Join the Masons

Morning everybody. Lots to do today, including finishing a column for the university magazine and seeing lots of dissertation students - mostly those who don't realise quite how good they are: my job today is to point out exactly how much work they've done and how much sense it makes.

There is a spectre haunting The Hegemon: the spectre of Mason

Firstly though, here are a few photos of last night's inaugural professorial lecture by Paul Mason, the distinguished Newsnight economics journalist, and now Visiting Professor. The main theme of the night was the crash and whether or not it fits executed Soviet economist Kondratiev's theory of long waves (Stalin's henchmen realised what he didn't: that the wave refuted Marxist belief in the historical inevitability of Marxism). 

'Peoples and countries will be pitched against each other' as we struggle to get out of the slump he said. There's a reckoning to be paid for the past 20 years or so of economic madness: the question is who pays it, and whether we take a lot of pain now or a massive amount of pain later (for instance, we could inflate our way out of debt now, but everybody's savings would disappear overnight). In a really serious slump, you see things like party political broadcasts being conducted by candlelight, as he remembers happening in the 1970s (send me a link, someone?).

Mason's shadow makes a point

 It was complex, thoughtful and pretty gloomy. Mason himself spoke authoritatively and passionately: he thinks in the long term and clearly cares about actual people rather than economic models and states. He felt that elite groups such as those who meet at Davos are in a state of some panic, and have little conception or interest in the public good. We shouldn't look to China either: they don't want to be a hegemonic power setting and keeping to standards of behaviour. Instead, we should expect a prolonged period of post-globalisation protectionism (we can already see it happening in sneaky devaluation, which just shifts economic problems onto other countries): we just have to hope that it isn't fascists leading this charge. Or, he said, we could easily inflate our way out of trouble in no time: just start a war with Iran. Oil prices will rocket, so will inflation, debts wiped out. There are a few down sides to this of course…

This chap was sitting in front of me. I was very distracted by his directional haircut.

 The discussion also took in the big one of UK economics: the supposed high-tech manufacturing miracle which politicians always say is coming won't help employment. Modern factories are virtually deserted. So what is everybody else meant to do? We can't sustain an economy based on people serving each other coffee for low wages: there's no demand available now that credit-fuelled spending is off the table. I don't have the answer to that one, and nor does Mason. But he thinks we should be worrying about it. Plenty of people on the left (Marx, deriving it from Hegel) looked forward to the end of work, whereas others believe in the Dignity of Labour. Here's Marx's vision of the perfect society:

In communist society, where nobody has one exclusive sphere of activity but each can become accomplished in any branch he wishes, society regulates the general production and thus makes it possible for me to do one thing today and another tomorrow, to hunt in the morning, fish in the afternoon, rear cattle in the evening, criticise after dinner, just as I have a mind, without ever becoming hunter, fisherman, herdsman or critic.

He also made the point that technology doesn't lead booms: oceans of cheap money lead to tech booms as investors seek risky bets. This reminded me of David Harvey's work. In it, he says that the credit crunch wasn't caused by too little cash in the system, but too much. The Germans saved all their money. They therefore got low interest payments on their cash. So they started showering it on risky, silly investments: obscenely high mortgages in Ireland, speculative Spanish building, weird derivatives, CDOs, MBSs and the rest of the alphabet soup. The more money went in, the safer it looked: after all, risk had been 'sliced and diced'. When actually, it just meant that everybody held debt with absolutely no idea of its provenance or actual risk. When the penny dropped, panic was the only sane response. Bingo: the crunch.

He's got the whole world in his hands

Other highlights: Mason reckons embittered Mervyn King (outgoing chair of the Bank of England) believes he saved the UK economy from a much, much worse fate by quietly allowing the pound to devalue in 2008, propping up exports to some extent.

Finally, Mason cautioned students even on the most vocational of courses to cherish the opportunity to engage with ideas, pure and simple. Music to my ears.

The rest of the photos I took are here.

Masonic Secrets

As promised, quality economics journalist Paul Mason came to give a presentation today, on the subject of Is There An End to the Crisis?. He was excellent - a good speaker but also a good listener. His thesis is that we aren't living in a moment of crisis: crisis is the normal state of capitalism (though he did point out that it's a lot worse because we invented some insane financial securities in the late 90s).

The key challenges are: rebalancing an economy so it's not just finance but real things like manufacturing; moving to an investment-based growth strategy rather than a credit (i.e. debt) funded economy; reducing the deficits without causing revolutions. On this last, I disagreed: what's wrong with a revolution if it's the only way to change things?

Along the way we discussed house prices, the decline of the US and its passionate hatred of state spending (I asked why the US government couldn't trick the Tea Party by spending loads of money on weaponry as usual, but he thought they're too angry even for that to work), the Roman model, house prices, the long-term decline in real wages (American salaries have remained flat or slightly lower since 1973), the rise of China and the prospects for the Euro.

It was fascinating stuff. Mason's very interested in China. He says that they're moving towards a slightly freer system but that they're not (as yet) interested in the kind of global hegemony America's operated. They want to be regional bosses, and they're not yet sure about whether to move to a social welfare/infrastructure-building state, or a consumer capitalist one (let's hope it's the former).

With the Euro, Mason's pretty pessimistic. He thinks the Greeks will leave: they don't want to stay in and the Germans, whose economy underpins the Eurozone but also creates the imbalances between rich Germany and poor Ireland/Spain/Portugal, doesn't want to carry them any more. He thinks Ireland will be bailed out massively though, because it's a 'conduit' between Germany and Co., and the offshore tax havens. What a revolting role for a nation to pursue: lice-picker to the productive bigger fish.

He uses an interesting analogy for the role of the banks (no time for the disgraceful behaviour of regulators, credit-rating agencies and the accountants). They are, he said, like the Alien in the film of that name. They've attached themselves to our economies, and if you cut them off, their acidic blood - the debt which has fuelled the economy for twenty years - will eat through the ship's decks - the real economy - one by one. The saviour this time, he says, was the state (at massive cost to us, hence the austerity we're facing), but no states are strong enough to do it a second time.

So what are our options:
1. Devalue the currency so we can export a lot and not afford to import much. That exports unemployment and suffering to the third world.
2. Do nothing and face revolution.
3. Radically restructure the global economy and work together. He thinks China's toying with some interesting ideas, such as a non-dollar global reserve currency to end currency wars.

For a man who clearly admires the US, he's pretty pessimistic about it: the politics, the poverty, its whole-hearted endorsement of naked capitalism. For instance, he points out that Nissan has moved away from the unionised East Coast high-wage areas to the Deep South. It pays less and its supplier factories have moved too. These subcontractors pay much lower wages, so that only undocumented immigrants work there. Then the locals get all racist and a spiral of social decline sets in. The population doesn't want the government to spend any money and even the stimulus isn't working because local authorities provide so few services that they can't effectively spend any of the money Washington is giving it to restart the economy.

Mason's solution is to copy Germany - his version of that country is one of high public investment. They spend a lot on schools, training and infrastructure. You therefore get a workforce with very high skills (hence BMW, Porsche, Siemens etc) who earn a lot because their jobs can't easily be outsourced. German companies grow through investment rather than debt (state-owned industrial banks help) and they're always technologically advanced. Think back to the 1960s: Britain's car industry died because it carried on producing outdated rubbish on outdated machines - investment was never a possibility. The UK would become like Germany: more boring, less extreme, but stable.

I found all this very interesting. I did have a few questions though. Such as: how are we going to move to an investment economy? Our entire financial system is based on allowing bankers and speculators to make massive profits overnight - short-selling is a clear example. There's nothing to make these people invest for the long-term. So if there's a profit to be made from halving your company's share price overnight, they'll do it, even if it means you can't raise money for new machinery. Also, how do we get the accountancy firms to stop authorising wheezes, and credit-ratings' firms from behaving irresponsibly? We've spent 30 years claiming that regulation destroys dynamism and innovation: just because the state has saved capitalism doesn't mean that capitalism will submit to the state. They're out there trying the same old stuff… they never learn.

Anyway, it was a fascinating session, and I'm really pleased that Mason is coming back for more.

Oh happy day

What a day I have ahead of me. 2 hours of Milton (great for me, slightly bemuses the students), then going to the Paul Mason appearance - he's one of the best economics journalists around: you may have seen him on Newsnight - then 3 hours on Beauty: the book with which I'm getting more and more uncomfortable, not maquillage tips. Though I reckon I could do that too.

Here's a little piece which rather dignifies labour: I'm a huge fan of Cannonball Adderley and this is 'Work Song'.



Let's have my other Cannonball favourites while we're at it: 'Why Am I Treated So Bad?' and 'Space Spiritual', both Axelrod productions.

A Fanboy moment

Paul Mason has the best job in the world: he's a roving correspondent for Newsnight, and he really gets the connections between economics, politics and culture. He knows a lot about them all, writes in a concise and witty style, and gets all the best jobs: his piece on Gary, Indiana was a model of documentary film-making. Here's his review of the year, and his conversation with the ghost of John Maynard Keynes.

Buy his book too!

Mind what you say (or Tweet)

The original Twitter idiot has had his appeal against conviction for sending threatening messages rejected.

Paul Chambers, frustrated by repeated airport closures, Tweeted something unfunny about blowing up Leeds airport unless it reopened. Only his few Twitter followers received the message, and everyone knew it was a joke. Certainly Leeds Airport authorities didn't pay any attention.

But someone reported it to the police, and he was convicted. His appeal was based on the fact that it's obviously a joke. The judiciary disagrees and upheld the conviction (he hasn't tweeted it yet).

In solidarity, here are the words of another notorious terrorist and threat to national security.

'Come friendly bombs, and fall on Slough
It isn't fit for humans now'.

(John Betjeman, poet laureate).

This is ridiculous: it wasn't a bomb threat, and the authorities should be able to distinguish between terrorism and weak humour. When I say 'I could murder an Indian', I'd hope passing Plod can work out that I mean could eat a curry and not kill a human being. Apparently not. I really don't see how the medium through which Chambers' message was distributed made a difference.

Anyway, my day is improving. Not getting enough work done, but I have received another big stack of books: the Moomins novels I didn't have (Moominland Winter, Moominsummer Madness, Moominvalley in November, Tales from Moominvalley and The Exploits of Moominpapa; the other two beautiful big illustrated Moomin poetry books (Who Will Comfort Toffle? and The Book About Moomin, Mymble and Little My, Paul Mason's Live Working or Die Fighting: How the Working Class Went Global (also out of solidarity: he manned a picket line at the BBC and deserves support, and his reports from Gary, Indiana on Newsnight and in the New Statesman were exemplary), and the hard-sf novel du jour, Rajaniemi's The Quantum Thief.

(Thanks to Adam for correcting 'nuclear' to 'friendly' - I did know that really).