Why are global policy-makers unwilling to deal with high unemployment?

Paul Krugman re-tackles this important question, and tries out a different answer from his usual. Let's see if we agree.

He begins with the glaringly obvious:

Unemployment is a terrible scourge across much of the Western world. Almost 14 million Americans are jobless, and millions more are stuck with part-time work or jobs that fail to use their skills. Some European countries have it even worse: 21 percent of Spanish workers are unemployed. ... Yet a strange thing has happened to policy discussion: on both sides of the Atlantic, a consensus has emerged among movers and shakers that nothing can or should be done about jobs.

Krugman then offers the latest evidence that the people in power are determined to do nothing, the European OECD report, which he also discusses here.

But there really are things that can be done. As many have said (myself included), the problem is personal debt — mortgages, credit card payments, student loans. There's little demand for goods in a world of un- and underemployment, job insecurity, large household debt burdens, and a post-bubble housing market. Who's going to spend in that environment? Only the wealthy and the falsely secure.

Krugman heartily agrees. So what responses are available?

For example, we could have W.P.A.-type programs putting the unemployed to work doing useful things like repairing roads — which would also, by raising incomes, make it easier for households to pay down debt. We could have a serious program of mortgage modification, reducing the debts of troubled homeowners. We could try to get inflation back up to the 4 percent rate that prevailed during Ronald Reagan’s second term, which would help to reduce the real burden of debt.

All good things that won't be tried. Krugman knows it, and we know it.

Which leads to the crux of the article, its title, and my disagreement (again) with the Professor. He now thinks the reason nothing will be done is not a failure of ideas, but "learned helplessness" on the part of policy-making elites:

As I see it, policy makers are sinking into a condition of learned helplessness on the jobs issue: the more they fail to do anything about the problem, the more they convince themselves that there’s nothing they could do. And those of us who know better should be doing all we can to break that vicious circle.

I have a different thought: Let's apply Occam's Switchblade. The people who are doing nothing, are doing it because they want to. The rest is just words, words, words and a barely credible cover story.

Please, Professor; sometimes you just have to let people show what they want and agree that they really do want it.

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Carbon emissions hit record high last year

We were supposed to see movement in the other direction due to the global recession. It's even more of a concern since the Republicans in the US are obsessed with denying that there is an issue. How can we address the problem when so many can't even admit that a problem exists?

Greenhouse gas emissions increased by a record amount last year, to the highest carbon output in history, putting hopes of holding global warming to safe levels all but out of reach, according to unpublished estimates from the International Energy Agency.

The shock rise means the goal of preventing a temperature rise of more than 2 degrees Celsius – which scientists say is the threshold for potentially "dangerous climate change" – is likely to be just "a nice Utopia", according to Fatih Birol, chief economist of the IEA. It also shows the most serious global recession for 80 years has had only a minimal effect on emissions, contrary to some predictions.

Last year, a record 30.6 gigatonnes of carbon dioxide poured into the atmosphere, mainly from burning fossil fuel – a rise of 1.6Gt on 2009, according to estimates from the IEA regarded as the gold standard for emissions data.

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Life in a kleptocracy: How Mikhail Khodorkovsky came to own the giant oil company Yukos

Matt Taibbi, who once lived and worked in Russia, has an interesting piece about the current media concern over Putin's prosecution of Mikhail Khodorkovsky, the head of both the massive Russian oil company Yukos and the large Russian bank Menatep.

For Taibbi, it's foolish to feel bad about Khodorkovsky, since he's not quite the "moderate businessman" he's lately painted to be. My interest in the article is the story behind Taibbi's justification for vilifying Khodorkovsky.

This is what life looks like in a kleptocracy, a state that's run by crony capitalism on steroids. In a kleptocracy, everything owned by the government can be stolen or bought cheap if you have the right connections — and those connections are in government precisely for the purpose of selling public property to their friends for personal gain. It's institutionalized looting.

Here's Taibbi on how Yukos, the formerly state-owned oil company, was acquired. Note the role of the bank Menatep, which Khodorkovsky runs, in the process:

Khodorkovsky acquired his controlling stake in Yukos via the "loans-for shares" privatization auctions in the mid-nineties. In those auctions, the Russian state essentially sold off stakes in giant government-owned industrial companies in exchange for cash, the ostensible object being twofold: raise money for the cash-strapped state and also speed up the transformation from a Soviet command economy to a capitalist system.

But Khodorkovsky didn't do much to add cash to the state's coffers, because he got the money to buy Yukos from ... the Russian government! In those days the Russian Central Bank farmed out some of its operations to private banks. As part of that policy, Menatep ended up holding billions in state funds that were meant to be distributed for government actions, like for instance the prosecution of a war in Chechnya. A state audit eventually found that some $4.4 billion in Russian government money was never returned to the state by Menatep. And a research paper by the Harvard Business School concluded that Menatep was many billions in debt to the the Russian state when it made its winning bid for a controlling stake in Yukos for the preposterously low price of $350 million.

Even better, Khodorkosky got his buddies in the Yeltsin administration to allow Menatep to administer the Yukos auction; it naturally excluded its rivals from bidding on the stake, making the Yukos auction a one-horse race.

In other words, he used public money to buy the company, and he ran a rigged auction in order to exclude rival bids (which, by the way, offered the state more for the sale). All because of his "connections."

Taibbi concludes with a mafia metaphor:

To quote Goodfellas, this is all "real greaseball shit." Khodorkovsky was an ex-Komsomol insider communist hack who was handed a huge company by his thug pals, but when his gang asked him to toe the line and his Don, Vladimir Putin, asked him to do a service, he balked and went solo. So they took back his cheese and threw him in jail.

We're not there yet, but we're closing in on it. The acquisition of Yukos is not much different from some billionaire financing the political campaigns of western senators; then getting the Senate to make public land available for private profiteering — oil leases, for example, or logging, or grazing rights; then rigging the auctions.

It's only a question of scale. In Wisconsin, one of Scott Walker's proposals is the right to sell off state-owned power plants and utilities. How is this different?

One final point — I've recently been posting about coalitions, the progressive coalition and the so-called Democratic "coalition" that contains both progressives and Rubinite neo-liberals. In what world are progressives not dead-opposite to neo-liberals on issues like "privatization" (aka looting)?

Conclusion? Strengthen the progressive coalition using Cruickshank's suggestions, and show your teeth and your bite to the neos. They'll never respect you otherwise.

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German government votes to go nuke free by 2022

Remember that the government in Germany is a center-right coalition. Germany may not be as deep into nuclear energy as France but this is still very big news. Changing energy sources won't be easy but if Germany can show that it works, it will be hard to argue against such a significant change for other countries. CNN:

Minister of Ecology Norbert Roettgen of the Christian Democratic Union party made the announcement early Monday after negotiations with coalition partner, the Liberal Party, which had been opposed to setting a date for decommissioning the nuclear facilities.

Opposition parties have long supported shuttering nuclear energy in Germany

"The decision looks like this," Roettgen said. "Seven older nuclear power plants ... and the nuclear plant Kruemmel will not go back online ... a second group of six nuclear reactors will go offline at the end of 2021 at the latest, and ... the three most modern, newest nuclear plants will go offline in 2022 at the latest."

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34 million impacted by drought in China

It's like Europe will start talking about drought as well sometime soon. But remember, climate change doesn't exist.

A debilitating drought along China's Yangtze river has affected more than 34 million people, leaving farmers and livestock without water and parching a major grain belt, according to the government.

More than 4.23 million people are having difficulty finding adequate drinking supplies, while more than five million are in need of assistance to overcome the drought, the Civil Affairs Ministry said in a statement on Saturday.

"The special characteristics of this drought disaster is that it has persisted a long time," the ministry said.

"Secondly the losses to the agricultural and breeding industries have been severe... while drinking water for people and livestock have been seriously impacted."

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Eleven more deaths in Syria on Sunday as troops and tanks roll on

The G8 did a good job of getting Russia on board with Libya but somehow, Syria didn't make the cut. Al Jazeera:

Opposition groups in Syria say the army has moved into towns and villages in the centre of the country, killing protesters.

Residents said on Sunday that troops have stormed the town of Talbiseh, where five people are said to have been killed.

Tanks have also pushed into Rastan, where it is claimed two people have been shot dead. Meanwhile, in Homs, Syria's third largest city, there are reports that one person was killed when troops opened fire on two bus-loads of students.

Talbiseh is 10km north of Homs, where tanks shelled a main neighbourhood earlier this month.

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Voters in Malta approve divorce in referendum

It was close, but now the only remaining country that refuses to accept divorce is the Philippines. (The Vatican as well but does that really count?)

This deeply religious island nation has shaken the Roman Catholic Church by voting in favour of legalizing divorce.

Sunday’s referendum count found 52.6 per cent want a law that would allow married couples to divorce after they’ve been separated for at least four years.

“I am absolutely elated,” Deborah Schembri, chair of the Yes campaign, said in an interview. “The Maltese have voted to give themselves more civil rights.”

Schembri, a family lawyer, called on the ruling Nationalist Party to quickly pass legislation that would take Malta off the list of only three countries in the world — along with the Vatican and the Philippines — that do not allow divorce.

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