Informational Cascades and the Financial Crisis

Mark Thoma posts an extract about Informational Cascades and the Financial Crisis from Wall Street's Lemmings, by Cass R. Sunstein, TNR.

To get a sense of how cascades work, imagine that a group of people is deciding whether to invest in real estate or instead the stock market. Assume that group members are announcing their views in sequence. From his own knowledge and experience, each member has some private information about what should be done. But each member also attends, reasonably enough, to the judgments of others.

The author wants to believe that things are so simple:

As behavioral economist Robert Shiller has shown, ... people were greatly influenced by a process of social contagion that amounted to an informational cascade. ...

This is just simplified version of the Tipping Point theory. My conclusion was:

For us Communists, the message is that the mass-marketing of selling the party newspaper and mass rallies is still important.

There are no short-cuts: no magic viral marketing campaign waiting to be unleashed once get to the right people. The tipping point is just an anarchist pipe-dream of an influential event that triggers a magical transformation of society. People can be panicked for a time but then revert to old habits.

As the evangelists keep pointing out, change starts from the heart and moves outward into the world.

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Saving The System

The Economist wants to implement item #5 of the Communist Manifesto in Saving the System

Centralization of credit in the hands of the State, by means of a national bank with State capital and an exclusive monopoly.(Marx 1959, 342)

The magazine diagnoses the problem as:

... Today’s failure of confidence is based on three related issues: the solvency of banks, their ability to fund themselves in illiquid markets and the health of the real economy. The bursting of the housing bubble has led to hefty credit losses: most Western financial institutions are short of capital and some are insolvent. But liquidity is a more urgent problem. America’s decision last month to let Lehman Brothers fail—and the losses that implied to money-market funds that held its debt—prompted a global run on wholesale credit markets. It has become hard for banks, even healthy ones, to find finance; large companies with healthy cash flows have also been cut off from all but the shortest-term financing. That has increased worries about the real economy, which itself adds to the worries about banks’ solvency.

Emphasis Mine

Credit allows the early conversion of commodities into money. Instead of waiting for the goods to be sold to the ultimate consumer, and money returned to the manufacturer, credit allows for the partial realization of profits at every stage of the movement of goods from the factory to the consumer.

Credit, in itself, is not the problem: it is the management and allocation of credit among the various debtors.

In a banks run along capitalist lines, credit is allocated where the preceived profit is the greatest, not where the need is the greatest. The enterprise must do this in order to survive otherwise another enterprise with a larger capital base innovate and undercut it.

The negative feedback to this progression is risk. The higher the rate of profit should be correlated with the risk that the investment may fail. Government regulation tends to make banks aware of what types of risks they can undertake.

The specifics of the plan are:

This analysis suggests that governments must attack all three concerns at once. The priority, in terms of stemming the panic, is to unblock clogged credit markets. In most cases that means using central banks as an alternative source of short-term cash. This week the Fed took another step in that direction: by buying commercial paper, it is now in effect lending direct to companies. The British approach is equally bold. Alongside the Bank of England’s provision of short-term cash, the Treasury says it will sell guarantees for as much as £250 billion ($430 billion) of new short-term and medium-term debts issued by the banks. That is risky: if left for any length of time, those pledges give banks an incentive to behave recklessly. But a temporary guarantee system offers the best chance of stemming the panic, and if it were internationally co-ordinated it would be both more credible and less risky than a collection of disparate national promises.

The second prong of a crisis-resolution strategy must aim to boost banks’ capital. A new IMF report suggests Western banks need some $675 billion of new equity to prevent banks from rapidly reducing the number of loans on their books and hurting the real economy. Although there is plenty of private capital sloshing around, there is a chicken-and-egg problem: nobody wants to buy equity in an industry without enough capital. It is becoming abundantly clear that government funds—or at least government intervention—will be necessary to catalyse the rebuilding of banks’ balance sheets. Initially, America focused more on buying tainted assets from banks; now it seems keener on the “European” approach of injecting capital into their banks. Some degree of divergence is inevitable, but more co-ordination is needed.

Third, policymakers should act together to cushion the economic fallout. Now that commodity prices have plunged, the inflation risk has dramatically receded across the rich world. With asset prices plummeting and economies shrinking, deflation will soon be a bigger worry. The interest-rate cuts are an important start. Ideally, policymakers would not use only monetary policy. For instance, China could do a lot to help the rest of the world economy (and itself) by loosening fiscal policy and allowing its currency to appreciate more quickly.

Emphasis Mine

This is socialist intervention of a colossal scale but without taking control of the banks. The governments are intending to be passive investors which means that the risk of moral hazard increases not decrease (as noted above).

References

Marx, Karl. 1959. Capital, the Communist Manifesto and Other Writings. Ed. Max Eastman. New York: The Modern Library.

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System not immune to shocks

Heather Ridout, chief executive of the Australian Industry Group, says that the System not immune to shocks and urges a more socialist approach to the crisis.

The Federal Government has a vital role to play. Economic management has got a lot tougher and the Government should be ready to take up the slack in the economy as business investment and consumer spending retreats. It should prepare to bring forward key investment projects.

Perhaps the most difficult thing will be for the Government to keep an eye on the need for longer-term reforms in areas such as the federation, skills development, innovation, infrastructure planning and taxation. We may be in a period of crisis management but these require attention now if they are to underwrite a sustained recovery and a new era of prosperity.

Emphasis Mine

Back in 2005, BCA Admits Failure of Capitalism - Calls For Socialist Intervention. The on-going lies are about how Capitalism is the superior economic system (except when it goes down big time!) And yet, these business groups are all in favour in the government getting involved once the Capitalist system seizes up.

This free market ideology is unstable because of the positive feedback loops where investment follows profit not need.

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Dabbawala

The Economist is impressed by the success of the Dabbawala (also see Wikipedia article) in The cult of the dabbawala as a new management trend.

As usual, the capitalist press fails to realise that the free association of independent worker-owners is greatly superior to an organisation divided between owners and workers.

AS THE warrior king who defeated the Mughals and founded the Maratha empire of Western India in the 17th century, Shivaji Bhosle is remembered as a tactical genius as well as a benevolent ruler. The direct descendants of his Malva-caste soldiers are also developing a reputation for organisational excellence. Using an elaborate system of colour-coded boxes to convey over 170,000 meals to their destinations each day, the 5,000-strong dabbawala collective has built up an extraordinary reputation for the speed and accuracy of its deliveries. Word of their legendary efficiency and almost flawless logistics is now spreading through the rarefied world of management consulting. Impressed by the dabbawalas’ “six-sigma” certified error rate—reportedly on the order of one mistake per 6m deliveries—management gurus and bosses are queuing up to find out how they do it.

Emphasis Mine

The capitalists are impressed by the Dabbawala's efficiency and want to study it. They will be blind to the key features of the success:

• Decentralised management
• Four (4) levels of organisation: (Ramasastry:2004A, p.4)
1. Workers
2. Team Leaders
3. Group Leaders
4. Central Committee
• Equal pay for all workers

References:

Ramasastry, C.S. (2004A), DABBAWALLAHS OF MUMBAI (A), Publication #904D11, Ivey Management Services, Ontario, Canada (Not available online)

Ramasastry, C.S. (2004B), DABBAWALLAHS OF MUMBAI (B), Publication #904D13, Ivey Management Services, Ontario, Canada (Not available online)

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Chloe Hooper: The Tall Man (2)

I have finished reading Chloe Hooper's latest book, The Tall Man.

I had posted my reactions to a radio interview with Chloe Hooper: The Tall Man

Hooper leaves out one word from her story: occupation. The State of Queensland is engaged in an occupation of Aboriginal lands in North Queensland for the benefit of white settlers.

The Wild Time was the invasion of whites into this area, and the Stolen Generations was the ethnic cleansing undertaken to consolidate white control of the area's resources. Palm Island is part of the gulag of the occupation.

And in enforcing this occupation, Senior Sgt Chris Hurley became brutalised by the frontier justice. Even though he acknowledged his own racism and worked hard for Aboriginal betterment, he could not escape the racism of the State of Queensland. In putting on his uniform, he was putting on a history of genocide, racism, and brutality.

Hurley's struggle against institutional racism showed the limits of individual change. He had to choose between his soul and his uniform. Palm Island made that choice very stark.

Cameron Doomadgee's taunt of "Fucking cunts" and his punch to Hurley's face caused Hurley to explode into a rage that killed Doomadgee. Doomadgee saw a blue uniform. Hurley saw an insolent, ungrateful blackfellow. They could not see each other as human beings.

Hurley may have been coerced into pleading not guilty to the charge of manslaughter in order to protect the honour of the Queensland Police. Hooper seems to imply that Catholicism guides Hurley's career in the Police Service as a mixture of duty and using power for social justice. He could have been persauded to cover up to protect the progress being made by the reforms in the Police.

My reading of Hooper's story is that the cases when Hurley was brutal towards Aboriginals, he was either enforcing frontier justice or he was under stress in a dangerous situation. One case could even have been an accident when he backed over a woman's foot. The failure to acknowledge the incident or to apologise made the situation worse. These cases became easy to cover up and Hurley was drawn into this world of half-truths and denials.

The problem is not with the Police nor with the Government, it is with the white people of North Queensland. This was shown by the quick verdict of not guilty returned by the jury.

The wealth of North Queensland depends on the secure title of land there: mining, agriculture, tourism. Racism justifies the theft of land from the Aboriginals and the exploitation of those stolen resources. If the Police and Government did not support this racism, they would be replaced by those who would.

Hurley was wrong to attempt to change the racism of the Police from the inside. The economic forces that depend on racism are just too strong for individuals to overcome. And now he has to live with the blood of an innocent man on his hands. Hurley would have done better to plead guilty and accepted his punishment. Even better would have been to control his temper and not killed Doomadgee.

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The Only Diet for a Peacemaker Is a Vegetarian Diet

Picked up The Only Diet for a Peacemaker Is a Vegetarian Diet from DrumBeat: July 12, 2008 at the The Oil Drum.

John Dear argues that:

But for me being vegetarian boils down to peacemaking. If you want to be a peacemaker, Bruce said, reflecting the sentiments of Leo Tolstoy, you will want to eat as peaceful a diet as possible. "Vegetarianism," Tolstoy wrote, "is the taproot of humanitarianism." Other great humanitarians like Mahatma Gandhi, Albert Schweitzer and Thich Nhat Hanh agree. The only diet for a peacemaker is a vegetarian diet.

Emphasis Mine

He states his vegetarianism began with reading Diet for a small planet by Frances Moore Lappe:

In it, Lappe, the great advocate for the hungry, makes an unassailable case that vegetarianism is the best way to eliminate world hunger and to sustain the environment.

The key points are:

1. The amount of plant food consumed by farm animals for human consumption is staggering (70% of US grain);
2. The amount of grain used for bio-fuels is not as bad but has an impact (10% of US grain);
3. The amount of greenhouse gas produced by farm animals is large (40% of methane - farts);
4. And there is the ancilliary impacts on water and land usage. (90% of water use in an industrialised country goes on agriculture)

In summary, vegetarianism reduces resource consumption and therefore the need for competition over resources.

However, vegetarianism goes beyond this to broaden our humanity through a connection with nature. Dear expresses this as a religious experience:

"Not to hurt our humble brethren, the animals," St. Francis of Assisi said, "is our first duty to them, but to stop there is not enough. We have a higher mission: to be of service to them whenever they require it. If you have people who will exclude any of God's creatures from the shelter of compassion and pity," he continued, "you will have people who will deal likewise with other people."

And yet there are people who see meat-eating as an expression of their personhood. My being a vegetarian threatens their self-worth. Some become quite vocal and passionate about eating meat. It is as if my mere existence dimminishes their self-worth in some way. It is equivalent to being a teetotaler among beer drinkers, or a non-smoker among smokers.

But a change in personal dietary habits is only a small part in the need to fix the world so that humans can survive. We also need to change how the system works. This cannot be done by individuals - only by the people united.

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Revolution of urban rebels

Mark Thoma posts an extract about the Revolution of urban rebels in recognition of the US Independence Day.

The conclusion from Edward Glaesar is:

Across countries today, there is a robust correlation between urbanization and democracy. This correlation reflects many things, such as the tendency of more urban places to be richer and better educated, but it also surely reflects the role that cities play in supporting the coordinated action that creates and defends democracies. So enjoy your Fourth of July with as much greenery as you like, but also remember that city air made you free.

Emphasis Mine

The underlying assumption of the article is that rural communities are not democratic. In fact, throughout history, rural democracy has existed longer than urban democracy. The main reason for this is that rural communities tend to be collections of independent producers of roughly equivalent wealth (usually poverty).

In the original article, Athens is posited as the birthplace of democracy when, in fact, there are a major regression in democratic development. Some Athenians had become immensely rich off the debts of others. The agrarian democracy collapsed into three (3) classes: slaves (former debtors); freemen (debts could be extinguished); and aristocracy (debt holders).

The latter class afford to sit around all day and marvel at the wonderful democracy they had created while everyone else worked their guts out paying off their debts. And today people read this propaganda as the beginnings of democracy.

The American Revolution was one of the large land-holders (who were also slave owners) and the urban petty capitalists against an arbitrary government in London. The pretty words of the Declaration of Independence was issued to find enoughs mugs to die for the cause.

Urbanisation is more than just connections between people: it is about economic specialisation and dependence between people. What the urban population should be most keenly aware of is that they do not produce their own food. They are dependent on others for their sustenance.

Most of us cannot eat what we produce. Especially people like me who write computer programs. I need to exchange what I produce for money so that I can buy shelter, food, water, and other basic neccessities.

The urban connections spring directly from this need to sell what I produce and to buy what I need. I need other people in order to survive.

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Mongol

In the movie, Mongol, the rise to power of Temudjin revolves his love for Borte and his religious devotion.

Temudjin is presented as a combination of Moses, Joseph, and Joshua.

Sandra Hall reviews Mongol as well and finds:

Naturally enough, they're also out to humanise their hero, a job made easier by the decision to deal only with the story of his early life, when he was yet to become acquainted with the character-altering effects of absolute power. They keep it simple. Central to everything is his love for Borte (Khulan Chuluun), his lifelong companion - which, in itself, is enough to make him unique in a society where a man's wife is not nearly as valuable as his horse. He's a 12th-century SNAG in other words, so it hardly seems fair that the Japanese actor Tadanobu Asano (from Takeshi Kitano's Zatoichi) makes him such a stolid personality.

Emphasis Mine

Ghenghis Khan a SNAG! I hate to see a Mongol Rambo, then!

Anyway, back to my religious interpretation of the movie.

Temudjin retraces part of Joseph's journey by being sold into slavery by his blood brother. Whilst in the Tangut prison, he is mocked but a Buddhist monk bargains with Temudjin for the survival of the local monastery. Temudjin agrees if Borte comes. This occurs at the cost of the monk's life.

Instead of the wife having Joseph thrown into prison, the wife releases Temudjin through bribery and threats. And the prophecy concerns the destruction of the Tangut kingdom.

The aspect of Moses' life is that Temudjin is now an escaped slave who was once a nobleman and who had killed one of the slave overseers. He takes his family back into Mongolia. There he goes up to the holy mountain to conceive of the Law for all Mongols (Yassa). The movie only presents three (3) laws.

1. Women and children are to be spared
2. All debts are to be paid
3. Never betray your Khan

Moses got an extra seven. But Temudjin became the Mongol Law Giver. No burning bush or golden calf, though.

In the role of Johusa, Temudjin united the tribes to conquer the Promised Land (Eurasia). Johusa was more modest in his ambitions.

In all cultures, there are the heroic individuals who undergo great trials and betrayals (Joseph), rebel against the existing order to create a new one based on law (Moses), and unite their people in a singular purpose (Joshua).

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Art, Marx, and Bill Henson

In the June 2008 edition of Annals Australasia, Robert Tilley discusses Art, Marx, and Bill Henson (p.27)

A Catholic conservative agrees with Karl Marx!

In a famous sentence Marx wrote, "All that is solid melts into the air, all that is holy is profaned..." Marx was talking about the effect of capitalism on traditional social mores and manners. Critics were saying that the Communists were set on destroying religion, family, and property. And so they were. Only, it was Marx's argument that the Communists didn't have to do anything to achieve this aim for capitalism was doing it for them.

Leaving aside the questions of property, it is clear that free-market ideology is very effective indeed in destroying religion and family. But it does so under the name of freedom and not of the Dictatorship of the Proletariat.

Following the lead of earlier Christian socialists, Marx argued that capitalism is of the essence of liberalism and thus of the bourgeois state. It works to remove the substance from things like family and religion, replacing that substance with another value altogether: the value of a commodity that can be packaged, sold, consumed and, if we're suitably well-behaved, recycled.

Emphasis Mine

What Tilley overlooks here is that Capitalism is also very effective at destroying the private property of ordinary people. Witness the rising rates of home foreclosures here and in the USA and UK. Also the rising number of business bankrupcies as the capital of the middle is obliterated. The Communists are not this but the Capitalists.

Tilley is correct to point to commodification as the driving force of Capitalism. The production of commodities allows for profits and the accumulation of ever greater profits.

Tilley decries the intrusion of Capitalism into Art:

There may well be aesthetic merit in Henson's work but that is not really the point. Rather have aesthetics become the means to get to the point: the point being that all should be stripped of substance, made into a commodity, and be freely sold and consumed.

Tilley keeps to the standard Catholic position of critising both Capitalism and Communism without proposing any alternative. Although at times, I suspect that some pine for the High Middle Ages.

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From Marx to Morales: Indigenous socialism and the Latin Americanisation of Marxism

John Riddell describes the development of Communist theory From Marx to Morales: Indigenous socialism and the Latin Americanisation of Marxism.

Riddell contends that the retardation of Capitalist development in Latin America means that the peasants (along with the indigenous population) form the backbone of the revolutions there. This is akin to the Bolshevik revolution of 1917.

The development of agricultural cooperatives leads to a degree of Communist consciousness, but it is still limited by being local to the land. The difficulty lies with jumping from organising a farm on a cooperative basis to that of a society.

This difficulty is based around the awareness of dependence upon others. Farmers can produce all that they need. They can be self-sufficient.

On the other hand, workers in a manufacturing plant are keenly aware that they usually cannot eat what they produce. They need to depend on others for their raw materials and sustenance.

Unfortunately, I should say that industrial workers should be aware. Since Capitalism in Western countries has worked flawlessly for the past 60 years, workers are lulled into believing that there will always be food in the supermarket as long as they have money.

When a crisis strikes, it is too late then to work how interdependent we all are in an advanced industrial society.

Marx was right to say that only the Poletariat can lead a Communist revolution because they are the only ones who are capable of appreciating the need for social cooperation for survival and who do the actual work.

The question remains of how to awaken this awareness? Even now as the economic crisis looms, we are still blissfully ignorant.

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Chloe Hooper: The Tall Man

In this week's edition of Big Issue, the cover story is about Chloe Hooper's latest book, The Tall Man.

There was also an interview on ABC Classic FM today with her and Margaret Throsby. (Has not been uploaded at time of posting.)

As reported by Sarah Stephens in Palm Island: Police terror follows death in custody:

At 11.20am on November 19, a 36-year-old Aboriginal man, Cameron Doomadgee, died in the police watch-house on Palm Island, 70km north of Townsville. An hour earlier he was very much alive, singing along the street. He was arrested for public drunkenness and locked up as a ‘‘public nuisance’‘.

...

Koch wrote in the Australian on November 29: ‘‘Two Aboriginal men who were in the cells at the time have given statements that they saw [Doomadgee] being punched and beaten by Chris Hurley, a senior sergeant.’‘

Senior Sergeant Chris Hurley was acquitted of the charge of manslaughter in July 2007.

Hooper was unable to interview Hurley. But Hooper was interested because:

One intriguing aspect of the case is that Hurley, who had been working in 'frontier' communities like this one for several years, seemed to be a model of reconciliation: a man who had admitted to realising he was a racist and deliberately changing his ways. He was especially known for his work with Aboriginal children and his friendship with an Aboriginal activist, Murrandoo Yanner. (p.16)

However, Paul Benedek writes about Palm Island cop's violent history:

In evidence that was previously suppressed, but has now been allowed after a Supreme Court challenge, Palm Island residents are alleging detailing a history of violence by Senior Sergeant Chris Hurley, the officer who arrested Mulrunji and claims he “fell” to his death.

Looks like the only way for Hurley to escape racism is to leave the Police Service. The culture of police racism is so great that someone of Hurley's inclination is dragged back into its maw even as he struggles against it.

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Rick Shenkman, American Stupidity

According to Rick Shenkman, American Stupidity may well threaten the existence of the USA.

How much ignorance can a country stand? There have to be terrible consequences when it reaches a certain level. But what level? And with what consequences, exactly? The answers to these questions are unknowable. But can we doubt that if we persist on the path we are on that we shall, one day, perhaps not too far into the distant future, find out the answers?

"Stupid Americans" used to be a cliche uttered by the villian in many a B-grade movie. This would spur the American hero to feats of derring-do that would astonish and overpower his adversaries.

Alas, such sentiments today would only elicit cries of Anti-Americanism! And the populace would relapse into blissful ignorance.

Today, the USA stands on the precipice of the greatest economic crisis since the Great Depression. And yet, wilful ignorance is proudly displayed. What a pathetic end to a once-great nation. The greatest Capitalist country ever is about to collapse into a dark age of fear and ignorance without nary a fight.

Shenkman writes:

Five defining characteristics of stupidity, it seems to me, are readily apparent. First, is sheer ignorance: Ignorance of critical facts about important events in the news, and ignorance of how our government functions and who's in charge. Second, is negligence: The disinclination to seek reliable sources of information about important news events. Third, is wooden-headedness, as the historian Barbara Tuchman defined it: The inclination to believe what we want to believe regardless of the facts. Fourth, is shortsightedness: The support of public policies that are mutually contradictory, or contrary to the country's long-term interests. Fifth, and finally, is a broad category I call bone-headedness, for want of a better name: The susceptibility to meaningless phrases, stereotypes, irrational biases, and simplistic diagnoses and solutions that play on our hopes and fears.

Emphasis Mine

In response to my post about No Blood for Oil!, the suggestion was made to drill off the US coast. Forty years after the oil production peaked in the USA (1970), there is apparrently oil just waiting to be discovered off the coast of the USA! Enough to stop all oil imports! Hah!

The USA is going to have to adjust to a lower standard of living. How low? No one knows!

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Annoy a pilgrim, face a fine: police

If you Annoy a pilgrim, face a fine: police.

The Catholic Church in Australia is now full of wusses!

New South Wales Police are defending the introduction of new regulations that will allow people to be arrested and fined for causing annoyance during World Youth Day.

Under the laws, police can direct people to stop engaging in conduct that causes annoyance or inconvenience to the pilgrims.

The laws take effect from today until the end of the month.

Emphasis Mine

Catholics are being persecuted and killed in Iraq, Pakistan, Sudan, Indonesia, and Palestine.

The previous pope survived persecution under the Nazis then the Communists.

For a religion that was persecuted from the very beginning, annoyance is now seen as an impediment to faith. What the hell is wrong with these Catholics?

So much for following the master to the end!

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23 June 1789

On 23 June 1789, King Louis XVI decided to show who was the boss. The National Assembly disagreed.

J.M.Thompson's opinion is:

It soon appeared that the king's stand had come too late, and could only be maintained by arms. A display of force was, indeed, made: when the deputies arrived at the Parliament-house on June 23rd, they found it surrounded by troops. But this threat of violence, and the absence of the popular minister, served only to strengthen the spirit of resistance. Nor did the Commons now stand alone. On the previous day they had been joined by the Archbishops of Vienne and Bordeaux, at the head of a hundred and fifty clerical deputies. After listening to 280 speeches in five days, these representatives of the First Estate had at last decided to throw in their lot with the Third. Thus strengthened, the National Assembly was in no mood either to be intimidated or to be cajoled. (p.22)

...

Thus, in terms as clear as French could make them, the Assembly was reminded that it was only being allowed to play at reform. Louis could refuse to sanction what the deputies proposed: he could force them to accept what they disliked. He claims to have done everything hitherto by himself: he will, if necessary, dismiss them, and proceed alone. He will do for France what Frederick has done for Prussia, Catherine for Russia, Joseph for Austria. He will be the Benevolent Despot for whom the country has been waiting so long. (p.23)

Emphasis Mine

The French Revolution
By J. M. Thompson

Louis wanted to manage incremental change. The new Capitalists wanted to get the priviliged bludgers off their backs.

Historians, such as Thompson, reviled Louis as weak and indecisive. The system failed Louis by placing him in that position. A heriditary monarchy has only one path of succession. It cannot consider better candidates.

And yet the system expected the monarch to be far better because they are the monarch.

The evolution of French Feudalism has reached a dead-end in Louis XVI from a mob of lawless ruffians posing as lords of the castle to an ossified system of privileges that depended on the character of the monarch for its survival. (An 18th century version of the CEO myth.)

Even then, the Third Estate wanted to proceed incrementally. Revolution was not thought of yet. This was to change dramatically in the space of a few weeks.

The Third Estate were not intellectually prepared for what was about to explode. The American Revolution had been about a colony seeking self-government and ending up with independence.

The English Revolution had been almost rolled back by the Restoration. The ideals of the Levellers and others were too dangerous.

And yet, without class analysis, one must resort to conspiracy theories about secret societies controlling human destiny. There were secret societies because revoultionaries in an authoritarian state must work underground.

But the French Revolution was about people taking control of their destiny for a short time before the new ruling class wanted to stay in power instead of following the monarchy.

Tom Peters says to do it All At Once! He gives a good analogy of the difference between Reform (incremental change) and Revolution (change everything).

I'm an avowed incrementalist—even if the aim is stratospherically high. That is, get going ASAP—and quickly experiment your way toward/to success.

...

Between my little project and Wendy Kopp's Richter 8.0 project, and Dubai and Korea, I am pondering the circumstances when "do it all at once and figure out what 'it' is and how to do it on the fly" is the right answer. There is no doubt that such conditions exist—though the key, beyond the compelling dream, is the raw talent and energy and enthusiasm and obsession and resilience of the participants. It is 99.99% (or more) a matter of raw emotion—not a matter of analytically identifying a big opportunity, assigning "good people," and then proceeding based on state-of-the-art project management software.

Emphasis Mine

I suppose the Party should invest in some project management software??

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No Blood for Oil!

Remember 15 February 2003 when 10 million people said, "No Blood for Oil!".

Well, five years later, we got plenty of blood and we are running out of oil!

Yves Smith asks "Did the Iraq War Cause High Oil Prices?"

An oil economics specialist, Mamdouh Salameh, who advises the World Bank and the UN Industrial Development Organisation, contends that oil prices would be at less than 1/3 of their current level had the US not invaded iraq.

Emphasis Mine

Prof Juan Cole lists the costs to Iraqis in The Real State of Iraq:

By now, summer of 2008, excess deaths from violence in Iraq since March of 2003 must be at least a million. This conclusion can be reached more than one way. There is not much controversy about it in the scientific community. Some 310,000 of those were probably killed by US troops or by the US Air Force, with the bulk dying in bombing raids by US fighter jets and helicopter gunships on densely populated city and town quarters.

...

The wars of Iraq-- the Iran-Iraq War, the repressions of the Kurds and the Shiites, the Gulf War, and the American Calamity, may have left behind as many as 3 million widows. Having lost their family's breadwinner, many are destitute.

...

In these situations, typically 3 persons are wounded for every one killed. In Iraq, I suspect it is higher, because US bombings and guerrilla bombings are such a big part of the violence. But let us be conservative.

That would mean 3 million Iraqi wounded in the past five years.

...

As for the displaced (i.e. homeless), they amount to a startling 5 million persons. There were 1.8 million internally displaced in January of 2007, and by December it had risen to 2.4 million. There are 2.3 million externally displaced, 2 million of them in Jordan and Syria.

Cole translates these figures into equivalent numbers for the USA by using a factor of 11. For Australia, we should use a factor of 5/7 (according to CIA World Factbook) This would mean everyone in Sydney, Newcastle, and Woolongong would be either dead, wounded, or a refugee. There could be an overlap between wounded and refugee.

Cole concludes that:

I do know that the apocalypse that the United States has unleashed upon Iraq is among the greatest catastrophes to befall any country in the past 50 years. It is a much worse disaster over time than the Burmese cyclone or the Mississippi floods.

At least, the Australian Combat mission over as Iraq troops return except for those not classified as combat troops!

While Rudd vindicates anti-war movement — bring all the troops home

However, most Australian troops in Iraq will remain. While not classified as “combat” troops, the 800 remaining armed forces personnel are not deployed to help with reconstruction. They include soldiers guarding Australians in Baghdad’s fortified “Green Zone”, sailors guarding maritime oilfields, air force units, and advisors and trainers of death squad-linked, pro-occupation Iraqi forces.

We have the appearance of withdrawing without really withdrawing.

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Why the Celtics Won—From Auerbach to "Unbuntu"

Bill Taylor explains Why the Celtics Won—From Auerbach to "Unbuntu". (The Celtics are an American Basketball team). The key elements were pride and community.

The legendary coach, Red Auerbach, was interviewed in 1987:

“How do you motivate the players?” Alan asked, expecting, I imagine, a complicated, multi-faceted answer. “Pride, that’s all,” Red answered. “Pride of excellence. Pride of winning. I tell our guys, ‘Isn’t it nice to go around all summer and say that you’re a member of the greatest basketball team in the world.’”

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Unfortunately, under Capitalism, pride in workmanship is diminished as the extra care and time is an extra cost that apparently adds nothing to the bottom line.

The blight that affects computing today is that of "good enough". It is within our power to make Windows operate without the BSOD, but it is good enough that Windows works most of the time.

The pride of workmanship in computing is going. The user interface of choice is now a web page! Yes, it is good enough! But can we do better! With a shit facade like that, why would anyone spend effort making the code in the back end a source of pride?

The community aspect of the Celtics win is due to Archbishop Desmond Tutu:

As Tutu explained, “A person with Ubuntu is open and available to others, affirming of others, does not feel threatened that others are able and good, for he or she has a proper self-assurance that comes from knowing that he or she belongs in a greater whole and is diminished when others are humiliated or diminished…”

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Yet in our workplaces, we have competition between individuals for jobs, promotions, projects, and pay rises. We are only evaluated on individual performance. We are replaceable components in the industrial machine.

There is no community interest - only the interest of the Capitalist. The workplace is an artificial community created to serve Capitalism.

How can we have pride in what that does not belong to us?

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NDA Photographs

For those who are not on the GreenLeft Weekly e-group, links to photographs taken from the NDA are below:

• 1st anniversary protest against NT intervention by Peter Boyle
• Hobart protest pics by Rose Matthews
• SBS News slideshow & news video of protests
• Photos from Sydney rally against the NT intervention by Alex Bainbridge

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End the racist NT intervention now!

Saturday June 21 National Day of Action Against the Racist Intervention into Northern Territory Indigenous Communities. The Sydney rally is at

Sydney: 11am, The Block, Redfern
contact Monique Wiseman 0415410558 or Paddy Gibson 0415800586

View Larger Map

Sam Watson says End the racist NT intervention now!

“You don’t deal with issues of alcoholism and drug addiction with police. It’s a health issue, not a law and order issue. You need properly funded drug and alcohol services in Aboriginal communities, not more police and bureaucrats”.

The Socialist Alliance spokesperson concluded by pointing out that a properly funded program of positive discrimination for Indigenous people in education and training and a real Indigenous job creation campaign could have started to solve the problems of Aboriginal communities’ hopelessness years ago.

As Malcolm X once said, "You cannot have Capitalism without racism."

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Status Quo-oh

Jim Kunstler examines the current Status Quo-oh as the perfect storm of climate change, financial instability, and peak oil combine to make life interesting for the planet.

The real tragedy of industrial agriculture is the subsitution of energy for knowledge.

Behind that magic is an agribusiness model of farming cranked up on the steroids of cheap oil and cheap natural-gas-based fertilizer. Both of these "inputs" have recently entered the realm of the non-cheap. Oil-and-gas-based farming had already reached a crisis stage before the flood of Iowa. Diesel fuel is a dollar-a-gallon higher than gasoline. Natural gas prices have doubled over the past year, sending fertilizer prices way up. American farmers are poorly positioned to reform their practices. All that cheap fossil fuel masks a tremendous decay of skill in husbandry. The farming of the decades ahead will be a lot more complicated than just buying x-amount of "inputs" (on credit) to be dumped on a sterile soil growth medium and spread around with giant diesel-powered machines.

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The farmer has become another worker drone that follows a set of instructions. Ten thousand years of agricultural knowledge wiped out over the span of three generations.

Capitalism requires more and more of the workforce to become members of the proletariat in order to drive wages down and profits up. Standardised ways of working reduce training time and the bargaining power of workers. If they could give a set of instructions to monkeys, Capitalists would have no compunction about doing it as they would only have to pay peanuts.

In my own profession of computing, we complain about the skill levels of the new people but they do a good enough job for the Capitalists at a cheap price. So what if a computer system crashes and kills people? Tort Law Reform caps the liabilities anyway.

Preventable deaths are just another business cost. Profit is the only thing that matters.

How will anyone react to this looming crisis?

Perhaps more ominous is the discontent on the trucking scene. Truckers are going broke in droves, unable to carry on their business while getting paid $2000 for loads that cost them $3000 to deliver. In Europe last week, enraged truckers paralyzed the food distribution networks of Spain and Portugal. The passivity of US truckers so far has been a striking feature of the general zombification of American life. They might continue to just crawl off one-by-one and die. But it's also possible that, at some point, they'll mount a Night-of-the-Living-Dead offensive and take their vengeance out on "the system" that has brought them to ruin. America has only about a three-day supply of food in any of its supermarkets.

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It has been a similar situation in Australia. The last real rumble about fuel prices was back in 2005 when Trucker Blockades were mooted and Trucker Blockades - One Day On, they folded.

The demoralisation of the proletariat is so complete that people could well lay down and die.

The problem with revenge against the system is that there is no obvious target. There are rumours of secret societies running things.

At least with the French Revolution, there were the obvious symbols of Feudalism to be destroyed: the Bastille; the Monarchy; the Church; and the Aristocracy. What are the equivalents for Capitalism? The Stock Exchange? Maybe, but so what? It is just a building.

The Capitalist system is a way of thinking about social relations between people. It is expressed in laws, customs, and expectations. These cannot be changed by force only by patient reasoning.

Unfortunately, patience requires time and time is running out.

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Tomgram: John Feffer, Are We All North Koreans Now?

In the latest Tomgram: John Feffer, Are We All North Koreans Now? John Feffer argues that the recurring crises in North Korea are not just problems with Communism but with industrial agriculture.

In the 1990s, North Korea was the world's canary. The famine that killed as much as 10% of the North Korean population in those years was, it turns out, a harbinger of the crisis that now grips the globe -- though few saw it that way at the time.

That small Northeast Asian land, one of the last putatively communist countries on the planet, faced the same three converging factors as we do now -- escalating energy prices, a reduction in food supplies, and impending environmental catastrophe. At the time, of course, all the knowing analysts and pundits dismissed what was happening in that country as the inevitable breakdown of an archaic economic system presided over by a crackpot dictator.

They were wrong. The collapse of North Korean agriculture in the 1990s was not the result of backwardness. In fact, North Korea boasted one of the most mechanized agricultures in Asia. Despite claims of self-sufficiency, the North Koreans were actually heavily dependent on cheap fuel imports. (Does that already ring a bell?) In their case, the heavily subsidized energy came from Russia and China, and it helped keep North Korea's battalion of tractors operating. It also meant that North Korea was able to go through fertilizer, a petroleum product, at one of the world's highest rates. When the Soviets and Chinese stopped subsidizing those energy imports in the late 1980s and international energy rates became the norm for them, too, the North Koreans had a rude awakening.

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We all literally eat oil. Oil for fertilizer. Oil for tractors. Oil for trucks to take the produce to the factories. No oil, no food!

The article also points out that we are running out of arable land and water as well. And global warming is exacerbating the problem.

The core problem is seen to be:

The quest for perfect markets usually conceals a global shell game in which wealth is redistributed from the many to the few. To even the playing field that markets constantly tilt in favor of the powerful, and to direct funds toward environmental sustainability, governments need to intervene in the economy.

Yet another liberal is wishing upon the star of a benevolent government! The state exists to sustain the power of the ruling class. That power can be sustained either by force or by bribery.

The interest of the rulers is to stay in charge in order to increase their wealth. If people have to starve in order for the rulers to profit, so be it. No money, no food! This is the marketplace speaking. No soppy sentimentality there!

Feffer's solution is:

Certainly organic farming will play a role here. Although Green Revolution guru Norman Borlaug has dismissed organic agriculture as incapable of feeding the world, an important new study published by Cambridge University Press shows that organic systems in developing countries can produce 80% more than conventional farms.

Integrated farming systems that rely on sustainable energy -- solar, wind, tidal -- will also be critical. No-till agriculture can cut down on energy use and soil erosion.

While properly wary of snake-oil salesmen, neither can we afford to be Luddites. New technologies will play a role as well, as long as they reduce fertilizer and pesticide use, don't shackle debt-ridden farmers to major seed companies, and meet strict consumer safety requirements.

All we need are some kind-heart Capitalists! Hah! These do not last long enough in the face of their ruthless competitors to do permanent good.

This is just one crisis in which private property (capital) confronts public good (food and water).

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