Updated 19th June 2012 to add Edward Hugh article.

Over the weekend I had time to digest a lot of excellent material on the Euro crisis, which I’ve excerpted and linked to from this blog entry.

Like many, I felt a profound disappointment when I learned last night that Antonis Samaras had won the elections in Greece, because it felt like New Democracy were presenting the country’s options as a Hobson’s choice. I think the Greeks hold a few more cards in this game of inter-institutional poker than ND have been suggesting. And regardless of Samaras’ intentions, the result hasn’t calmed the rhetoric of the right-wing German press (link in German).

Anyway, here’s a rundown of the best of my reading:

Catastroika

An excellent Greek documentary on the deteriorating situation in that country, and its causes. The TL;DR version is that the Memorandum imposed by the Troika isn’t so much the result of irresponsible public sector spending, but a response to a crisis which has provided cover to complete the neoliberal project, as imagined by Hayek and later Friedman. The question is not so much about reducing government, but of who (the democratic state or corporations) should govern.

There’s an excellent detour into exploring the history of the Treuhandanstalt, which presided over the post-reunification divestment of East German state assets, and which managed to report a colossal loss despite starting with billions of Deutschmarks of assets. The implication is that the Troika have explicitly modelled the installed technocratic Greek government on the Treuhand, and that the fire-sales going on in Greece are cast from the same mould.

I’ve still to watch the last part of this (it’s about an hour and a half long) but so far it’s very good.

Paul Krugman: The Greeks as Victims (link)

The ‘painting by numbers’ version of the crisis presented for American readers. Krugman presents a potted history of the Euro, and a warning that the ECB needs to be a bit less ‘Bundesbank’ (treaties permitting - which I think raises practical concerns):

The only way the euro might — might — be saved is if the Germans and the European Central Bank realize that they’re the ones who need to change their behavior, spending more and, yes, accepting higher inflation. If not — well, Greece will basically go down in history as the victim of other people’s hubris.

Edward Hugh: Rescue Me (link)

The fantastic Edward Hugh of ‘A Fistful of Euros’ brings together all the threads of the crisis, with a focus on why Spain is different. If you only read one article out of this selection, make it this one.

Back in 2006 inspectors at the Bank of Spain sent a letter to Economy Minister Pedro Solbes complaining of the relaxed attitude of the then governor, Jaime Caruana (the man who is now at the BIS, working on the Basle III rules) in the face of what they were absolutely convinced was a massive property bubble. Their warning was ignored. What could have been done, many say. Well, at least two very simple things could have been done, and well before things got out of hand – on the one hand apply much stricter loan to value and income documentation rules which offering a much higher proportion of fixed interest rate loans (quotas could have been applied), and on the other insist the Spanish government run a much higher level of fiscal surplus to drain demand from the overheating economy.

Of course, the politicians were not interested in hearing about any of this, since as measures they would have been highly unpopular, but where were M Trichet and his colleagues? They were too busy presenting Euro Area aggregate data to be willing to warn about growing imbalances between the individual economies. Now of course, the imbalances are undeniable, and the ECB is having to implement an asymmetric set of collateral rules (among other things) to try to counteract their impact.

Wolfgang Munchau: What happens if Angela Merkel does get her way (link)

Financial Times

A pretty stark outline of the Gordian knot of preconditions the various institutions are placing on the potential solutions to the crisis:

The Bundesbank said there should be no banking union until there is a fiscal union. Angela Merkel said that there should be no fiscal union until there is political union. And François Hollande said that there should be no political union until there is a banking union. They have 10 days to disentangle that knot.

Nerves in the Kanzleramt are no doubt frayed - to say nothing of the Tobin Tax the SPD are trying to force in return for German ratification of the European Stability Mechanism. 

He also predicts, in fairly certain terms, Spanish and Italian exits within weeks or months:

Clearly, Mario Monti is not going to pull the trigger. He was installed in the job of Italian prime minister to avoid such an outcome. But the political mood in Italy is changing. The arrival of Beppe Grillo and his populist Five Star movement as a force in Italian politics tells us that we should not expect Brussels-compliant technocrats to run the country for ever. “The EU is out of control and the euro is a box of dynamite with a fuse that is getting ever shorter. And we are sitting on top of it,” Mr Grillo wrote in his blog.

Slavoj Žižek · Save us from the saviours: Europe and the Greeks (link)

London Review of Books

Treading much the same ground as Catastroika (Žižek is in fact one of its interviewees), this piece imagines the Greek situation as the testing ground for a new form of capitalism - a “a depoliticised technocracy in which bankers and other experts are allowed to demolish democracy”.

He points that we’ve seen this kind of ‘democracy’ before:

Here is the paradox that sustains the ‘free vote’ in democratic societies: one is free to choose on condition that one makes the right choice. This is why, when the wrong choice is made (as it was when Ireland rejected the EU constitution), the choice is treated as a mistake, and the establishment immediately demands that the ‘democratic’ process be repeated in order that the mistake may be corrected. When George Papandreou, then Greek prime minister, proposed a referendum on the eurozone bailout deal at the end of last year, the referendum itself was rejected as a false choice.

Satyajit Das: The Euro-Zone Debt Crisis – It’s Now ABOUT Germany NOT UP TO Germany! (link)

Naked Capitalism

An attempt to refocus attention on the fact that Germany has, in fact, a very weak negotiating position in relation to Greece and the other potential flashpoints in the EMU zone:

Greece owes about Euro 400 billion to private bondholders but increasingly to public bodies, such as the IMF and ECB, mainly due to the bailouts. If Greece walks away as some political parties have threatened, then the fallout for the lenders, such as Germany, are potentially calamitous.

Das’ piece reminded me of a segment in Michael Portillo’s (ugh) excellent Euro-crisis documentary (filmed in March, which now seems at least a world away). I was struck once again by the sense of self-sacrifice which German blue-collar workers feel regarding the pain of the early days of the Eurozone. Their ‘internal devaluation’ has meant that real wages have not increased in fifteen years. It’s something that Das touches on to drive home the point:

German citizens will have to pay twice for the Euro. In the early 2000s, they paid through internal devaluation – reductions in real wages, unemployment and labour market reforms. Now, they will have to pay for the bailouts. Once the artificial boom ends, voters will discover they were betrayed by Germany’s pro-European political elite. There will be an electoral revolt and, as in the rest of Europe, a strong challenge from radical political forces with unpredictable consequences.

And finally,

Daniel Gros: Democracy versus the Eurozone (link)

An older piece - written nearly three weeks ago, which now feels like the Mesolithic period in terms of this crisis. It addresses the question of why EU government commitments are being laughed at by the bond markets: they see a risk of defection or rejection by Eurozone member states:

The broader message from the Greek and French elections is that the attempt to impose a benevolent creditors’ dictatorship is now being met by a debtors’ revolt. Financial markets have reacted as strongly as they have because investors recognize that the “sovereign” in sovereign debt is an electorate that can simply decide not to pay.

My own two cents

Either the Federal Chancellor, the German Constitutional Court or the European Council are going to have to blink. Debt reduction is a necessary precondition to growth in the peripheral economies, which are not solely responsible for the predicament. And that means mutualisation of the liabilities Greece, Italy and France have built up.

For the record, I support the Euro project and wish to see it succeed, but recognise that it was not built with crisis in mind - to put it mildly.

I fail to see an immediate short-term solution, but then I suppose the succession of short-term fixes is part of the issue. Eurozone electorates (rather than governments) are going to have to choose between preserving the Euro and preserving national democracies in their current form. It needs to become impossible for Europe not to stand behind its commitments, and that means fiscal and political union.

And to achieve this, the Parliament, the Commission or some other body has to be empowered to be responsible for Euro area debt, as well as run budget coordination when the rout is over. But it would be all too easy to allow such an arrangement to become a ‘union of the creditors’, or a neoliberal fantasy project which subserves democracy to fiscal conservatism and asset stripping. Or for it to end up being a Council-led, technocratic and intergovernmental process, beset by all the wrangling and summits and one-upmanship that that entails.

In truth, the time for national ‘leaders’ has passed.

Their inaction begat crisis, and continued talk of ‘firewalls’, ‘big guns’ and ‘austerity’ no longer convinces the electorates or the markets. While they use the Council and ECB to play the kind of principal-agent blame game which (unfortunately) so often characterises European politics, the contagion just spreads to the next-weakest of the pack. I do wonder what sort of political integration Merkel has in mind, but I suspect my best hopes may be over-optimistic.

And so those turgid questions from the pre-Lisbon Treaty era raise their ugly head again: how do we give direct democratic legitimacy to the European Union? And how do we avoid simply affixing a veneer of democratic accountability to an elite-driven process? Most of all, how do we rebuild European integration around shared social values, so that we can benefit economically in equal measure from an essentially political project like a single currency?

Answers on a functionally integrated, fiscally harmonised postcard, if you please.

We Told You So: James K Galbraith (son of J K Galbraith) on the US economy.

An excerpt from a memo he co-wrote to the Obama campaign in the summer of 2008:

“What is the alternative? It is to embark, from the beginning, on a directed, long-term strategy, based initially on public investment, aimed at the reconstruction of the physical infrastructure of the United States, at reform in our patterns of energy use, and at developing new technologies to deal with climate change and other pressing issues. It is to support those displaced by the unavoidable shrinkage of Bush-era bubbles but to do so efficiently—with unemployment insurance, revenue sharing to support state and local government public services, job training, adjustment assistance, and jobs programs. It is to foster, over a time frame stretching from five years out through the next generation, a shift of private investment toward activities complementary to the major public purposes just stated. It is to persuade the rest of the world that this is an activity worthy of financial support.”

I’m a little suspicious of the Why Music Matters campaign. What piqued my interest was that its ‘birth date’ on Facebook is set to “February 1877”. That’s the same year the Berne Convention (i.e. the birth of international copyright) came into force.

And it’s run by Universal Music, who are members of the IFPI, the nice folks who brought you (and mostly wrote) the Digital Economy Act.

I’m all for promoting artists and legal music purchases, and it seems to be quite a positive campaign so far, but my fear is that it become a vehicle for Universal to shove baseless copyright fundamentalism in our faces, as it is wont to do.

They say they are developing a ‘trust mark’ which will be shown by music services because it “can be confusing to work out which ones will support the musicians you love”. I agree, it certainly is difficult to know who’s getting paid. But to be effective, such a scheme would need to be run by a neutral third-party with no interest in music being distributed through any given model.

So not Universal Music then.

I can see them getting nervous about lots of legitimate business models. For instance, can any band with a PayPal link on their website be certified? What about YouTube, into which Universal has a secret back-door allowing it to take down content without a formal request?  Would they have certified Spotify before it became too big to ignore?

There is no information on the website as to what criteria determine who gets the trust mark, nor how Universal will ensure that it’s done in a neutral manner. Their FAQ actually relates more to digital music in general than the specifics of their programme.

To raise a more fundamental point: people know why music matters, and are producing and consuming it in ever-greater quantities. What Universal needs to explain is why (and if) record companies continue to matter.

I finally got round to responding to the Scottish Government’s consultation on the referendum which could establish an independent Scotland. And yes, I submitted them with my name and address.

Here are my comments.

What are your views on the referendum question and the design of the ballot paper? (View ballot paper in ‘More Information’ below)

I welcome the clear, decisive and fair proposed question and corresponding ballot paper.

2. What are your views on the proposed timetable and voting arrangements?

The arrangements for the referendum must take into account the gravity of the choice being made. All parties wish a decisive outcome, and one which is beyond challenge for the foreseeable future.

Accordingly, the timetable must not be rushed. The voices of those who have not yet become engaged in the constitutional debate must be sought out and heard, and the options available must develop into propositions. Constitutional change may excite the politically-engaged, but among the general electorate it is seen to be not only obscure but irrelevant. The process must be designed to translate impassioned rhetoric into a sensible dialogue about what is best for Scotland.

Both sides of the debate must be given the opportunity to form stable, clearly-defined and active campaigning groups. Parties who have not yet fully elucidated what they would propose as an alternative to independence must be given the chance to do so, and pro-independence parties must explain all the implications of their proposition. Time must also be allowed for the Scottish Parliament to deliberate upon and pass the necessary legislation well before serious campaigning begins.

I therefore support the choice of 2014 as the earliest opportunity to hold the referendum. In any case, the Scottish Parliament should determine all the particulars of the process.

I support the franchise arrangements proposed by the Scottish Government. I would welcome the prospect of allowing 16 and 17 year olds to vote, and consider this not only a desirable option but a deliverable one.

I would also welcome the opportunity to vote over a weekend (Saturday and/or Sunday) if this were shown to be likely to raise electoral turnout and not pose unsurmountable practical issues.

3. What are your views on the inclusion of a second question in the referendum and the voting system that could be used?

I would welcome the inclusion of a second question provided that:

1) It clearly articulates a third (and not necessarily ‘middle’) option which is supported by an identifiable campaigning group or party

2) There is clear demand for such an option to be included, whether it is identified as part of this consultation process or any other.

3) It is formulated such that voters’ intentions are clear regardless of the outcome.

In view of point (3), I would prefer a third option to be included as a simple second question, referring to the outcome of the first question as a matter of fact, and putting forward an alternative proposition at the same time, for example:

“2. If Scotland does not become an independent country, do you agree that…[proposition]”.

4. What are your views on the proposal to give the Electoral Management Board and its Convener responsibility for the operational management of the referendum?

In view of the work already done by the EMB, I support its being responsible for managing the referendum.

5. What are your views on the proposed division of roles between the Electoral Management Board and the Electoral Commission?

I support the Electoral Commission’s involvement provided that it is answerable to the Scottish Parliament.

6. What are your views on the idea that the referendum could be held on a Saturday or on other ways that would facilitate voting?

I support any and all practicable options which are likely to raise electoral turnout, including Saturday polling, voting for 16-17 year-olds and non-traditional polling places.

One reservation to this is that voting in non-traditional polling places must be organised to ensure that normal electoral regulations still apply. In particular, organisations which host polling places must refrain from any kind of campaigning activity in and around the polling place.

7. What are your views on extending the franchise to those aged 16 and 17 years who are eligible to be registered on the electoral register?

I support the proposition and am convinced that it is deliverable within the proposed timetable.

8. What are your views on the proposed spending limits?

In general, I am in favour of state-funded political parties. In this particular case, I recognise that implementing this would require UK-wide reform, which is not practical or likely in the circumstances.

I therefore support the spending limits proposed in the draft Bill and consultation.

9. Do you have any other comments about the proposals in the draft Referendum (Scotland) Bill?

The running and outcome of the proposed referendum should reflect the popular will of the Scottish people. It is therefore vital that the Scottish Parliament possesses any and all powers not already in its competences necessary to make the referendum outcome beyond doubt.

All legislative bodies in the UK should work proactively toward ensuring this, in recognition both of the Scottish conception of popular sovereignty and also the clear mandate for the poll delivered by last year’s Scottish Parliament elections.

University of Hyderabad economist Vamsi Vakulabharanam has started a new project to determine the reason for the apparent break with the Kuznets curve between, on the one hand, east Asian economies such as Japan, Taiwan and Korea and on the other, emerging Asian economies such as India and China. While the east Asian economies, who developed earlier, were able to reduce inequality after initial periods of high growth, his suggestion is that the same does not appear to be occurring in India and China.

His hypothesis is that the particular global ‘regimes of capitalism’ present at different periods of history are the key factor behind the disparity. The periods before and after his ‘inflection point’ of roughly 1980 were distinguished by the prevalence or otherwise of the welfare state, stability of trading and currency conditions, and of course the entrenchment of neoliberalism in the latter period.

I think what makes his argument interesting is that it’s fundamentally about the relationship between elites in developing states and equality of economic opportunity -well-trodden turf for me when thinking about intellectual property regimes. A constructivist analysis might show that elites’ learning processes were important in making the ‘inflection point’ happen. Ideology might be the most significant component of the change.

I will be following with interest.

Oh, and the interviewer in the video has AMAZING hair.

R.I.P. Steve.

I learnt just over two hours ago the sad news that Steve Jobs had passed away, aged 56. My sincerest sympathies go to his loved ones. What follows is my attempt at a personal tribute/obituary.

To be glib about it, you put not just one, but several ‘dents in the universe’.

You started out by tinkering around with home-made circuit boards in the garage with Woz, and blustering through early demos at the Homebrew Computer Club. Apple might then have seemed like one of an endless procession of ephemeral Californian technology companies - just another Atari; a sandals-and-socks firm. But greater things were to come.

The Apple II would give you the springboard to redefine how computing worked. In your visits to Xerox PARC, you first saw an odd new interface paradigm in operation. A graphical screen; a ‘mouse’; rectangles called windows. These ideas would coalesce into the failed Lisa project, and then the Macintosh 128K which would ultimately deliver on the promise of the concept. Later, you would found NeXT, which saved Apple technologically, and Pixar, which continues to push the boundaries of film-making.

But let’s cut to the chase. What’s more important than these creations is your overall approach: that you personified how liberal arts values and a strong aesthetic sensibility could drive innovation more coherently than simple engineering alone.

You showed people that they could, and should, relate to technology emotionally. On a level more akin to interpersonal relations than to issuing commands to an unforgiving and arbitrary master. You showed us that technology was there to adapt, fit in with and bond to one’s life and identity. That you could feel it, and that it could empower you.

It’s true to say that you were never an innovator. You were something different - a special kind of translator. One able to be inspired by true visionaries such as Vannevar Bush and Isaac Asimov, and then distil their great ideas into a kind of exacting passion and single-mindedness that drove everyone forward much more than it ever frustrated.

It was why you directed Susan Kare, Andy Herzfeld, Bill Raskin and others in a skunkworks project called ‘Macintosh’ which would go on to define the spirit of modern computing, in spite of it nearly being stillborn. It was why you put Kare to work designing just the right kind of mouse cursor for the original Mac, and sent her back to the drawing board again and again. Why the Mac had a single mouse button for decades in spite of protestations from all sides. And it was why you phoned Vic Gundotra at Google in an apologetic mid-weekend panic because the Google logo had the wrong kind of yellow on its iPhone app icon. The stories are endless and almost mythical.

The truth is that it was always your way, whether we liked it or not. And generally, we did. Because from the introduction of consumer networking technology at Apple, to the way Pixar insisted on making movies with heart, everything you did was infused with a fundamental optimism that we can be better, and that we can do things in a better way.

But which way? It was never a utopian vision of technology as a neutral, benevolent force, like that which has guided Google to ubiquity, nor did it ever really align with the libertarian ‘hacker spirit’, which would come to be embodied by the likes of John Perry Barlow and Richard Stallman. Instead, it was an idiosyncratic mixture of aesthetic rigidity and just a smidge of hacker-ness: at Apple especially, you did things partly because you could, but only if they were done beautifully. 

What I will miss most, then, is the integrity which you brought to everything you did. Despite being skeptical and distrusting of many of Apple’s latter activities, it’s clear that they were still infused with the kind of coherence and designed-in honesty that made Apple iconic. In other words, in some sense, I kind of knew you were a big part of everything they created. And that everything they didn’t create was significant by its absence.

I could see this in the way the slim pizza box-like LCII, which was my first taste of modern computing as an eight-year-old, had every port it needed in just the right place, as compared to monolithic IBM-compatibles of the day with hulking great chassis. I can see it in the MacBook Pro that I’m using now, which runs an operating system which doesn’t work against me. I could see it in the design of the original Macintosh user manual, as beautifully minimalist and relentlessly positive as it was. Heck, I’m pretty sure I can even see it in the keyboard on my desk.

Your true legacy will be if whatever Apple does in future continues to embody that elusive sense of being a complete ‘thing’ - that aura which everyone else tries so hard to emulate. Apple would be best served viewing imitation as the sincerest form of flattery, and rather than lashing out, concentrate on building whatever’s next.

Because it has always specialised in defining itself by being different. And you always seemed to know just what ‘different’ should feel like.

For that, amongst many other things, we will miss you.

—GRW

Mark Ronson - Record Collection 2012 (Perseus Remix) by PERSEUS

sometimes I can see for miles…

…standing on the brooklyn bridge…

…with friends in the brownstones…

…beauty…

…and admiring the crazies.

most of all though, the sheer energy of a city with all its best days ahead of it.