Tuesday, December 06, 2005

How We Rob Africa

African poverty is the West's fault - say even committed capitalists now.

In recent years, it became a popular tome among our economic, political and media elites that Africa should stop blaming colonialism for their woes, as that was decades ago, now the problem is local: massive corruption.

This is disingenuous at face value already: direct exploitation wasn't the only effect of colonisation, its economic and social and local political distortions are effects lasting for decades - even without considering post-colonial secret service messing-around, corporate corruption and diplomatic gangsterism. However, an even worse picture emerges when we look at the money flows - no, the net flow is not US/European aid money flowing into African sand/mud, it's the other way around, writes The Guardian:

Five trillion dollars has been corruptly removed from the world's poorest countries and lodged permanently in the world's richest countries. That is the "conservative estimate" not of a leftwing anti-globalisation activist but of a leading American businessman and enthusiast for capitalism who has just completed a major study of how multinational corporations, wealthy individuals and unscrupulous governments are using the world's banking systems in ways that spread poverty.

When aid or debt relief are discussed, attention often focuses on corrupt leaders and governments in Africa and other parts of the developing world. But they are amateurs compared with the rich companies and individuals who use the world's tax havens and banking systems to hide sums of money that could address almost all of the continent's financial needs.

The Guardian has this to say about the author of the study:

Raymond Baker is a committed capitalist whose new book, Capitalism's Achilles Heel, has already made waves in the US. In Britain he has been working with the Tax Justice Network, a London-based organisation that seeks to expose the abuse of tax havens and loopholes.

Baker describes capitalism as "the greatest economic arrangement ever devised", but he believes that western governments and banks are failing catastrophically in their duty to police the system. "Falsified pricing, haven and secrecy structures and the illicit movement of trillions of dollars out of developing and transitional economies break the social contract ... that Adam Smith incorporated into the core of the free-market system," he writes.

I more think it's just natural for capitalism to function like that. On one hand, classic capitalism doesn't work without 'new frontiers', without some resource to exploit - without something put beyond the reach of that 'social contract'. On the other hand, tricksery of companies and capital owners is the nature of enterprise - banks are part of this, Western governments are only 'responsible' to their own voters, so are they really failing?...

Monday, November 28, 2005


Dear neglected readers, I have some rather turbulent months behind me, especially up until a French language exam I had to take recently - hence the silence. And I probably won't be back to once a week frequency until the beginning of next year.

However, on the progressive community blog European Tribune (where you'll find some toned-down-for-a-wider-audience versions of what I posted here), I have been made a frontpager - as that goes with some obligations, I haven't fallen silent there; you can separately read my 'diary' posts and frontpage stories (for example I wrote the October Revolution anniversary entry). All my readers would be welcome there (in particular I would be happy to see more, and better arguing, hard left voices there).

Venezuelan Boom

The Venezuelan political conflict of recent years was something remarqable, not the least for the fact that both sides preferred to fight it out with mostly (but not always) the weapons of 'soft power'.

The opposition tried mass protests, strikes, capital flight, polls and media manipulation (especially before and during the failed US-supported coup attempt), litigation, elections, and a recall vote (ironically using a law introduced by President Chávez). The Chávezistas took over all instances of power, Chávez has his own TV show (tough the opposition owns most of the private media), his supporters had their own mass protests, recall petition signers' names
were publicised.

But Chávez's most effective use of 'soft power' were social programs for the people who became the committed base that saved him, the poor. Chávez may or may not have been a committed social revolutionary before, but either way, his political fortune now firmly depends on delivering to Venezuela's poor. So let's look at some numbers - numbers reported with as much spin as any used by neoliberals.

In a preemptive strike, let me state what Venezuela's 'socialism' is not: it is not a state-run economy like, say, Cuba: the public sector is less than 30% of the economy, the oil sector reform still foresees joint ventures, land reform mostly goes with compensation (all of these earn criticism for Chávez from the local and parts of the international hard left).

Now first let's have a look at what neoliberals focus on instead of general well-being: GDP growth. During the Chávez years, including this year's until the third quartal compared to Q1-Q3 last year (all graphs mine based on data I collected):

Last year and this year, that's quite some rebound, ain't it? And that's with a budget surplus1, and foreign debt reduced (from 46% to 38% of GDP)! Next year may make the Chávez presidency the first longer period in 30 years with per capita growth2.

No wonder Chávez's approval rating climbed to 77%, and that members of the opposition became critical of their own (a good starting point is this assessment of "Ni-Nis", then further posts on that blog).

Two criticisms have usually been levelled at this growth: (a) it is based on increased government spending, (b) it is based on windfall from rising oil prices.

However, on the spending front, government expenditure is still below 40% of GDP; while on the production front, for example in the third quartal this year, the whole of the public sector only grew 5.4% overall, but the private sector soared 11.1%. We get the same picture when comparing the oil and non-oil sectors: +4.2% vs. +10.4%. The current rebound is also very different from what happened in Venezuela during previous oil price hikes (see second footnote).

On the low side, while the new JODI data [Read Jérôme's discussion at EuroTrib] show that the post-strike 2004 oil production was much closer to Chávez's claims than sceptical analysts' estimates (see f.e. MEES's), in the first half of this year the surmised maintenance problems seem to have had their effect (more here). Also, with oil income giving some 50% of the government budget, those social programs seem in danger if oil prices fall.

However, even disregarding Peak Oil doubts about falling oil prices, production problems may be solved next year or after, and some of the social programs (like the adult literacy campaign) are one-off things that'll run out. And another thing critics fail to note is that non-oil tax receipts increased too, in fact more than government oil income (see discussion of next year's plan).

Meanwhile, even without taking social benefits into account3, the poverty rate (more here) is now 38.5% and falling (see chart below), while other human development figures like literacy and health also improved (the latter is set for further improvement). Tough more slowly, unemployment (11.4% in October), informal employment (c. 47%), and percentage of homes without basic services are also falling.

Before making a connection to Europe and elsewhere, I shall mention that I am less interested in Chávez the person than what the 'Bolivarian Revolution' brought. And I won't even posit Venezuela as a coherent positive model - for example, it had so far no solution to the problems with police and military4, and only little effect on corruption (for the latter see point 2 in Gregory Wilpert's part in this web-based debate and this article on some recent discussion), and there is the controversy of authoritarian laws (where it must be noted that the supposedly Chávez-controlled Parliament seems to be more authoritarian than the President, and the also supposedly also Chávez-controlled Attorney General wants to remove these laws). But some aspects of this class war5 may be contemplated even here in Europe.

In Europe, any left-wing government is under the threat of "capital flights" and "capital strikes", when in effect business "votes" on the markets instead of the people. And the standard response has indeed been appeasement or complete submission (helped by a media that doesn't even wince at reporting business demands and spin as unquestionable wisdom). But what Venezuela shows to me is that by reliance on the people, and steadfastness to ride it out over years, such a conflict can be won.

  1. Some foreign analysts doubt official numbers, and - maybe based on foreign debt still increasing on market value (tough less so on nominal value) - still expect a budget deficit. However, given that even their figures are relatively low, and how wrong they were before, and signs like that this year's non-oil tax revenue exceeded plan already in October, I'm not convinced.
  2. As far as I could piece together Venezuela's economic history, the previous 'best' was the turbulent Carlos Andres Pérez presidency (early 1989 to 1993), with the IMF-recipe shock therapy followed by the Gulf War oil boom, that ended at about zero net per capita GDP growth - but with increased poverty.
  3. The Venezuelan statistics office does plan to change poverty statistics so that social expenditures are taken into account. Opposition spinmeisters however 'reported' this as if such new methods were already in use, to be able to dismiss the improvements.
  4. Do you remember when Columbia kidnapped ex-FARC-leader Rodrigo Granda in Venezuela? The part the US media liked to gloss over was that Interpol didn't accept Colombia's arrest warrant - hence Venezuela was not 'hiding a terrorist' and was under no obligation to hand him over. The part Chávez didn't want to hear much about was that the 'kidnapping' was executed by bribed Venezuelan army officials.
  5. Another parallel to Europe: in European welfare states, large chunks of the worker class moved up to middle class, and now defend themselves against newcomers (this is one aspect of the problem of the French banlieues) - in Venezuela, the anti-Chávez opposition included trade unions, but those representing the best paid: oil workers, public workers.

Tuesday, October 04, 2005

Leftist Victory In Styria

...and the end of the Haider era.

In the Southeastern Austrian province of Styria (Austria has a federal system very much like Germany), conservatives lost the election for the first time in 50 years. The results, in percentages and regional assembly seats:

  • SPÖ (Social Democrats): 41.72% (+9.40), 25 seats (+6)
  • ÖVP (conservatives): 38.66% (-8.63%), 24 seats (-3)
  • KPÖ (communists): 6.32% (+5.29%), 4 seats (+4)
  • Grüne (Greens): 4.68% (-0.93%), 3 seats (+/-0)
  • FPÖ (ex liberal, populist far-right): 4.59% (-7.82%), 0 seats (-4/-7 before spit, see BZÖ)
  • LH (list of breakaway ÖVP member): 2.04% (LH+ÖVP: -6.59%)
  • BZÖ (FPÖ breakaways): 1.72% (BZÖ+FPÖ: -6.10%)

Just as in Germany, the hard left managed to take away the votes of the desperates - but it is more notewrothy, because the communists weren't in the Styrian regional assembly since 1970. The Austrian Communists have troubles in the federal party, a tainted recent history (guarding the black money of the East German SED), some extreme anti-EU members, and some undying Stalinists, but the Styrian communists are a separate breed. They have a strong base in Graz (20.75% in the last city assembly elections) and a popular leader in the person of one Ernest Kaltenegger, who made it custom for party officials to publish their personal finances every year and donate most (yes, over 50%) of their income.

These elections also signal the final end of that ever-self-reinventing far-right demagogue, Jörg Haider. Earlier this year, his big stunt was to abadon and decapitate his party, found a new one (the BZÖ) with loyal members, and take over the FPÖ's place in the federal government. But apparently, this was too obviously brazen for the faithful - indeed the fact that only in his home province Carinthia did the majority of party members follow him was an indication. Also, Haider's attempt to spin the change as the abadonment of the hard far-right was quickly ruined by one BZÖ guy who called WWII deserters murderers and called for fairness for 'the victims of the post-war Nazi witch hunt', and then another who denied the existence of gas chambers...

Leftist parties won, but given the seat distribution and the tepid centrism of the SPÖ, it looks likely that Styria will continue to have a Grand Coalition, only with 5 SPÖ and 4 ÖVP ministers instead of 3:5 (+1 FPÖ) and an SPÖ head.

Finally, I wonder how this will influence the issue of the Semmering-Basistunnel, a rail tunnel under a much-frequented pass (Vienna's gateway to the South) at the border with Lower Austria province. That one was blocked by the SPÖ member head of Lower Austria for a decade, who claimed environmental damage. However, for that he repeatedly changed the province's laws, fudged laws that the constitutional court repeatedly quashed; and in the meantime, he allowed the construction of a highway along the same route, with magnitudes higher environmental damage both during and after construction - I leave it to the dear leader to guess his real motives...

Directive From Hell Resurrected

The Bolkestein Directive (I wrote about it) is not dead.

As the StopBolkestein organizers just emailed, an amended version is about to hit the European Parliament later this month. So it's worth to rephrase my rejection (which I think is a bit more in-depth than the petition). Below is a slightly modified and translated version of what I wrote to two of my MEPs.

First: on education.
Private schools, especially if they are given the freedom to make their own curriculum [worst-case example from Britain] get into the scope of the directive. But this is inspired by the economics view of education, that is, education as only the training of future skilled workers. With appropiate protections for poorer regions or communities, a supply-demand solution for this may appear sensible. The education of culture (global, European, national, minority) may not need comprehensive standards.

However, in a democracy, it would be important for voters, all voters to know the world and society in general to a sufficiently high level to make qualified decisions. Be them referendums, parliamentary votes - or daily decisions as consumers buying something. For this, education needs to be comprehensive and curriculum needs to have standards, if not at EU or global level, at least at country or state level. Individual countries' marketisation of education would erode that, creating an EU-wide single market between such countries would make the destruction permanent.

Second: healthcare.
The fear of opponents in the West (here too) is social dumping. However, hiring of doctors and nurses in the West in large numbers would be a problem for the poorer new EU members, too: a shortage of medical staff - and, one can suspect, a decrease of the average competency of staff.

This problem, doctors moving where they are better paid and some regions having worse healthcare, already exists at country level. Even the national healthcare privatisation plans I'm aware of [and reject] call for some State role in mitigating it. However, the problem would be of much higher magnitude at EU level, and completely without instruments to compensate it.

Third and last: labor rights and oversight.
Bolkestein proponents can counter more superficial (= unfortunately most) critics by pointing out that for foreign workers too, the Draft Directive grants the workers' rights of the host country; and that its scope is only services and countries already liberalised nationally. But, if you think about it more, these defenses are worth little:
  1. As far as I know, there is no word about renationalisation - marketisation is a one-way street.
  2. The employer can always exert indirect pressure on the employee - if residing in a different country, thus he can undermine labor rights.
  3. Hence the most alarming point in the Draft Directive, the one nebulously entrusting the authorities of the employer's country of registration with oversight, remains very much on-topic: since conducting checks in another country has its practical problems, this prescription leads at least to lapses, at most a complete loss of overseeing the activities of service companies.
  4. A common market and different national labor rights means a competition between countries - a competition leading to the lowest common denominator.
  5. Hence my most general argument: no common market before common, and high-level, labor rights.
In the last two you find neoliberalism described in a nutshell.

Like its father, modern US libertarianism, it focuses on advancing a narrowly defined version of economic freedom, achieving which only means the extensive freedom of a few, and the replacement of opressive laws with economic duress as the means of coercion of the many. What's new about neoliberalism is, instead of just hating the State, it prefers to use every possible authoritarian power to achieve its goals. Use the State to dismantle the (social) State. (And its difference from neoconservativism is not in any details, just the focus on economic isssues rather than military-police powers.)

Tuesday, September 27, 2005

Cars And Welfare Cuts

I was recently at a family reunion. I have two lovely aunts who were present, whom I and my cousins always chided for stubbornly insisting on their car as their sole mode of transport.

The only exception is holiday trips far away, and this summer they were in Morocco together. As they showed pictures and told stories, they spoke of deep poverty, of a country that doesn't know pensions - and the shock of seeing old women who spend all day sitting on the street, with one hand opened for bypassers' money.

Unto which I replied: would they travel by mass transit, they'd see similar old women (and men) at stations and in underpassages.

The thought this anecdote leads me to is that part of middle-class Europe doesn't support welfare cuts just out of cold-hearted class interest (or the for most illusoric expectations of future upper-class interest) or hypocrisy, but because with their 'modern' lifestyle they just don't see the results.

Monday, September 26, 2005

Transalpine Madness

The above graphs show the development of freight transports in and across the French, Swiss and Austrian Alps, with rail traffic in black and road traffic in grey. It is quite striking that Switzerland does something right the two EU members don't at all. All three countries are in the process of building giant railway base tunnels, but present trends indicate they'll only suffice to maintain rail's already low share in the EU-member two...

Actually, what's not too apparent on the Swiss graph is that while road's share grew after the opening of the Gotthard Road Tunnel in 1980, this slowed in the nineties, and turned around after 2000. This was achieved by restrictions for heavy trucks, quotas and passage charges on one side, and fairly high-quality railfreight and trucks-on-railcars transport on the other side.

This is not for the wisdom of Swiss leaders - the group think of the political class is active there, too. Instead, it's direct democracy: Swiss voters have repeatedly, and consistently voted for expensive transalpine and local rail network projects, financed by taxes and road charges, and against more road construction in a number of referendums. Just a year ago, when another right-populist/industry proposal of re-starting major road construction was tabled, and the government's constitutionally-demanded 'opposite' proposal was for even more construction, both were voted down.

And what happened in the other two? For Austria, you can see a blip around 1990: that's when they too tried to restrict road traffic, with road charges and later quotas. But, border-crossing rail transport wasn't well developed - and, even at the time Austria was only applying for membership, the EU exerted persistent pressure to reduce and abolish the charges/quotas, citing internal market rules of 'fair competition'. No matter that the road charges only added (part of) the external costs (pollution, noise etc.) to trucker's prices.

(A more general rant on current EU rail policy in the previous post.)

A Sound Transport Policy (Not in The EU)

(This is a general rant, see post above for what triggered it.)

Being a hard-left blogger, I'm expected to rail against any privatisation, yeah right. However, unlike many of my Western counterparts, I didn't arrive here due to some general ideological argument on exploitation, or a broad distaste for capitalism, it was just the opposite: thinking privatisation/deregulation was a silly idea in specific fields led me there. Such as healthcare, the electricity network - and railways.

The philosophy of the current EU rail policy is to create competing private railways with free access to railway lines across Europe - and it is dead wrong.

The problem of European railways is not lack of competition: competition is already there, with road (and riverboats and air). The problem is a four-decades shortage of network investment, while at the same time, the rival modes were (and are) made more competitive with massive investment.

"But it'll bring in private capital", the market optimists would say. However, not in this system, where private capital primarily floods to buying rolling stock, price wars reduce reinvestable profit margins, and ultimately the State is called in to prop up the infrastructure (see British example, and also to some extent Sweden). Worse - I wrote network in the previous paragraph for a reason.

A result of privatisation is a further sucking-away of profits on mainlines, and thus a starving of side lines. But the "unprofitable line: close it!" mindset blindly ignores customer's needs: if less destinations can be reached by rail, even if only a smaller part of your transports are affected, won't it be simpler to transport with one mode of transport - and that's not rail? (This is even more true for passengers - indeed a forgotten reason why railways were public service.)

This is my main problem, there are some more. One is unstable service, as companies go bankrupt (examples in Germany) or the effect of safety neglect kicks in (examples in Britain). Also, the heirs of the old national railways try to maintain their positions with all kinds of tricks - which usually only hurt the position of the rail sector as a whole (say, selling old locomotives to scrap metal handlers rather than rival upstart railways). While in the EU documents I sometimes have to translate as part of my work, I see that the 'reformers' are well aware of the many tricks already applied, I doubt they'll find a working remedy even for these - not to mention foreseeing further tricks to be applied.

So what do I think should have been done instead (but won1t due to the neoliberal indoctrination of the whole European political class)? Strangely enough, to a good part stuff the EU also promotes, as part of this general rail liberalisation programme. Rail freight is most competitive over longer distances, but in the EU, borders hamper that: for rail, borders are system changes. Changeovers in electrification systems, technological standards, operating philosophies and organisation.

Unifying standards, operating international trains with multi-system locomotives, and a common safety system should work with more interwinded and cooperating national railways too, especially if the EU and the states (and regions etc.) care about maintaining the whole network.

Addition: I could add a lot of details, but let's look at Switzerland (see next post), an apparent counterpoint: it has a lot of private railways. However:
  • these do not compete: they cooperate;
  • most of them are majority-public-owned (by cities, cantons and the federal state);
  • in the last few years, there was a consolidation process: the state railway ate up some 'privates', and most of the rest coalesced into three larger regional networks.

Sunday, September 25, 2005

More German Bits

Roland Koch (see previous post) really tries hard to prevent a Grand Coalition and trigger new elections: after the idea of shared (2 years one party leader, 2 years the other) chancellorship was floated, he declared that the CDU/CSU should insist on the SPD dropping Schröder as a precondition.

One thing I forgot to insert into the previous post was that Koch, not Merkel, enjoys the US neocon's support. This they made painfully clear after Iraq's invasion. Merkel licked neocon arse with her foreign policy statements ever since summer 2002, and she long sought public contact with US counterparts, yet in May 2003, Merkel was only granted a meeting with Powell when the latter visited Berlin - while Koch was received for an unscheduled 15-minute meeting at the White House...

I also forgot to express Schadenfreude at how that utter idiot leading the FDP, Guido Westerwelle, fared: the guy who shares much of the blame for turning the FDP an unserious no-holds-barred-neoliberal 'fun' party is a direct candidate in Bonn, and this time got only 8.7% - that's 5.5% less than in 2002, and 5% less than list votes for his party in Bonn!...

Monday, September 19, 2005

German Elections: What Now?

The result

With one election district (of 299) voting two weeks from now, the list vote for parties (in linked table: "Zweitstimmen"; those above 5% get into parliament, below all above 0.5%):

  1. CDU/CSU (Christian Democrats/Socialists[Bavaria]) 35.2% (27.8%+7.4%; 2002-3.3%)
  2. SPD (Social Democrats) 34.3% (-4.2%)
  3. FDP (Free Democrats, [market-]liberals) 9.8% (+2.4%)
  4. Die Linke (Left Party, hard left) 8.7% (forerunner PDS +4.7%)
  5. Grüne (Greens) 8.1% (-0.5%)
  6. NPD (National Democrats, far right) 1.6% (+1.2%)
  7. Republikaner (Republicans, far right) 0.6% (+/-0)

The Left

I think we have another shining proof to counter the centrist argument, another proof that leftist parties can gain votes by campaigning for leftist issues. After the SPD lost the state of North Rhine-Westphalia four months ago and went for early elections on the federal level, it fell to 26% in the polls – since then, being forced to campaign on the left by the new hard-left competition, it gained 8%, even tough the Greens ended up with the same and the hard left also increased, almost doubling its votes from poll numbers back then!

The Centre-Right

While the FDP outdid poll predictions by some 3%, the CDU was short of expectations by a spectacular 7%. For the first part, the explanation is supplied by opinion polls’ question about coalition preference: in the last few weeks, the popularity of a CDU/CSU+SPD ‘Grand Coalition’ fell dramatically, while that of a right-wing coalition rose – hence, a lot of CDU voters expressed their desire by voting for FDP. As for the other half of the loss, I‘m not sure. The CDU’s numbers fell before due to their own goal of being too open about neoliberal economic plans (naming flat-tax proponent Paul Kirchhof as economy minister candidate). However, its Bavarian sister party CSU lost even stronger (almost 10% over 2002 numbers, twice as much as FDP gained there), for no apparent reason.

The Far Right

Their non-story is a big story. Although they polled higher than in 2002, consider what happened in the meantime. Until lately, the far-right in Germany couldn’t achieve much because of strong voter traditions and because they were splintered (too many would-be-Führers). But no such traditions exist in East Germany – and one (DVU) in two states, another (NPD) in one state passed the 5% limit over the last few years. The second was most shocking, with NPD getting 13% in Saxony – and even more shocking was that NPD and DVU managed to forge a union for federal elections. That they failed to capitalise is largely a success of the Left Party, which drew away disaffected voters from the rat catchers – now even in Saxony, NPD polled just 4.9%.

By the way, the local creationists, PBC (Party of the Bible-faithful Christians) polled at 0.23%. That's not that much percentage-wise, but in absolute numbers, having over a hundred thousand complete nutters (and growing) is not a comfortable feeling.

Grand Coalition Scenario

The most likely outcome of the elections is a CDU/CSU+SPD government, with either CDU leader Merkel or current incumbent Schröder as chancellor. This will prevent some of the worse the Right had in mind, but also significant reforms. Except for more stealth neoliberal reforms. Also, in the energy question, this will be a union of the coal and nuclear lobbies, further picking away at the only successes of the Schröder government, which were thanks to policies pursued by the Greens. The big question is, who would profit until the next elections? It is reasonable to hope that the Left Party and the Greens will, as for the big parties, it depends on who gets the blame for failure/the credit for lack of disaster.

Repeated Elections Scenario

Or the Nightmare Scenario. Let me explain.

As things stand, both Merkel and Schröder want to become chancellor. But presently, it is possible that neither will have the backing of the majority of parliament or a governing majority. In that case, the parliament has to be dissolved – then its elections again.

Now, most people observing Germany assume that Bavarian PM and CSU head Edmund Stoiber (who was the Right’s candidate for chancellor in 2002) is the most dangerous right-populist in Germany. I disagree: Stoiber is in truth a boring technocrat, who only tries to compensate his distance from the people with boorish attempts at talking folksy. The real menance is called Roland Koch, and currently heads Hessen state.

Power-hungry, ruthless and reckless, he won in his state with a virulently xenophobic campaign, has a very macho aggressive style, wants radical social cuts and police state measures bordering on far-right demands, survived lying openly about his knowledge of the local CDU’s party finance scandal, some corruption scandals, and staging a theatre of fake outrage in the German parliament’s second chamber. He also has a history of bucking the party line when talking to the press and shaping policy on his own.

This guy is a loose cannon, but not a lone gun. He is not the most popular (that’s presently Christian Wulff, head of Lower Saxony state), but the strongest member of the so-called Andenpakt, a power alliance forged by Pinochet-admiring CDU then-yuppies on an airplane to Chile three decades ago… This group tried to undercut Merkel several times, it was their success that Stoiber was named chancellor candidate in her stead for 2002, and they tried a coup two years ago (that one backfired).

Last night, Koch appeared all too bent on showing himself before the media. He must be thinking that if no government can be formed, Merkel will get the blame within the CDU – and he will be the new candidate. Then Germany (and the rest of Europe) should beware – we would see the nastiest campaign ever, most probably fanning the flames of xenophobia with the issue of Turkey’s EU accession as excuse. If Koch will be the candidate, all Left parties should give their last to defeat the “we need a stable government, whatever its colour” meme, and prevent a right-wing majority.

Friday, September 16, 2005

US Polls

Bush's overall approval rating slipped to around 40% in most polls, and now even his favorability rating slipped for the first time to an equal or lower level than his disapproval rating. But it seems mismanaging (yeah, severe understatement) the relief effort after Hurricane Katrina is only part of the expanation - Bush's Katrina ratings, while negative, are still depressingly close to even. His support is still not down to the rock-solid 35-40% fundie base.

But more interesting is a poll on Iraq, the CNN/USA Today/Gallup poll conducted September 8-11. While on Bush's handling of the Iraq war (40% approve 58% disapprove) and on whether invasion was a bad idea (53% yes 46% no) numbers didn't change, on the question of pullout, now we have:

Date Stay as long
as 'needed'
Withdraw if
too many killed
9/8-11/05 35% 19% 41% 5%
7/25-27/03 37% 33% 26% 4%

Maybe this is the Cindy Sheehan effect.

(This is an update to my expression of polls scepticism three months ago and my premature optimism two weeks later.)

Thursday, September 15, 2005

Electricity Market Liberalisation Doesn't Work

Claim: electricity market deregulation will drive down electricity prices, it'll be good for us all.

Theory: free competition between producers with grid access means the cheapest offer wins, which means unfair overpricing by monopolists will be eliminated.

Counter-theory: Prices will go down first, but that at a cost: producers will spare by drawing down investments, which will lead to long-term problems and a price rise. But even before, large producers will use their financial reserves to drive prices down so much that upstarts go bankrupt, and then cooperate in raising the prices again, while blaming everything and everyone else. On an even shorter term, the general instability of markets will mean large oscillations. Meanwhile, all this focus on lowering prices forgets about sustainability and global warming.

Practice: My counter-theory exactly describes what happened in Germany after price liberalisation and market opening. The up-starts, except those defended by the feed-in law for regenerative energies, went bust in a few years, and indeed prices began to climb.

I created the above graph (the 2005 data is for the first quartal, it rose since another 5-10%) using the numbers calculated every year by the German Association of the Electricity Industry (VDEW), which represents the traditional producers and grid-owners - and pushes their agenda. Their reports since 2001 claim that prices rise due to the state, which added environmental tax and the feed-in law as price pushers. But, the netto price also increased significantly (even more since Q1) - and was calculated dishonestly.

The trick is with the feed-in law. The extra price for the consumer would be their share of the money paid out to regenerative energy producers at fixed prices minus the average production cost of the traditional industry for the same amount of electricity. But the VDEW tricksters simply calculate with the money paid out, without substracting the cost of the replaced traditionally produced electricity. (Correcting this would move up the right side of the Netto lines by about € 0.50.)

To get a bit closer to the truth, let's look at how the pre-tax price of electricity sold to medium-size industrial customers (who can connect directly to the intermediate-voltage network) developed since deregulation:

I created the above graph combining the VIK electricity price index (pdf!) and its predecessor, the Dow Jones/VIK price tracker (Excel!), using January 2002 as junction.

Finally, I note another 'effect', which can be seen to some extent on the first graph: the large locally monopolistic private companies that ruled the regulated market before the March 1998 deregulation significantly raised the prices leading up to that date. That is, the initial decrease in prices was to a significant part the elimination of windfall profit margins...

UPDATE: some more on the above, with a longer version of the first graph.

First a note on the VIK price index for electricity to the industry. It is based on wholesale prices at an electricity stock market (a combination of baseload and peakload averaged over a month), but the pricing for many customers is determined by long-term contracts - hence lower; it's new customers who are fucked with most. But, the March 1998 starting point is still pushed up by a previous windfall profit price hike, let me expose that below.

I created another graph for the typical private home (the metric used is 3500 kWh/year with the usage patterns of a three-person home throughout), this time extending back to 1980 (yearly to 1990). But I will note some other strong effects that shroud what I want to show.

You will first note the giant jump in 1991, which is the effect of German reunification: in the former East, production was less efficient, and upgrading them to Western standards or replacing them costed time and money. However, that process was essentially over by 1998. Second you'll note that in 1996, brutto prices moved down while netto prices moved up: then the regional monopolists used the elimination of a tax as cover, hence the bumpy rather than straight three-year rise for extra profits before deregulation.

Finally, note that that 1998 peak is actually the average of a late 1997-early 1998 spike and subsequent steep fall - so when you look again at the graph of VIK monthly data, the starting point is even more skewed than you'd guess from the above. (I also emphasize again that since the first quartal, prices rose another 5-10%.)

The last issue is gas prices. While most of the German production is not gas, it is significant in the short-term peakload production - and as Jérôme explained us, producers use marginals to determine the prices. So much so that at the above mentioned electricity stock market, baseload prices moved in lockstep with peakload ones (being lower by a constant ratio).

However, unlike in Britain or the USA, in Germany there is no apparent supply-side justification for the gas price hikes in the last year. Indeed a consumer group sued one of the main suppliers, E.ON, for the release of its price calculations - and yesterday a court gave them right. But E.ON still refuses to comply. I think that is proof enough that the big private suppliers are hitching a ride on top of the global oil and other regions' gas price rises.

Barroso's Trojan Horses

In line with the general neoliberal trend sweeping Europe (which will only get worse after the German elections), which also meant a wide majority in the most powerful institution of the EU, the European Council (the national governments' club), we now have a Commission president (it's British PM Bliar's fault) who is a self-styled neoliberal revolutionary. (Never mind that his economic policies ended in total failure at home - he even cooked the books -, and to a leftist election victory I discussed.)

Undeterred by the reasons behind the French and Dutch NO on the EU Constitution, after all he only does what most national governments want, he goes on - only clandestinely.

First, the EU Commission can now go after companies breaking environmental law. Or, that's how it is sold: for, the Commission's new powers also include "criminal sanctions for breaches of EU internal market, data protection laws and intellectual property rights". Without doubt music companies and Micro$oft will be happy about the last two - while the first can also be applied against environmental legislation, neutralising the positive in the headline part (there have already been such attempts against German laws like the regenerative energies feed-in law, the drink bottles recycling law and the lorry road tax law).

Second, Barroso suggested the scrapping of unnecessary EU legislation, bringing up the law on workers' protection from excessive exposure to sunlight as example, which made stirrings in the German yellow press as something absurd (i.e., 'barmaids at the Oktoberfest won't be allowed to hand out beer in traditional clothes [which expose some flesh]'). Now, even that ruling may look much less absurd if we look at the details in the final version and don't rely on the yellow press, but consider what else Barroso proposes to scrap: "EU-wide rules in areas such as food labelling, presentation and advertising, the regulation of sales promotions and weekend lorry-bans". I.e., he'd like to convert the EU just into what British anti-EU leftists erroneously believe it to be already...

Political Courage: Italian Example

There is eternal debate on the left between centrists and 'radicals' about whether compromising and appeasing the centre or standing firm and offering a coherent vision wins more votes.

In my opinion it's sometimes this sometimes that, while I think it's more often the latter (and even when it isn't I think it makes more sense to stay in opposition with ideas intact than be in power executing someone else's ideas). In the previous post, I indicated how centrism was a losing strategy for the German centre-left, and that it could boost poll numbers both times it was forced by events to campaign in a leftist way.

Now, recently, Romano Prodi stirred up some waters in Italy. The present leader of the opposition leftist L'Unione coalition was Italian PM from 1995 to 1998, during which time he was a centrist who didn't dare to push through laws that would have prevented the return of Berlusconi with his media monopoly and criminal past, nor to defy the business lobby - which led to 'reforms', which led to the rebellion of the communists and the fall of his government. He was also criticised for being a weak EU Commission President, tough he can hardly be blamed for much given that it is the EU Council - i.e. the national governments' club - that calls the shots.

Now back in Italy, Prodi pursues a more leftist line: he advocated and promised withdrawal from Iraq, bucked the European trend by boldly promising to change immigration policy from the extremely unfair and restrictive laws of the current centre-to-far-right government to an immigration-firendly one, and he advocated the introducion of French-style civil unions. For the last, he was attacked by politicians on the right and centre, and the Vatican-allied media, who compared him to the current Antichrist of the Catholic Curch (for introducing gay marriage in Spain), Spanish PM Zapatero. Centrists (Christian and non-Christian alike) are already crying that he is blowing the chances of victory.

Now, I don't think most Catholic really care that much about the Church's sword-waving, nor that polls indicate any danger: the Christian Democrat centrists in L'Unione, UDEUR, poll only at 1.3% (even their counterparts on the right, UDC, poll just at 5.7%), while L'Unione leads Berlusconi's bunch by 5.5%. But Prodi should be fearing the pro-Vatican mafia in politics and media even less if he considers the success of Nichi Vendola.

Regional elections were held in 14 provinces in April this year. People voted for party lists for the regional assemblies, and separately voted for a regional president. In Puglia province, (the 'heel' of the Italian 'boot'), a certain Nichi Vendola won the presidency, against these odds:

  1. Vendola was selected in a US-style primaries vote by the base rather than chosen by party leaders as the one seen most electable,
  2. he is a communist (and attacked for it),
  3. he is openly gay (and rather strongly atacked for it),
  4. he won in a Southern province (where people are more conservative),
  5. he won with 6% more than the last centre-left candidate,
  6. he won by more than the supporting L'Unione coalition on list votes (0.1% more - that must have come from the right!),
  7. he won while the L'Unione vote included 3.28% vote for the Christian Democrat UDEUR and its centrist allies!

This should be the example to put up against any defeatist talk on the left.

Thoughts On The German Elections

After the victory of party macho extraordinaire Gerhard Schröder over party enfant terrible Oskar Lafontaine (nicknamed "Red Oskar") shortly after the 1998 Social Democrat/Greens election victory, all mainstream parties in Germany fell in line behind the neoliberal economic mindset.

For the Left, this proved disastrous: the repeated appeasing of the business lobby and anti-welfare-state 'reforms' only alienated own voters, while the private economy didn't "thank" with either creating more jobs or at least electoral support: these moves not only didn't solve economic problems, but worsened the situation, which led to demands for even more 'reforms' from the business community. All the while, only the Green junior coalition party pursued progressive policies, only to be undercut by SPD politicians serving some lobby (most notably current economy minister Wolfgang Clement, a persistent and extremely dishonest propagandist against wind power for the coal industry).

Disproving the centrist mantra that campaigning for a progressive policy too clearly loses votes, Schröder narrowly won re-election in 2002 with his stand against the Iraq war. But he didn't learn anything, blew it again over the next three years with more of the same. Then he called early elections. Then the unthinkable happened: the rise of a serious contender to the left. The SPD was forced to campaign again as a leftist party - and its numbers rose from the low twenties to 35% again. (Not that I'd expect its leaders from learning this time either, should they enter some government.)

That contender to the left came by due to extraordinary circumstances. Some West German SPD members fed up with Schröder left the party and formed the WASG political group (not a party). Meanwhile, in the East, there was the PDS, the heir of the onetime ruling party of the communist dictature, but one that unlike fellow post-communists in the region developed towards something progressive in the Western sense, due to its marginalisation: they had to fight for votes with the SPD, they are dominated by the onetime reform wing, they are cleared of anti-democratic tendencies or criminal networks given that they were monitored for a decade by the local equivalent of the FBI, and they assimilated a lot of progressive youth groups not affiliated with the ancien regime.

Now, separated, WASG and PDS wouldn't have stood a chance - and there were various animosities between the two. But then "Red Oskar" Lafontaine declared that he leaves the SPD, and will run for election only if WASG and PDS ally themselves on a single list. Even more than British counterpart Galloway, Lafontaine suffers from an oversized ego - but that alliance proved a powerful idea all in itself. What followed was an unprecedented pressure from the leftist public opinion on the foot-dragging parties, who in the end managed to agree, and now run under the name "Die Linke" (Left Party). (See a very illuminating interview with a WASG activist in English at Lenin's Tomb.) In the first enthusiasm they even polled at 15%, now back to 7-8%, the campaign of all parties and the potentials for after the election were completely changed.

From the last polls before election (this Sunday), and the last mandates projection (see "Sitzverteilung" table to the right), it looks like a conservative-(market)-liberal coalition (i.e. CDU/CSU+FDP) will just fall short of majority. A centre-left-hard-left coalition is presently considered a practical impossibility, so it will likely be a grand coalition - on the positive side, both Greens and Left Party can argue against its policies in Parliament and could benefit in opposition.

I hope the Left Party can develop into something serious, as the only strong voice against neoliberalism, and not end up relying on the contentious stardom of Lafontaine. While most attacks against Lafontaine from the mainstream press are unfair (his much thematised speech about "Fremdarbeiter" was taken entirely out of context, but read on this the above linked interview at Lenin's Tomb), his last book includes some rather questionable culturalist passages - a departure from his demand years ago for a changed sense of "German-ness". Meanwhile, I also hope the Greens can reinvigorate themselves, as the only strong voice for seriously tackling the problems of global warming, Peak Oil and industrial farming, and not end up relying on the contentious stardom of current foreign minister Joschka Fischer.