Tag Archives: Newton Emerson

A Brexit compromise with Unionism?

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In the previous post I argued that there should be no attempt to conciliate unionism, and certainly not by socialists.  Although its politics is entirely reactionary this is what is being proposed by a number of commentators who really should know better.

In one blog, a comment asserted that the ‘institutions of the [Northern] State are errand boys for Sinn Féin, who are errand girls for the Army Council, which is a body of totally unreconstructed IRA hard men from back in the day.  Moreover, it is an almost entirely Northern body, on the cusp of taking control of a 26 County State.’

This, of course, is phantasy.  Locally, the regular columnist in the nationalist newspaper questioned whether ‘sectarian control [has] simply changed hands?’ and asserted that it was ‘difficult to avoid the observation’.

This ignores recent history that is littered with loyalist riots against what they see as encroachment on their rights by Catholics.  Indeed, such riots played a major role in the start of ‘the Troubles’ with such inconvenient facts as the first policeman killed being shot by loyalists.

Conciliation has already been adopted by the Police Service of Northern Ireland pretending that loyalist paramilitaries are not involved in organising and leading the riots.  Its first statement pointed the finger but refrained from outright assignment of responsibility.  It waited until the umbrella group for the main paramilitary groups had issued an appropriate statement denying involvement, and calling for only peaceful action, before stating that these organisations had not ‘sanctioned’ violent protest and that only individuals may have been involved.  This is the normal way of trying to prevent escalation; part of what was called a long time ago an ‘acceptable level of violence.’

The Unionist columnist Newton Emerson has written in a number of Irish newspapers that compromise with loyalist demands should be made to protect the peace process.  After all, warnings by nationalists and the Irish Government that republican violence would follow any Brexit land border within the island had led to it being placed down the Irish Sea.  If Irish nationalism could threaten violence to get its way what’s wrong with unionism doing the same?

There is some obvious truth in this, except that a hardened land border, while not strictly contrary to the Good Friday Agreement (GFA) as often claimed, would not only serve (dissident) republicans but would also severely undermine the current political arrangements.

In the GFA nationalists were to accept the legitimacy of partition and of the Northern State in return for some cross-border bodies, a hypothetical mechanism to bring about a united Ireland through a border poll, one however that was in the gift of the British Government, and a power-sharing Stormont regime that included an effective sectarian veto on change for both sides, which of course is more obstacle than opportunity for those seeking change.

If the border were to be strengthened as a result of a hard Brexit that most of unionism supported while the majority in the North of Ireland opposed, and with the stupidity of the DUP coming back to haunt them in loyalist riots, nationalism might consider that promises are cheap but reality expensive.  It was not republican dissidents that put a border down the Irish Sea but the Irish Government and the EU with the blessing of senior US politicians.

Emerson goes on to ask ‘should we risk restarting the Troubles ‘over inspecting packets of ham at Larne?’  He queries the evidence and reason for believing that the EU Single Market ‘would otherwise be swamped via circuitous smuggling of food through Britain and Northern Ireland.’

He also, in rather contradictory fashion, suggests a law-and-order solution to smuggling across the Irish border and maximum mitigation of the effects of the Protocol in order to assuage loyalist paramilitaries who, although almost defeated, require concessions.  In this regard there are further press reports of money for these paramilitaries in a continuation of the policy of weening them off criminality and political violence by giving them what they want.  Alongside this a law-and-order solution would be applied to the really delinquent factions.

All this is washed down by the admission that ‘at some point we will have to confront the moral squalor of giving in to violence but that moment is hardly now, when so little might be required to prevent violence.  Rather it would be immoral to prioritise hypothetical ham over life and property.’

Of course, the ham is far from hypothetical and Emerson gives every indication of suffering from the illusion of the supporters of Brexit who never understood the magnitude of the decision they supported.  He regards the potential breach of the EU Single Market as small, although both the EU and British sought to use the North of Ireland as leverage in the overall Trade and Cooperation Agreement, promoting its importance to any overall deal.

There is no reason to believe that loopholes would not be exploited and no reason for the EU to believe that the British Government would not seek to exploit concessions or mitigation or whatever term is used to fudge the regulations.  The British have openly breached agreements already reached and failed to implement practical measures, such as  installation of inspection posts and access to data, that it promised to deliver.

The EU has claimed that the most difficult issues could be solved by the British agreeing to synchronise their food standards with those of the EU but the British have ruled this out, and while the British have asked for flexibility the EU has stated that they must first implement what they have already agreed.

It would go too far to say that loyalism and the British Government are in cahoots, the latter is not attempting to get rid of the Protocol altogether, but the pressure applied by both is in the same direction.

The Single Market may not seem so dramatic as yet another political crisis in Northern Ireland but the EU has more interest in the former than the latter: concessions that are given only to Britain might easily give rise to discrimination cases against the EU.  More generally, retreating on the basis of pressure from political violence does not set a good example for any other potential challenges to Brussels and member states.

There is no reason or evidence to believe that smuggling would not take place on the Irish border were it also to become the border for Brexit, or to believe that such smuggling would need to ‘swamp’ the EU Single Market for it to matter to the EU.  On the other hand there is good reason to believe that mitigation of the trade border in the Irish Sea would not be enough for loyalism. For the EU, checks on any border would have to mean something and if they did loyalism would object.

There is no doubting that these checks are onerous and will increase after the transition but the negotiations between the EU and British to find technical solutions do not warrant the view that the Protocol will be effectively removed.  These negotiations were reported by RTE and the Guardian, with some sceptical coverage of them by one informed blogger.

There has so far not been enough direct impact on imports to motivate those not consumed by potential constitutional implications to protest.  As Emerson points out, Marks & Spencer has just announced the opening of a new food store in Coleraine, and Covid-19 has been a much more immediate barrier than Brexit to people getting what they want.

This does not mean that loyalism is not angry, or has cause, but their anger should really be directed to the DUP who led them up the garden path with Boris Johnson at the forefront. Nevertheless, while loyalism does not need to be particularly coherent, there are also limits to what an incoherent view of the world will achieve in bending that world to its own misapprehensions.

Emerson’s law-and-order solution does not seem to recognise the incongruity of calling for increased repression of dissident republicans and others in order to reduce ‘paperwork’.  He wants a retreat on policing of protest demonstrations that are held within unionist-majority areas so as to avoid ‘confrontation’, but it’s not clear how much consideration he has given to the minority living within these ‘unionist-majority areas’.

Of course, in most Protestant areas Orange marches are generally popular and there can be little doubt that a majority of Protestants oppose the protocol and would have sympathy with the aims of demonstrations against it.  The majority would have less sympathy with the paramilitaries who often accompany such displays and that is their problem: one doesn’t come without the other.  Emerson forgets that the immediate victims of loyalist paramilitaries are Protestants in working class areas who are often presented as the paramilitaries’ political constituency, in so far as they can claim one.

He is right therefore to acknowledge the ‘moral squalor’ involved in concessions to loyalism but over twenty years from the deal that was supposed to bring peace and an end to them, we apparently have to make some more, and to the same people.   He says that ‘we’ have to make them but the majority of the population have had no choice in the matter.  His ‘giving in to violence’ has in the past not only involved ‘giving in’ but the sponsorship of loyalist paramilitaries by the British State through all sorts of collusion.  This has involved not only accepting loyalist violence but protecting its perpetrators and assisting its organisation and effectiveness through state agents.  In his seemingly bold and brave admission of unfortunate necessity we are to forget what it has meant in the past.

If Newton Emerson’s proposals have any educative value, they show the limitations of unionist opinion, even from its most intelligent and least prejudiced sources.  It reminds me of the statement last week by First Minister Arlene Foster who, after riots and petrol bombs, and with one bus driver attacked in a case of “attempted murder”, declared that these actions were an “embarrassment” and “only serve to take the focus off the real law breakers in Sinn Fein.”

In the mind of unionism, even when its their fault it’s really someone else’s, anybody else’s.  Brexit was a unionist own-goal which they are trying to reverse.  Socialists have no interest in defending their seventeenth century reaction from twenty-first century capitalism.  It would be good if the many on the left in Ireland who also supported Brexit would acknowledge that they too have made a mistake.

Back to part 1

Jeremy Corbyn’s economics 2

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o-JEREMY-CORBYN-THE-FACTS-facebookIt would appear that Newton Emerson doesn’t buy the view that quantitative easing might be about investment in real activities that promote growth but his disdain for the economic rationality of Corbynomics and his arguments opposing it are full of contradictions and holes.  So for example while he appears to see it Corbyn’s approach as dangerously radical he notes other, apparently more radical, alternatives such as giving out unfunded tax cuts or rebates, which have come from decidedly mainstream quarters such as George Bush or the head of the Financial Services Authority, who noted that the Bank of England had considered something similar.

The rationale behind Corbyn’s proposal is that the British economy needs sharply rising investment to boost economic growth.  This would produce higher levels of employment with people paying more taxes and taking fewer benefits, in the process reducing the public sector deficit and debt while realising better public services.

Newton Emerson however sees only the prospect of increased inflation because it would mean printing money and giving it to the government who would waste it, leading to rising prices.  He compares this unfavourably with simply handing out money through unfunded tax reductions (characterised as dropping money from a helicopter)or the Bank of England’s own quantitative easing explained in the first post, although he favours each of these for totally different reasons!

So, simply handing out money is good because “it is spent immediately on the high street” while the existing quantitative easing is even better because it “is a more effective and responsive version of the helicopter drop, where the cash is handed out under circumstances that ensure it will be hoarded by the banks.”  So if it’s spent that’s good and if it’s not that’s even better!

I don’t think I’m sticking my neck out very much by saying that most commentators think that the banks not lending the money but hoarding it, as explained in the last post, is a problem with quantitative easing as practised by the Bank of England and not a plus.

Of routeing the money through the banks, he says: “Better still, the moment prices start rising, the made-up pounds can be recalled and lending will instantly shrink by a factor of 20, reversing inflation in its tracks”.  Yes indeed, monetary policy usually takes around 18 months to two years but one that works instantly would be even better, except that if it worked by reducing lending instantly and by a factor of 20 the effect would be a catastrophic depression.

Emerson is right when he says that capital investment projects might take two to five years to get off the ground while the money paid on wages and to suppliers starts to be spent right away but this is an effect of any investment, state or private, so why is this only a problem with state investment?

If there were already an investment boom and a cyclical upturn that might shortly lead to overproduction and a glut of goods that cannot be sold profitably because of saturation of the market there would be a point to Emerson’s objection.  But preventing this would require some sort of economic planning, basically an end to capitalism, and he definitely doesn’t favour this.  In circumstances of a meagre upturn after a long recession it is unlikely there is constrained capacity that would lead to rapid inflation if additional money was pumped into the economy in the way proposed.

Emerson shines his Tory credentials by recalling the economic crisis in Britain in the mid-1970s in which deficit spending by the Labour party Government in 1976 led to the IMF being called in to give Britain a loan.  This shows that this sort of Keynesian policy leads only to inflation.  Four decades on, he says, the Corbyn supporters dismiss this lesson.

But his problem is two-fold.  What exactly is the lesson to be learnt and is the situation today the same as that in the mid-1970s?

The lesson drawn by certain advisors to city traders in the mid-1970s was that too much money was being created which was causing inflation and that Governments should target measurements of money supply to ensure that they do not exceed predetermined levels.  This monetarist policy was taken on board by the new Thatcher Government and dropped when it didn’t work.

But even his quoting of Labour leader Jim Callaghan in the 1970s ignores the admission in it that this policy had previously worked.  Post war recessions were shorter and less severe because of Keynesian policies.  Today’s critics of these policies now proposed by Corbyn ignore this, while Keynesians forget that it cannot solve underlying problems.  So yes these policies did lead to inflation, which increased over the post war period and eventually took off, but this brings us to the second question whether conditions today are the same as those of the 1970s?

The ‘money printing’ carried out by the Bank of England etc., which Emerson supports, is not free of inflationary consequences itself, it’s just that he fails to notice because they appear in rising property, share and other asset prices.  The policy of investment by the state at least promises investment in activities that support real production.

The Corbyn alternative is not madcap economics and is more supportive of working class interests than stuffing money into banks whose Directors were only yesterday appearing in parliamentary hearings explaining how they didn’t really know what they were doing.

Nevertheless the Corbyn policy of infrastructural investment by the state is limited in two senses and isn’t itself socialist.  First it’s investment in infrastructure where private capitalist initiative has failed.  The investment proposed is not therefore the sort that would be in competition with private capitalist production and in so far as it will be private capitalist concerns that pick up the contracts, such state investment will be a big boost for them.  Emphasis on state investment in infrastructure is something Corbyn shares with the many left electoral alternatives that have decried the desertion of old labour from its past.  They are pretty naked now it may be back.

The second way it isn’t socialist is that it is the capitalist state that is increasing its role in the economy not worker owned cooperative production, in which workers can democratically take the initiative and learn to run things themselves.  This could lay the economic and social grounds for a political challenge to the system as a whole where workers to decide they should own and run the whole lot.

There is nothing very democratic about current state ownership and the workers within it still answer to a boss.  The success of state led investment in efficiency terms is very much dependent on the developmental capacities of the state itself but when private capitalist intervention has failed it’s not a very strong argument for the likes of Emerson.

Like the rest of the shrill and desperate attacks from the right the local criticism of Corbyn doesn’t hold much water.  Others in the mainstream have recognised openly the limited radicalism in what is being proposed, which may actually be understood by those venting their disapproval.

Their opposition may therefore be motivated by fear that what is being proposed opens other more radical vistas for those seeking an alternative to austerity.  That this may well be the case is a reason why Corbyn should be supported.

Jeremy Corbyn’s economics 1

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corbynimages (12)I hadn’t even gotten out of my scratcher yesterday morning when I looked at my mobile and the BBC news web site to see what was happening in the world, only to see yet another attack on Jeremy Corbyn’s campaign for Labour party leader.  This time the Brlairite was Blair himself, looking skull-like and definitely not very well – all that chasing after money mustn’t be good for his health.  “Labour must come to its senses” he apparently said.  I didn’t read any more.

Corbyn has been criticised in just about every way imaginable, from the Mail prophesying a return to the “dark ages”, riots and intervention by international peace keepers, to the oh so condescending approach of Janen Ganesh of the ‘Financial Times’: that Corbyn’s policies, “eccentric” and a “joke” as they are, are not really the problem, it’s the “soft left” and Andy Burnham and Yvette Cooper who are the ultimate problem.  Poor Jeremy, he’s either responsible for a new dark ages or he’s such a joke he doesn’t deserve consideration, even as a problem.

At the centre of all this dismissal is contempt and ridicule of Corbyn’s economic proposals for “quantitative easing for people instead of banks.”  Our local biggest daily ‘The Irish News’ had its own columnist to hurl his own critique, this time mixing both dire prediction and condescending ridicule.

The author, Newton Emerson, thinks that fewer than 1% of the population will understand “why Corbynomics is ridiculous” even though “it takes little more than an A-level to understand why.”

Emerson is normally an acute commentator on politics in the North of Ireland, frequently exposing the hypocrisy of political culture here and the rottenness of the political arrangements.  Unfortunately he has two problems.  First, when it comes down to it he actually supports the rotten political arrangements, and secondly, he gives every indication of having been educated in the dismal science of economics as taught in the universities.

He is undoubtedly correct that the general population is seriously under-educated in economics and this is a real problem for them identifying their interests in any debate.  On the other hand I don’t believe that Corbyn’s ideas are very radical and certainly not ridiculous, so going to university or doing an A-level really isn’t the answer.

So let’s see if we can understand what the issues are in this case.

Quantitative easing as practiced by the Bank of England involves the bank loaning newly created money (created as an electronic entry in the bank’s accounts) to a fund which has to pay it back, so theoretically it’s a loan and not just giving away newly created money.  This fund then uses these loans to buy government issued bonds (IOUs payable by the Government) that are held by pension funds.  These pension funds now have money instead of these bonds.

The theory is that these pension funds will then want to use the money to buy other assets from banks such as bonds to replace the ones just sold back to the government or buy other sorts of securities such as private debt instruments (IOUs issued by private corporations to raise money for investment).

The end result is that money has been created electronically by the Bank of England and it now rests in the banks which, it is hoped, will use the new money to buy debt issued by private firms that will in turn help them invest directly through the money just received.  This investment will create jobs and economic growth.   That’s roughly the theory anyway.

However, once the banks have the money they can do what they want with it.  They could buy bonds or securities issued by other countries; they could buy existing shares or securities which would give no more money to firms to invest but simply increase the price of these pieces of paper; they could buy commodities or property and cause inflation in these assets or they could simply sit on the cash.  In each case there would be no increased employment or contribution to economic growth.

Even if they bought newly issued debt from private companies, these too could decide not to invest the money in new factories, offices or equipment and instead do any of the above and join in the great speculative boom in property or share prices etc.  Many banks and companies appear to have done just this, which has made them richer but not helped economic growth.

In other words the ‘money printing’ that has been carried out has helped the banks and made the rich who hold financial assets richer by increasing their price.

Hence the alternative proposed by Jeremy Corbyn in which the newly created money, which is also in the form of a loan, is given to a State investment bank who then loan it out to state agencies which would invest in state-owned infrastructure such as “housing, transport , digital and energy networks.”  The objective would not only be to create jobs in the short term and promote economic growth, so reducing the debt burden, but also contribute to the longer term productivity of the economy, which is recognised as going through something of a productivity crisis.

To be continued.