Joseph Stiglitz on BBC

listen to ‘Joseph Stiglitz: "The prospects of Europe recovering through austerity are nil" - The World at One, BBC Radio 4’ on Audioboo

"The prospects of Europe recovering through austerity are nil"

Mutual Indebtedness

I usually think that Nigel Farage is a hateful reptile. But watching this speech on 13 June I have to admit that he has a point. European politicians have their heads up their arses.

"I remember 10 years ago... [they were saying that] with the Euro by 2010 we would have full employment"

100 billion is being put up for the Spanish banking system. 20% has to come from Italy. The Italian banks lend money to Spanish banks at 3% interest, but they have to borrow it from the markets at 7%. Genius! [Paraphrase].

David Cameron and Subliminal Campaigning.

hard working 

families 

the right thing 

something for nothing

Have a close listen to David Cameron some time soon. He constantly repeats little trigger phrases that tap into what George Lakoff calls 'frames'. He tries to get them into every sentence. This is because, directly or indirectly, he has been advised by some of the most cunning evil geniuses from the advertising world.

Frames evoke emotional associations. So Cameron incessantly repeats 'hard working' and 'doing the right thing'. Everyone likes to think of themselves as hard working and doing the right thing. These are not Conservative values. But Cameron is using the advertising technique of constant repetition to associate the Conservative brand with these frames in our minds.

When you do this in ordinary speech is sounds a bit awkward. Listening to him you think, he sounds like an idiot. But each time he says 'hard working' there is a little response from your brain: images, attitudes, and emotions are evoked. The more often the same kind of stimulus occurs in reference to a particular set of circumstances the more we associate the two. It's just how the brain works, how we learn -- repetitions strengthens neural connections. In our natural environment this is a real advantage. In the present Cameron uses these subliminal (i.e. not quite conscious) messages to try to manipulate us. Even if we dislike Cameron we come to associate him with the frames 'hard working' and 'doing the right thing', etc. He just needs to keep peppering his speech with these triggers, say them with conviction, and the rest of what he says is just filler.

Now if you don't believe me then watch a Derren Brown show. Brown uses subliminal messages to manipulate his audience, then at the end tells them what happened. Bet on Cameron not telling us how he manipulated us. It so happens that Conservatives have a head start on this kind of thing. George Lakoff thinks that it is because conservatives are much more likely to study Business Studies at university. And they all study marketing at some point. So they caught on much earlier. And of course big business, which is broadly supportive of conservatism as a result of the deregulatory agenda, spend millions on advertising, so they have some insights as well. Progressives the world over a less interested in Business Studies. In the UK the support for Labour comes from the the working classes who typically have less education. So they seem to be struggling to catch up.

One of the facets of this approach to campaigning, and make no doubt that Cameron is in campaign mode for the next election, is that reason is distorted by belief. I've written about this in the context of religion: becoming religious is very like falling in love. I've observed that Neo-Conservatism has much in common with religion (except it offers no eschatology). What we observe about decision making is that we unconsciously decide which facts are salient by how we feel about them. This is why a person with strong convictions cannot be persuaded by facts: even if they are true, the emotional weighting tells us that the facts are not salient. What Cameron is doing is attempting to change the way we feel about facts.(See Facts and Feelings).

And this is why we get political paradoxes. Cameron repeatedly talks about 'hard work'. But he himself has had everything on a plate. He's never worked in his life, apart from a brief spell as an unpaid secretary, let alone worked hard. Most of the cabinet are the same. What's more the people benefiting most from Neo-Conservative deregulation of the economy are those who borrow money to speculate on asset prices. This requires no effort. A lot of trading is done by computers! Certainly inheriting money requires no effort. In fact the people who work hard are the obvious ones: the working class. And ironically the working class have lost out worse than any other section of society as wages have remained stagnant, union power has been eroded, and house prices have become unaffordable. Meanwhile the people who effortlessly make money have exponentially increasing salaries, access to politicians ears (often paid for), and have profited from the repeated debt fuelled asset bubbles. Cameron and his cronies have nothing in common with hard working people, and no real sympathy with them. But we can bet that hard working people will be starting to identify with Cameron because of the simple trick he is using.

Similarly Cameron says 'doing the right thing'. But he is not doing the right thing. For instance he is trying to pin the blame on our financial troubles on welfare, when we really know it was deregulated banks. We know that successive governments allowed banks freer and freer reign. And they used this to line their own pockets and beggar the nations of the world. £1 trillion to bail them out, and now we find that half of them were cheating on interest rates! Nor are many of Cameron's friends and associates 'doing the right thing': Rebecca Brooks, James Murdock, Andy Coulson, Jeremy Hunt; George Robinson, Philip Green and a host of other Tory Party Donors. Now the vaunted banks who are supposed to save us from economic ruin are caught cheating! These are not people who do the right thing.

Cameron and his associates are not people who share British values like working hard, playing fair, doing the right thing. If their really was a big society it would have crushed them decades ago for defaulting on our shared values. Let's face, all these people are just queue jumpers.

Why is this rank hypocrisy not obvious to everyone? It must in part be because Cameron's side are sincere. They believe their own rhetoric. They were children when Lewis Powell wrote the founding document of the NeoCon religion in 1971, and they're been bought up believing in that world view. They believe that the very position they've attained vindicates their moral superiority. And they have class ideologies reinforcing that as well. If the were insincere the job of defeating them would be easier.

Even when they cut corners or actively break the law they are on the whole not found out; and if they are found out the punishment is out of all proportion. A London rioter who stole a bottle of water got six months in prison. A banker who drove his business into the ground while personally profiting to the tune of 10s of millions of pounds is actually rewarded with salary increases in the order of 40% and bonuses with millions. Barclays rig interest rates and no one is indicted for fraud. A fine of £290 million seems like a lot of money, but to them its not really - just 10 days profit. Plus punishing the corporation rather than individuals means that no one has to take responsibility for the fraud.

So just reflect. A little war is being waged for our attention and for our emotional investment. Cameron is trying to slip beneath the defences of the nation and associate his odious self with 'hard work' and 'doing the right thing'. He speaks out about 'getting something for nothing'. But he does not work hard, he does not do the right thing, and all he's got was for nothing. Cameron is lazy, corrupt, and undeserving.

One final little note that 'the right thing' might be a moral message. But since not winning the election outright Cameron's support from the Tory core voters has been shakey. So this could be aimed back at this own people. He might well be waving his Right Wing politics at these people to get them to trust him as well.

But we need to beware stumbling into the realm of subliminal campaigning and framing. It is a complex field that requires serious study. We need experts to advise us on how to combat Conservative use of these techniques. George Lakoff, one of the founders of cognitive linguistics has been advising progressives in the US and his Huffington Post blog is certainly worth reading. But a little knowledge is a dangerous thing. At least we can be aware that this sort of thing is going on, and how it works.

At the very least it would be interesting to document these little catch phrases and note how often they are used. And who is using them. If anyone spots any more, please let me know in a comment.

Please Sign the Petition

"We the undersigned call for an independent, judicial public enquiry into fraud, wrongdoing and ethics of British banks, their management and their staff, and the role of the British Bankers Association. The terms of reference of this inquiry should also include the manipulation of interest rates on about £225 trillion of assets. The inquiry must have full powers to compel witnesses to appear on oath, and to obtain all forms of evidence."

https://submissions.epetitions.direct.gov.uk/petitions/35421

Stop the housing Ponzi scheme

"The government's new housing policy will collapse sooner or later like a fraudulent investment strategy"

Yesterday the government unveiled its housing strategy to "get the housing market moving again". The centrepiece was a mortgage indemnity scheme to help first-time buyers to get on the property ladder. But this policy is a disastrous waste of taxpayers' money that will satisfy nobody.

By Ian Mulheirn. New Statesman. 22. November 2011.

There is bad news...

"The UK has fallen back into recession as the economy shrank by 0.2% between January and March.

A sharp fall in construction output was behind the surprise contraction, the Office for National Statistics said.

The Chancellor, George Osborne, said the figures were "disappointing" and blamed both the European crisis and Britain's spending in the 'good years'." -- BBC Interview.

How come a dunce like me can understand what's wrong with the economy and what's wrong with what the Chancellor is doing about it, and the world's leaders and economists cannot?

It's simple. The debt bubble left the private sector owing about 500% of GDP and households about 100% of GDP.  The private sector is busy paying off debt and/or going bankrupt. They mostly don't want to borrow more because they're over indebted -- they borrowed like drunken maniacs in the boom, and now they have a hangover in the slump. Of household debt about 80-85% is mortgage, but what's left means that there's no market in consumer credit either. Except at very high interest rates -- and anyone can tell you that bank lending rates currently bare no relationship to the Bank of England's base rate.

From the bank's point of view only about 8% of their lending is to the real economy -- i.e. to invest in businesses produce goods and services, and to buy houses. The risk of trying to improve that is that the market is overloaded, likely to stay in recession for some years, and asset prices set to fall even more. So lending to the real economy is not sensible for them, in the sense that they will not make record profits this year like they did last year. They happily take money from the government, but they have no one left to give it to now the debt bubble has burst. Indeed it's still so high Steve Keen is predicting yet another major credit crunch.

So, yes, Europe is a mess, because they too ignore debt, and our (insolvent and uncreditworthy) banks are highly exposed either directly or indirectly and if Greece goes broke and defaults, crashes out of the Euro and uses it's own currency (which it almost certainly will do) a lot of money is going to disappear. Or is that wealth? Still sorting our the difference.

Anyway. How hard is this to understand. It's not that hard is it?

What we need to do, but probably won't, is tackle private sector debt. Have a modern debt jubilee. Then regulate the banks to restrict how much money they can create, and make them loan to the real economy to fund businesses that do stuff and create jobs.

Vote for me. I couldn't do worse than this lot!

Keen to be Heard

This is a good balanced article on Steve Kee's impact on the world of economics. It makes clear that mainstream economists, especially in Australia see him as rather extreme in his views and predictions, but also respect him for having predicted the Global Financial Crisis. His prediction that house prices would fall by 40% has yet to come true, but given the evidence it ought to!

BRW Interview and Assessment

Cameron and How he is Framing the Political Debate

Paying tax is how we help each other, how we express our concern for the education of children, caring for the sick and elderly, and providing amenities for the community, like roads, electricity and water.

I've been looking into George Lakoff's work on how political discourse is framed. Conservatives have an underlying metaphor of the community as a family ruled by a strict father, who is always right, rules by authority and force (if necessary). In this family morality is expressed as obedience. It requires discipline. The moral are rewarded with success. So if you are poor, it is because you lack discipline and are therefore immoral. A loving parent would discipline an immoral child by chastising them.

Does David Cameron's touting for votes by punishing the poor make a little more sense in this light? And what about the rewarding of his successful, i.e. rich friends? And since Jimmy Carr portrays himself as a pervert for comic effect (edgy, but successful), he doesn't deserve the enormous success he's had, so he is targeted when Tory donors using similar schemes are fine and dandy.

The strict father family is invoked in other ways. Since Reagan, at least, conservative politicians have been framing tax as a affliction. Reagan campaigned on "tax relief" ie relief from the imposition and affliction of government taking our money.  When tax is framed as a burden it is only rational to stick to the letter of the law, not the spirit of the law. We forget the the spirit of the law is working together to create a better world.

Also "the market" (which is entirely a fiction created by delusional economists) is like the perfect strict father: the market knows, decides, rewards and punishes, and its authority should not be ursurped by regulation. Conservatives feel drawn to this idea. Perhaps this is an idea that has had it's day, but in fact not legislation has been passed which might make a difference to the markets. The markets are still free to gamble on assets for instance. The market as conceived by economists is simple, rational, linear, and tends towards an equilibrium. It perfectly rewards the industrious and punishes the lazy. The market then is the Buddhist conception of karma, and impersonal force which keeps tabs on us.

Providing support for young people to find independence, is important for creating a dynamic society. In times when house prices have been inflated by criminals gambling on asset prices, we have a moral obligation to provide help paying the rent. We could do away with housing benefit if rents reflected  the real cost of ownership.

Conservatives are concerned that people are getting something for nothing, that the system rewards those who choose not to work. Laziness is immoral in their world view, and Cameron has several times let slip that he sees himself as not only a political leader, but a moral leader. Conservatives are asking themselves why anyone should "benefit" from not working, not why we should support those who are unable to work because economic mismanagement has lead to high unemployment. Facts don't help because Cameron is appealing to emotions which emerge out of a deep seated world view. We can say that there are 11 people out of work for every job available in the UK, but this does not change the fundamental attitude. Housing benefit just epitomises this problem for Torys.

Ironically the people making money with no effort are the bankers and those with enormous investment portfolios. Like Cameron himself. If working hard is a virtue then the bankers who gambled our money away are some of the most vicious members of our society. They didn't earn the money. And the public had to spend a trillion pounds bailing them out. "The market", to use that language showed us that banks and financial speculators were wrong and immoral by making them insolvent. But the government has failed to follow through on the morality of that particular mess.

Part of the problem is that progressives tend to argue by negating the words of the conservatives (who are way ahead in terms of setting the agenda). But even when we negate a word we invoke the frame it is defined by, and the narratives it is embedded in. George Lakoff illustrates this by saying "don't think of an elephant".

But progressives have a different family in mind. A family of nuturing parents. Mother and father are involved. They teach us that respect does not come from position or authority but has to be earned. We look after each other, and help those who need help. The nuturing family is tied into a the extended family, and into the wider community.

Progressives failed to make the point that paying tax is how we help each other, how we express our concern for the education of children, caring for the sick and elderly, and providing amenities like roads, electricity and water. They don't point out that though pooling our resources we have created a better society. If we forget what it was like we have Charles Dickens to remind us!

No one, no matter who they are or what they are doing, succeeds on their own. There is always a team. The most successful business person relies on teams of people to carry out their vision and implement their strategies. Cameron himself relies on Tory donors, party workers, policy advisers, the civil service, his wife and family, on voters. We are all inter-related.

How do we get this across without falling into the trap of sounding like communists? Because the conservatives have long ago linked this kind of discourse to the Soviets and the Chinese.

One thing you will notice about Cameron is that he does not attack the left on their own terms. He does so in his own conservative language, repeating catch phrases. Now Cameron and his team are not particularly adept at this game, but more recently Cameron has been falling back on more traditional conservative language. And the conservatives around the country will be lapping it up, not because Cameron is stating facts or being more logical than the left, but because to a conservative this kind of talk feels right. And on the other hand this means that simply opposing this message with facts is unlikely to change minds. On my other blog I have tried to explain how this process works.

How the Germans See Us

German Comedy Ambassador Henning Wehn makes a few pointed observations for a little light relief. Not sure what the date on this is, but by the remarks it may be pre 2008.

Four Horsemen

Here is the first trailer for the film The Four Horsmen made by the Renegade Economist. The film has not been shown in my home town of Cambridge, UK and I'm exploring bringing it here. I know not many people are reading this yet, but if you're interested let me know.