngsters who say savings and pensions are boring should ask themselves how exciting poverty in old age is likely to be.

I'd say the numbers, and the opinion offered, speak for themselves. 

Let's see here. A generation is normally seen as covering about 25 years. So if we say the youngest baby boomer is now about 50, then we have another generation aged 25-50, and yet another aged 0-25. I know that this is playing with the numbers a bit, but that's not all that important. 

What is important is that these generations are set to blame each other for all manner of things. And I can't see how that will work out alright.

The baby boomers made one crucial and fatal mistake right from the start. They didn't have enough children. At least not to keep their pension systems going. The oldest are fine; but anyone now aged 50 has very little to no chance of ever getting a penny in pension money. 

Pensions plans are Ponzi schemes, pyramid games. They need fresh blood all the time, and always more of that than there was before. Well, those days are long gone. Moreover, the younger generations, in general and on average, make less money than their parents. And they have to pay a lot more to go to college and university. Ponzi schemes don't collapse slowly. They're here one day and gone the next.

Stories about frugality are cute, but comparing our societies from 30 or 50 years ago with today is real tricky. How much richer did the baby boomer generation get by letting their kids spend? How much did, and still do, they profit from real estate prices so high younger generations can't afford to buy a home?

That is an endless and useless discussion. Useless because the young will take over political power at some point regardless of any external circumstances. What's disconcerting is that this transition may take too long in the face of a rapidly collapsing economy. 

Wherever you look, unemployment amongst young people is far higher than the average. Still, the older generations think their children will pay to keep their pension money coming in anyway. With what, though? 

The baby boomer generation, willingly or not, it makes no difference, have accumulated a large part of their wealth at the cost of the future. And perhaps, but only perhaps, we would be able to keep that mirage of borrowing from infinity going a little longer if we could keep the economy growing at 5-6-7% annually. 

Thing is, we can't. We're stuck in the biggest and deepest credit crunch mankind has ever seen, and we haven't even started to see its true character. In fact, the only thing alleged to be a solution is more of the same: borrowing from the future. Which is what each and every bailout plan is. Nothing more, nothing less.

So we’re setting ourselves up for an epic fight that will tear our societies apart, rip them to shreds. Who's going to willingly give up their pension? Who’s going to volunteer to pay for other people's pensions when they can't even earn enough to feed their own kids? In the end, this will be decided by political power. Or rather, it would, provided we would be able to have our societies function more or less normally until then. What are the odds?

This is of course not all the whole coin, not all sides to it. Our major problems are seldom one- or even two-dimensional. E.S. Browning for the Wall Street Journal:

Oldest Baby Boomers Face Jobs Bust

Many older Americans fear they will be working well into their 60s because they didn't save enough to retire. Millions more wish they were that lucky: Without full-time jobs, they are short of money and afraid of what lies ahead. [..]

Older Baby Boomers are trying to postpone retirement, as many find their spending habits far outpaced their thrift. With U.S. unemployment at 8.6%, and much higher among people in their teens and 20s, younger members of the labor pool accuse Boomers of refusing to gracefully exit the workplace.

But their long-held grip is slipping, as employers look past older Americans to younger, cheaper workers. The Labor Department counts people as unemployed only if they have looked for a job in the previous month. By that definition, 6.5% of workers aged 55 to 64 were unemployed in October, below the national average but more than twice the jobless rate for the group five years earlier.

Taking into account the number of older people who want full-time work but are unemployed, working part-time or need a job but have quit looking, the percentage jumps to 17.4%, or 4.3 million Americans ages 55 to 64, according to the government data. The number has grown from 2.4 million in October 2006. This group without full-time work now accounts for more than one in six older Americans seeking positions. [..]

Older people have more trouble finding new jobs. Among unemployed workers older than 55, more than half have been looking for more than two years, compared with 31% of younger workers, according to the Heldrich Center. Among older workers who found a new job, 72% took a pay cut, often a big one, the Rutgers data show.

The problem has been building for decades: Inflation-adjusted, middle-class incomes have stagnated in parallel with a free-spending culture of indebtedness that has left many Americans with too little saved. Over the same time, many U.S. companies cut pensions and shifted to less-generous retirement-savings plans such as 401(k) accounts that have stagnated or diminished in the market tumult of past years.

Older families aren't just failing to save, they are increasingly draining accounts that were supposed to help finance retirement.

The median household headed by someone aged 55 to 64 has $87,200 in retirement accounts and other financial assets, according to Strategic Business Insights' Macro Monitor database. If each of the 4.3 million unemployed or underemployed people in this age group runs through half the family savings, that will, in theory, total $188 billion in lost retirement money. [..]

The trouble spreads across generations. Older people hang on to jobs or, out of desperation, take lower-level jobs for which they are over-qualified. Either way, they displace younger workers. [..]

At an age when they should be generating peak incomes and savings, many unemployed and underemployed Americans are applying for early Social Security benefits and spending what's left in their retirement accounts.

Yes, it's not just generation versus generation, not just parents against their children. The problem is much more perverted. We no longer have a functioning financial system, a functioning banking system, or a functioning political system for that matter. All these systems died on the same battlefield. Credit.

When Richard Nixon threw out the gold standard in 1971, the younger baby boomers were getting their first jobs and buying their first homes. Happy Days! It took an entire generation, actually a bit more than 25 years, for the inevitable outcome of that decision to reach the high point of its devastating glory. 

But here we are now. We've all been had. All but 1% of the people. When it's no longer the fruits of his labor that determine a man's wealth, but the fruits of his wagers, when our leaders are those who are best connected to the moneylenders in the temple, instead of those that throw them out, there is no way we could not have ended up where we have.

Still, pitted against each other we will be. Whether in our own countries, or in skirmishes between countries -Europe-, or a WWIII over energy resources that keep the cattle at home docile, we will fall for it all again. We haven't learned much. But then again, maybe it isn't about learning after all. 

We are ready and willing to destroy our societies, and eventually our planet, over a few scraps falling off the big table, like a Mac Mansion, an iPod, an SUV, because that is who we really are. Because we can make ourselves believe those are not scraps, that we are indeed kings now, seated at the table, and heaven knows we have lived better than ancient kings of any age over the past decades. 

And most of all because we are no good at all at planning long-term. We can pay into a pension plan, that seems long-term, but at the very same time we can't figure out that if at some point there's less new contributors than older ones, that plan must and will implode.

We all will swear we love our children above anything in the world, and most would give their lives for their kids. And we honestly mean it when we say it.

The reality, however, is that we leave our children with a world that is polluted beyond recognition, in which species disappear at a rate 1000 times faster than before, and in which everything we’ve trained our kids for is vanishing right before their eyes.

Our "leaders" are psychopath lackeys of a long bankrupt financial system that uses its servants to gobble up the yet to be earned wealth of our progeny, and we just sit by and watch it happen. 

We never noticed what happened to our financial systems when Nixon pulled his trick in '71, after all, we got richer, right, so who's to complain? We never noticed how the increasing fake wealth drove our societies and families apart, we wanted more space, more individualism, more things to buy and possess. We never noticed how our energy supplies started to run out; hey, we're driving more than ever, so there must be more oil than ever...

We have done exactly the same that any primitive life form would do when faced with a surplus, of food, energy, and in our case credit, cheap money. We spent it all as fast as we can. Lest less abundant times arrive. It's an instinct, it comes from our more primitive brain segments, not our more "rational" frontal cortex.

It's not that we're in principle, or talent, more devious or malicious than more primitive life forms. It's that we use our more advanced brains to help us execute the same devastation our primitive brain drives us to, but much much worse. 

That's what makes us the most tragic species imaginable. We’ll fight each other, even our children, over the last few scraps falling off the table, and kill off everything in our path to get there. And when we're done, we’ll find a way to rationalize to ourselves why we were right to do so. 

We can be aware of watching ourselves do what we do, but we can't help ourselves from doing it. 


Most. Tragic. Species. Ever. 

The unholy marriage

How protest became a prisoner of the media

Once, radicals used the media to try to spread their ideas. In 2011, the media class used radicals to spread its ideas.

by Brendan O’Neill 

2011 was the year in which protest became a prisoner of the media. Many end-of-year commentaries have gushed about the fact that, in contrast to the ‘complacency and apathy’ of the 2000s, 2011 was a year of political tumult everywhere from Tunisia to Manhattan. Yet while some of these protests were refreshing, there was something weird about them, too: the extent to which they were dependent on the media. Modern protest is increasingly reliant upon the media not only for impact, but also for ideas, and this gives the media extraordinary power to create political possibilities today.

It is fitting that 2011 ended with Time magazine naming ‘The Protester’ its Person of the Year and using a photoshopped image of an Occupy protester crossed with an Arab Spring protester on its cover. Because in many ways, these protesters are creations of the media; certainly they are creatures of the media, their complaints of the past 12 months having been sanctioned and, more importantly, shaped by the media class.

The Occupy movement was set in motion by the media, by one of the most elitist magazines on the market: the ‘anti-capitalist’ Adbusters. Having spent the past 22 years railing against the‘army of zombies’ that makes up modern Western society, with our ‘glazed eyes, blank stares, faces twisted into ugly masks of want’, Adbusters decided to kickstart a live-performance version of its disgust for the masses. It published a one-page advert in its July edition saying, ‘What is our one demand? Occupy Wall Street, 17 September. Bring tent.’ The non-brainwashed sections of society, those good people who aren’t a part of what Adbusters brands the ‘billions and billions’ who have been ‘disfigured’ by consumerism, heeded the call and headed to Wall Street.

It is remarkable how much the outlook of Adbusters, which is only a more quirkily stated version of the anti-consumerist, anti-wealth sentiment rife amongst the respectable media classes, has infused the now-global Occupy movement. Occupy Wall Street complains that ‘the working class of [America] has been brainwashed’. A placard at Occupy London says capitalism has turned the masses into ‘chumps and tarts’. Here, the supposedly radical occupiers faithfully ape the political posturing of their founders and patrons in the cliquish liberal media. And they have the temerity to call themselves ‘the 99%’.

The Occupy movement wasn’t only founded by the media - it has been sustained by it, too. Occupy has continually sought legitimacy and traction, not in the public square, with its unpredictable hordes, but in the media square. The absence of any clear constituency for these self-styled voices of radicalism to engage with means they increasingly see the media as their key, perhaps only platform. And their dearth of a political alternative, their absence of an overarching ideal, means they’re extremely prone to having their agenda set for them by others. It is striking that influential voices in the media have implored the Occupy movement to ‘resist the pressures to clarify [its agenda]’ and to stick with its ‘lack of concrete demands’ - because it is the very amorphousness of Occupy that allows media practitioners to project their concerns on to it, to influence the political agenda through treating the occupiers almost as ventriloquist dummies.

So when a supportive columnist says the great thing about Occupy’s ideology-lite, goal-free protesting is that it opens up a space for ‘creating new possibilities’, you can’t help feeling that the only class ‘creating possibilities’ today is the media class. They continually project their own politics and prejudices on to the Occupy movement, claiming it’s all about social inequality, the problem of greed, the need for higher taxes, or whatever their social set’s bugbear happens to be. It’s notable that Time magazine’s end-of-year issue congratulated Occupy for its role in ‘shifting the national conversation’, by which it meant rejuvenating chattering-class debates. Apparently, ‘the Nexis news-media database now registers almost 500 mentions of “inequality” each week’, compared with only 91 a week before Occupy started.

How fitting that a movement founded by the media, sanctioned by the media and crowned ‘Person of the Year’ by that most respectable media outlet should have its success measured in terms of newspaper word-counts rather than real-world shifts. Time is really pleased that Occupy has acted as a kind of willing conduit for the arguments of the respectable media class, boosting the standing of today’s cultural elites.

Of course, radicals have always had a relationship with the media. French revolutionaries published propagandistic pamphlets. The street-fighters of 1968 loved having their protests photographed and written about, while civil-rights protesters from the American South to Northern Ireland chanted ‘The whole world is watching!’ when there were TV cameras around. Yet in the past, radicals used media outlets to communicate their own ideas and demands. Today, we have an almost perfect inversion of that scenario: now, the media class uses radicals to push its own narrow political agenda.

There are three problems with the unholy marriage between protest and the media that was consummated in 2011. First, it nurtures a nasty elitist outlook, where those who fail to join in the media-celebrated protesting - the vast majority of people - are denounced as uncaring or dumb. Where Adbusters labels us ‘zombies’, Time prefers to fret about those who are still in an ‘internet-induced fugue state, quietly giving in to hopelessness’. Second, it allows for the undemocratic setting of political agendas, where small groups of cut-off hacks and activists claim to speak on behalf of ‘the 99%’ and claim to have a special insight into what are the big problems facing the world (Time says the biggest problem is ‘hellbent megascaled crony hypercapitalism’ - expect to see that on an Occupy placard soon).

And third, it gives rise to a very shallow, contradictory form of solidarity. One of the reasons modern protesters are so drawn to the media, seeing it as a tool for ‘globalised action’, is because they feel they have more in common with other middle-class ‘creators of possibilities’ overseas than they do with the everyday people who inhabit their own streets. This is not internationalism, but rather a means of escaping the disappointing masses at home by creating media-enabled links with like-minded people abroad. Sadly, the largely educated protesters of the Arab Spring have also played this game, preferring to link up with decadent Occupy movements in New York and London rather than engage with and enthuse and potentially lead the people of their own nations.

The media has won its new political authority by default rather than design: it is the corrosion of the old political constituencies and the crisis of political thinking that created the space for the smart set to wield such influence. Consequently, we’re obliged to ask of 2011: was it really an historic year of political upheaval, on a par with 1848, or the year when the undemocratic, pious media class successfully conquered and colonised the world of protest?