Posts tagged with ‘welcome to the postnormal’
A protegé of the French economist Thomas Piketty, Gabriel Zucman has researched the mystery of international balance sheets showing increasing liabilities: Where’s the money?
Rich people and cash-rich companies are hiding it in tax havens:
Jacques Leslie, The True Cost of Hidden Money
GABRIEL ZUCMAN is a 27-year-old French economist who decided to solve a puzzle: Why do international balance sheets each year show more liabilities than assets, as if the world is in debt to itself?
Over the last couple of decades, the few international economists who have addressed this question have offered a simple explanation: tax evasion. Money that, say, leaves the United States for an offshore tax shelter is recorded as a liability here, but it is listed nowhere as an asset — its mission, after all, is disappearance. But until now the economists lacked hard numbers to confirm their suspicions. By analyzing data released in recent years by central banks in Switzerland and Luxembourg on foreigners’ bank holdings, then extrapolating to other tax havens, Mr. Zucman has put creditable numbers on tax evasion, showing that it’s rampant — and a major driver of wealth inequality.
Mr. Zucman estimates — conservatively, in his view — that $7.6 trillion — 8 percent of the world’s personal financial wealth — is stashed in tax havens. If all of this illegally hidden money were properly recorded and taxed, global tax revenues would grow by more than $200 billion a year, he believes. And these numbers do not include much larger corporate tax avoidance, which usually follows the letter but hardly the spirit of the law. According to Mr. Zucman’s calculations, 20 percent of all corporate profits in the United States are shifted offshore, and tax avoidance deprives the government of a third of corporate tax revenues. Corporate tax avoidance has become so widespread that from the late 1980s until now, the effective corporate tax rate in the United States has dropped from 30 percent to 15 percent, Mr. Zucman found, even though the tax rate hasn’t changed.
Mr. Zucman’s tax evasion numbers are big enough to upend common assumptions, like the notion that China has become the world’s “owner” while Europe and America have become large debtors. The idea of the rich world’s indebtedness is “an illusion caused by tax havens,” Mr. Zucman wrote in a paper published last year. In fact, if offshore assets were properly measured, Europe would be a net creditor, and American indebtedness would fall from 18 percent of gross domestic product to 9 percent.
So, another wrinkle in the new abnormal economics: the wealthy can skew the system to pile their shekels higher and higher, meanwhile manipulating the system so that national policies reinforce the massive inequality of our economy.
Welcome to the postnormal.
Easy credit has led to a debt overhang in China, and it’s a dangerous game:
Neil Gough and Keith Bradsher, Markets on Edge as China Moves to Curb Risky Lending
A complex and loosely regulated network of financial go-betweens has sprung up to profit from repackaging and reselling China’s new mountains of debt, turning loans into investment products. Such products have become popular among ordinary investors in China because they pay much higher interest rates than deposits in savings accounts, where rates are capped by the government to protect the state-owned banking system from competition.
But loosely regulated financial businesses can make a dicey business model, as Wall Street learned in 2008. And they pose a particular threat in an economy where growth is slowing, as it has been in China for the last three years.
“The final users of the money will not be able to earn returns high enough to repay the money and promised interest,” said Yu Yongding, a senior fellow at the Institute of World Economics and Politics of the Chinese Academy of Social Sciences and a former member of the monetary policy committee at China’s central bank. “The chains of lending and borrowing can be long, just like the securitized subprime mortgages. The result can be devastating.”
This is smelling like 2009, all over again.
And meanwhile, back in the States, regulators are afraind to force banks to clean out their collateralized debt obligations. Another mess waiting to happen.
Ziauddin Sadar, Welcome to Postnormal Times, 2009
Rick Wartzman, The Robot Invasion
America in 2013… : another weakened empire telling itself stories of its exceptionalism while it drifts towards apocalypse of some sort, fiscal or epidemiological, climatic-environmental or thermonuclear. Our far left may hate religion and think we coddle Israel, our far right may hate illegal immigrants and think we coddle black people, and nobody may know how the economy is supposed to work now that markets have gone global, but the actual substance of our daily lives is total distraction. We can’t face the real problems; we spent a trillion dollars not really solving a problem in Iraq that wasn’t really a problem; we can’t even agree on how to keep healthcare costs from devouring the GNP. What we can all agree to do instead is to deliver ourselves to the cool new media and technologies, to Steve Jobs and Mark Zuckerberg and Jeff Bezos, and to let them profit at our expense.
Technovisionaries of the 1990s promised that the internet would usher in a new world of peace, love, and understanding, and Twitter executives are still banging the utopianist drum, claiming foundational credit for the Arab spring. To listen to them, you’d think it was inconceivable that eastern Europe could liberate itself from the Soviets without the benefit of cellphones, or that a bunch of Americans revolted against the British and produced the US constitution without 4G capability.
We find ourselves living in a world with hydrogen bombs because uranium bombs just weren’t going to get the job done; we find ourselves spending most of our waking hours texting and emailing and Tweeting and posting on colour-screen gadgets because Moore’s law said we could. We’re told that, to remain competitive economically, we need to forget about the humanities and teach our children “passion” for digital technology and prepare them to spend their entire lives incessantly re-educating themselves to keep up with it. The logic says that if we want things like Zappos.com or home DVR capability – and who wouldn’t want them? – we need to say goodbye to job stability and hello to a lifetime of anxiety. We need to become as restless as capitalism itself.
The sea of trivial or false or empty data is millions of times larger now. [Austrian cultural critic Karl] Kraus was merely prognosticating when he envisioned a day when people had forgotten how to add and subtract; now it’s hard to get through a meal with friends without somebody reaching for an iPhone to retrieve the kind of fact it used to be the brain’s responsibility to remember. The techno-boosters, of course, see nothing wrong here. They point out that human beings have always outsourced memory – to poets, historians, spouses, books. But I’m enough of a child of the 60s to see a difference between letting your spouse remember your nieces’ birthdays and handing over basic memory function to a global corporate system of control.
Jonathan Franzen, What’s wrong with the modern world
'We need to become as restless as capitalism itself', could stand as the motto of the globalist, late postmodern, neoliberal economy. But we are not becoming that, despite their plans and plots. Instead, we are drifting past their new normal, and into the postnormal, beyond their control.
Franzen — and many others — fail to see that it may require us getting immediately adjacent to total collapse to break their chokehold on the world. Otherwise, why would they let go, when they have everything, including the means to hold onto it?
To get there we will have to break the spell, sidestep ten thousand dilemmas, and decouple the incestuous bonds of economic complexity that deny the world is our commons and instead treat it like a vending machine.
Varnelis proposes that we have moved past postmodernism into the era of network culture:
Increasingly, the immaterial production of information and its distribution through the network is the dominant organizational principle for the global economy. To be clear, we are far from the world of immaterial production. We manufacture physical things, even if increasingly that manufacturing happens in the developing world. Moreover, the ease of obtaining goods manufactured far away is due to the physical network of global logistics. Sending production offshore – itself a consequence of new network flows – may put it out of sight, but doesn’t reduce its impact on the Earth’s ecosystem. And, beyond global warming, even in the developed world there are consequences: Silicon Valley contains more EPA (US Environmental Protection Agency) Superfund sites than any other county in the nation. But as Saskia Sassen and Manuel Castells have concluded, regardless of our continued dependency on the physical, the production of information and the transmission of that information on networks is the key organizing factor in the world economy today. Although other ages have had their networks, ours is the first modern age in which the network is the dominant organizational paradigm, supplanting centralized hierarchies. The ensuing condition, as Castells suggests in The Rise of the Network Society, is the product of a series of changes: the change in capital in which transnational corporations turn to networks for flexibility and global management, production, and trade; the change in individual behaviour, in which networks have become a prime tool for individuals seeking freedom and communication with others who share their interests, desires and hopes; and the change in technology, in which people worldwide have rapidly adopted digital technology and new forms of telecommunication in everyday life.
As we might expect, the network goes even further, extending deeply into the domain of culture. In the same way that network culture builds on digital culture, it builds on the culture of postmodernism outlined by Fredric Jameson in his seminal essay “Postmodernism, or the cultural logic of late capitalism,” first written in 1983 and later elaborated upon in a book of the same title. For Jameson, postmodernism was not merely a stylistic movement but rather a broad cultural determinant stemming from a fundamental shift to the socioeconomic phase of history that economist Ernest Mandel called “late capitalism”. Both Mandel and Jameson concluded that society had been thoroughly colonized by capital under late capitalism and any remaining pre-capitalist forms of life had been absorbed. Mandel situated late capitalism within a historical model of long-wave Kondratieff cycles. These economic cycles, comprised of twenty-five years of growth followed by twenty-five years of stagnation, provided a compelling model of economic history following a certain rhythm: fifty years of Industrial Revolution and handcrafted steam engines culminating in the political crises of 1848; fifty years of machined steam engines lasting until the 1890s; electric and internal combustion engines underwriting the great modern moment that culminated in World War II; and the birth of electronics marking the late capitalism of the postwar era.
If digital culture flourished during late capitalism, then it should not be surprising that Jameson observed that in that period, everything became interchangeable, quantified and exchangeable. With the gold standard done away with, capital would be valued purely for its own sake, no longer a stand-in for something else, but pure value. The result was the disappearance of any exterior to capital and with it the elimination of any place from which to critique or observe capital. As a consequence, postmodern culture lost any existential ground or deeper meaning. Depth, and with it emotion, vanished, to be replaced by surface effects and intensities. In this condition, even alienation was no longer possible. The subject became schizophrenic, lost in the hyperspace of late capital.
As capital colonized art under late capitalism, Jameson suggested, even art lost its capacity to be a form of resistance. The result was cross-contamination, as art became not just an industry but an investment market, and artists, fascinated by the market, began to freely intermingle high and low. With the art market calling for easy reproducibility and marketing, and with authenticity no longer a viable place of resistance, some artists began to play with simulation and reproduction. Others, finding themselves unable to reflect directly on the condition of late capital but still wanting to comment upon it, turned to allegory, foregrounding its fragmentary and incomplete nature.
History, too, lost its meaning and purpose, both in culture and in academia. In the former, history was recapitulated as nostalgia, thoroughly exchangeable and made popular in the obsession with antiques as well as through retro films such as Chinatown, American Graffiti, Grease, or Animal House. In academia, a spatialized theory replaced historical explanation as a means of analysis.
Modernism’s obsession with its place in history was inverted by postmodernism, which, as Jameson points out, was marked by a waning of historicity, a general historical amnesia. But if postmodernism undid its ties to history to an even greater extent than modernism, it still grounded itself in history, both in name – which referred to its historical succession of the prior movement – and in its delight in poaching from both the premodern past and the more historically distant periods of modernism itself (e.g. Art Nouveau, Russian revolutionary art, Expressionism, Dada).
Today, network culture succeeds postmodernism. It does so in a more subtle way. No new “ism” has emerged: that would lay claim to the familiar territory of manifestos, symposia, museum exhibits, and so on. Instead, network culture is a more emergent phenomenon.
Evidence that we have moved beyond postmodernism can be found in economic cycles. If late capitalism is still the economic regime of our day, it would be the longest lasting of all the Kondratieff cycles. Assuming the Kondratieff cycles are accurate, Jameson’s theorization would come in a downswing on the cycle that began after World War II. Indeed, given the protracted economic downturn of post-Fordist restructuring during the 1970s and 1980s, this seems entirely reasonable. A critical break took place in 1989 with the fall of the Soviet Union and the integration of China into the world market, instantiating the “new” world order of globalization. In turn, the commercialization of the Internet during the early 1990s set the stage for massive investment in the crucial new technology necessary for the new, fresh cycle. New Kondratieff cycles are marked by spectacular booms and bust – the delirious dot-com boom and the subsequent real estate boom are hence legible as the first and second booms of a Kondratieff cycle on the upswing. It is this second upswing, then, in which network culture can be observed as a distinct phenomenon.
Even if we abandon Kondratieff cycles as overly determinist, no cultural movement since the turn of the twentieth century has lasted more than twenty-five years. It would require special dispensation to argue that we are still in the same moment as Jameson when he first formulated his thesis.
I agree that postmodernism is done, and for all of the reasons Varnelis cites, but also a long list of others left unsaid in this overly long bit of cultural criticism, like climate change, political intransigence, and rising economic inequality. But it’s not just web culture emerging, or video games becoming the dominant medium. We are left with all the hot potatoes baked in the postmodern, burning our postnormal hands.
Welcome to the postnormal.
So as we rightfully commemorate the March on Washington and King’s speech, let us also pay particular attention to the content of that speech. King spoke of the “fierce urgency of now,” not the fierce urgency of nostalgia.
(I was struck by how old the speakers skewed this week during the commemorations.)
What is our fierce urgency? What is the present pressure? Who will be our King? What will be our cause?
There is a litany of issues that need our national attention and moral courage — mass incarceration, poverty, gun policy, voting rights, women’s access to health care, L.G.B.T. rights, educational equality, immigration reform.
And they’re all interrelated.
The same forces that fight to maintain or infringe on one area of equality generally have some kinship to the forces that fight another.
And yet, we speak in splinters. We don’t see the commonality of all these struggles and the common enemies to equality. And no leader has arisen to weave these threads together.
Charles Blow, ‘The Most Dangerous Negro’
'We speak in splinters' - Charles Blow
'We speak in splinters' is a great metaphor for the lack of solidarity in our society today. People are unable to find common cause, and the traditional organizations that relied on collective power — the Southern Christian Leadership Council in the civil rights movement, the unions in the labor movement, NOW in the women's rights movement — have lost their clout and their way.
The hyper individualism and splintering of identity that characterize the consumerist postmodern world means that we cannot organize around common cause, we cannot find a shared territory from which to march forward together.
Like other sides of human life, ‘the fierce urgency of now’ fails to pulls us into solidarity, not because we have overturned the ills of the past, but because one of those ills is our inability to see ourselves in others, and others in ourselves.
'We are in a time when things are not merely changing, but when everything is being pulled inside out'
My belief is that the only hope now is fluidarity, the postnormal replacement of solidarity. We do not need to form a collective, with a well-articulated platform for health care, women’s rights, civil rights, anti-surveillance, LGBT rights, and so on. We don’t need a leader and a march. We are in a time when things are not merely changing, but when everything is being pulled inside out.
- Instead of membership in a movement, we are weakly connected to others who are moving in the same general direction. We are now movers, not shakers.
- Instead of consensus with all of a party’s or movement’s manifesto, we affiliate loosely, and do not oppose other ‘movers’ central concerns, and hope that they will do so for us as well.
- Instead of a iconic phrase, like ‘equal rights’, or ‘power to the people’, that make demands, we offer up memes, emoticons and hashtags that are enigmatic and subject to multiple interpretations.
Barbara Ehrenreich and Bill Fletcher Jr, wrote Rising to the Occasion back in 2009, they were holding onto the postmodern progressive ideal: that a body of people could collectively and democratically decide how to solve shared problems. But that now seems to be increasingly impossible. They wrote:
We admit: we don’t even have a plan for the deliberative process that we know has to replace the anarchic madness of capitalism.
(I might amend to ‘the anarchic madness of capitalism, market economics, globalism, and party-based democracy’.)
But modernity erased the solidarity necessary for a progressive movement to come together. As I wrote in May,
We should aspire to fluidarity in place of the modern era’s solidarity. So, postnormal progressive thought has to move past searching for the lost solidarity of the last century, and contrive social tools to allow us to build — connection by connection — a new fluidarity together.
The labor force has been radically restructured (by the Boomers, not insignificantly) so that we work, when we can find work at all, longer hours for less money with no job security. How does one save up for a car or mortgage down payment on the kind of salaries most people who weren’t born into wealth earn in their 20s? How are young people expected to make a 5 year auto loan commitment (or 30 for a mortgage) when their employment is “at will” or when people spend years working as “permanent temps”? As I’ve said before, even the people in my age group I know personally who are doing well – and as someone with full-time employment and health insurance, I consider myself fortunate to be in that group – have tremendous insecurity about the future. In other words, even those of us who might be able to afford a new car now refuse to buy simply because we don’t know if our job will still exist (or who will be doing it) in a couple of years.
It is amusing to see how far analysts and journalists will go to avoid grappling with the relatively obvious fact that young people aren’t buying what they’re “supposed to” be buying because we, as an economy, are not paying them much. Or employing them at all. Or giving them any kind of long-term security necessary to induce them to make financial commitments to homes, cars, or other expensive purchases. This kind of denial of the obvious is becoming a trademark of Boomer-led journalism and financial analysis, the wailing and gnashing of teeth over the failure of consumers to rescue the economy by buying the things they’re supposed to be buying. Yet rarely do they consider the simplest solution, that younger people do not make these kinds of economic commitments because this society is now structured to make doing so impossible. God help the auto industry when this wave of retirees dies out.
The ’50s, the ’60s, even the troubled ’70s, weren’t nearly as bubble-prone. So what changed?
One popular answer involves blaming the Federal Reserve — the loose-money policies of Ben Bernanke and, before him, Alan Greenspan. And it’s certainly true that for the past few years the Fed has tried hard to push down interest rates, both through conventional policies and through unconventional measures like buying long-term bonds. The resulting low rates certainly helped send investors looking for other places to put their money, including emerging markets.
But the Fed was only doing its job. It’s supposed to push interest rates down when the economy is depressed and inflation is low. And what about the series of earlier bubbles, which, at this point, reach back a generation?
I know that there are some people who believe that the Fed has been keeping interest rates too low, and printing too much money, all along. But interest rates in the ’80s and ’90s were actually high by historical standards, and even during the housing bubble they were within historical norms. Besides, isn’t the sign of excessive money printing supposed to be rising inflation? We’ve had a whole generation of successive bubbles — and inflation is lower than it was at the beginning.
O.K., the other obvious culprit is financial deregulation — not just in the United States but around the world, and including the removal of most controls on the international movement of capital. Banks gone wild were at the heart of the commercial real estate bubble of the 1980s and the housing bubble that burst in 2007. Cross-border flows of hot money were at the heart of the Asian crisis of 1997-98 and the crisis now erupting in emerging markets — and were central to the ongoing crisis in Europe, too.
In short, the main lesson of this age of bubbles — a lesson that India, Brazil, and others are learning once again — is that when the financial industry is set loose to do its thing, it lurches from crisis to crisis.
Paul Krugman, This Age of Bubbles
A globalist monetary system — where those with capital can arbitrage freely, exploiting differences in regulations, salaries, and cost of goods without any checks — with lead to wild and dangerous oscillations in prices, currency differences, and investment. These oscillations are now endemic: they form the basis of what Roubini is calling the new abnormal, which is his take on the postnormal. We have a world economy which is a unstable disequilibrium, but our leaders act as if it is just a temporary blip — an unstable equilibrium — and we will soon return to normalcy. Nothing is further from the truth.
The monied benefit from the chaos: it increases the concentration of wealth and inequality, because the poor and small businesses cannot afford the arbitrage to shelter their small savings, and they can’t predict costs or risks. It’s not that the traders and financiers are trying to make others poor, it’s merely a side effect of their unregulated greed.
Of course they will continue to oppose regulation of the economic markets, and they will continue to support elected stooges who will block regulation, propagandizing about ‘free markets’ and ‘job creating investors’. Meanwhile, we are headed for decades of postnormal economics.