Poverty and Inequality – Evils to Combat

This was published by the Social Europe Journal

Why The Left Must Address Inequality And Poverty
28/04/2014 by Denis McShane

Gently, slowly one can sense the terms of intellectual trade changing. The long era of individual accumulation with the massive transfer of power from the wage-earning collective to the capital funds and bankers that have caused so much damage is coming to an end.
More and more the intellectual argument is shifting ground. The Nobel economics laureate, Amarta Sen, wrote an important essay in Prospect under the heading ‘Why Do We Tolerate Poverty?‘ ‘It’s bad reasoning, not human nature, that blinds us to the predicament of the poor,’ argues Sen.
At the same time in an important article in the Financial Times, Martin Wolf, arguably today the world’s most respected and prestigious economics columnist argues that the state not private banks should create money. This has absolutely revolutionary implications for the return of the state acting for the general interest. Banks would provide financial instruments but only the state could decide the amount of money in circulation, and do so in a regulated way to stop the bubble of greed followed by the inevitable bust that was the legacy of the Alan Greenspan vision of central banking serving private banking first, second and last.
Then there is the extraordinary reception given the Thomas Piketty’s book ‘Capital in the 21st Century.’ When it came out in France last year it was afforded a decent welcome but in New York and in London the English translation has been hailed as new Marx or Adam Smith. For the first time since Sartre or Camus, France has an intellectual who resonates at a global level.
And unlike the philosophising post-1945 French intellectual grappling with how the west should handle Marxist Stalinism (Sartre for, Camus against) Piketty gets into the heart of economics as a moral philosophy with an obligation not just to describe economic interactions but to argue that economics involves choice – whether to promote Enrichessez-vous ideology or whether to build the just society.
Marx, of course, wrote his manifesto first and produced the theoretical justification for it two decades later. Piketty has done his research but it has yet to be translated into practical policy, or more properly, policy that can be put forward with some confidence voters will endorse it.
The Left Needs To Take Up The Inequality And Poverty Challenge
Nonetheless when the Financial Times can run an article, again by Martin Wolf, advancing the argument that ‘A more equal society will not hinder growth’ and ‘Inequality damages the economy and efforts to remedy it are, on the whole, not harmful’ we are moving into new territory.
The FT is the parish magazine of advanced capitalism and if it is telling its readers the game is up on the relentless growth of inequality and poverty associated with right-wing governments and bankers since the Thatcher-Reagan era, including today’s dominant political elites in the European Union, then one can sense a new political era opening up.
The Sunday Times economics editor, David Smith, last Sunday (27 April) devoted a page to Piketty. Smith is shrewd and intelligent and despite being an ambassador over many years for a capitalism based on the richer getting richer and the poor poorer he now has to warn his readers that a new paradigm is needed.
With the working class increasingly turning to the isolationist and protectionist politics of identity populists like Marine Le Pen, Nigel Farage, Geert Wilders, or openly anti-semitic parties like Jobbik, which won 20 per cent in the Hungarian general election a few weeks ago, Davosman and their scribblers in the FT or Sunday Times are getting worried that the political backlash against the poverty and unemployment of so many in Europe might became very ugly indeed.
Translating this hunger for a politics that gives priority to reducing poverty and inequality into actual programmatic options that can win adherents and elections has yet to take place. Gouverner c’est chosir, declared Pierre Mendes France shortly after Aneurin Bevan declared ‘The language of priorities is the religion of socialism.’
Sadly the left hates to choose or decide priorities and tends to want to have everything at once. The reaction of some of the French Socialist MPs to the choice of priorities made by the new Manual Valls government is an example of this no-choose, no-priorities socialism that is the democratic left’s Achilles heel.
Too much of left political writing, other than the rather boring denunciatory rhetoric one associates with much commentary in papers like The Nation in New York, The Guardian or New Statesman in London or the Nouvel Observateur in Paris has offered highly specific, often modish, policy proposals aimed at dealing with one specific problem.
The left has been poor at the big picture and constantly repeating one or two themes and simple messages. Now at last last there is a chance to join with Wolf, Sen and Piketty and say poverty and inequality are like Beveridge’s want and squalor – namely giant evils that must be combatted.
Beveridge, a Liberal, was not afraid to use the word ‘evil’ to denounce the condition which pre-1939 banker’s capitalism had brought about. Can we find politicians who can fashion a language which incorporates the new concern about poverty and inequality or will this be only left to intellectuals and comment page writers?

April Showers Down Europe Books

There seems to be a new book on the EU and its problems, future or lack thereof published nearly every week.

I review 4 of such books for Tribune which for reasons of space only carried one of them.


Book Review Tribune


The Europe Dilemma. Europe and the Drama of EU Integration by Roger Liddle, IB Tauris/Policy Network  £14.99


The Uncertain Legacy of Crisis. European Foreign Policy Faces the Future by Richard Youngs, Carnegie £9.99


Our Europe, Not Theirs by Julian Priestly and Glyn Ford (eds), Lawrence and Wishart, £13.99


Is the EU Doomed?  By Jan Zielonka, Polity Press, £9.99


Like April showers books on Europe are falling fast. As with the Irish Question or Free Trade or Catholic Emancipation in previous eras the Europe question today dominates British politics. It will do so until the 2015 election settles the question of whether we have an In-Out Referendum as promised in 2017 by David Cameron. Or whether such a referendum has to await a new Treaty as Ed Miliband, with more courage than his predecessors, has pledged.

But even if PM Miliband puts off a referendum he can have no illusion that a Ukipised Tory Party under Boris Johnson plus our rabidly Europhobe off-shore owned press will resile from clamouring for a referendum.

Thus Europe remains hardwired into British politics. Nick Clegg proved what a disastrously incompetent politician he is when Nigel Farage comprehensively out-debated the LibDem public school kid over two successive Wednesdays on BBC2.

Is Labour  wise tactically to say, see and hear no Europe? At some stage a new generation of Labour leaders will have to come out from under the duvet and think, write and speak on Europe.

These four books are helpful guides to that processing of rebooting Labour’s thinking on Europe.

Roger Liddle has written an important, revealing contemporary history book on how the Blair government handled Europe. No-one is better placed than Liddle who sat in No 10 sandwiched between the pro-EU Blair and the more cautious Gordon Brown. As Peter Mandelson’s amanuensis and former SDP member Liddle understands the complex relationships between the incoming Labour leaders in 1997 and how central the EU question was to all of them.

He nails one myth. Keen as he might have been to take Britain into the Euro, Tony Blair’s hands were tied by his election pledge to hold a referendum. Whatever his own inclination a referendum on joining the Euro in 1998 or 1999 would have been impossible to win and a mammoth diversion from Blair’s work in Northern Ireland, getting economic growth going and repairing Britain’s social fabric.

The 5 economic tests and the opposition from the Euro-cautious if not hostile Treasury made no difference to the fundamental brake on swapping the pound for the Euro – namely the pledge to hold a plebiscite. Such a referendum would have brought the Tories back to life, split Labour which was far less united on Europe than people realized and destroyed the love-in with the Sun and Daily Mail that Blair and his spin machine had engineered.

Richard Youngs is a Madrid based British academic with the best insights into EU foreign policy of anyone in Europe. At Prime Ministers Question in the current Parliament, Cameron never has to face questions on international issues. The British political and media elites have given up on foreign affairs.

The most successful British-born foreign policy player in recent times has been Cathy Ashton, the EU’s foreign policy chief. On Iran, on Serbia and Kosovo, on liberating Ukraine from the corrupt murdering Yanukovich regime and on building up a foreign policy team from scratch Ashton has been scorned by the know-nothings of the London press but has far more real-time foreign policy achievements in her ledger than the disinterested William Hague.

In May, voters here and in 27 other EU member states can elect a new European Parliament. Scorned by many and far from perfect the EP now has power of co-decision that can make a real difference. Labour’s Sir Julian Priestly was Secretary-General of the EP and Glynn Ford was one of the most imaginative leaders of Labour MEPs. They have brought together a number of intelligent essays on why Europe needs a new deal after the long years of right-wing austerity politics. Labour has an excellent team of MEP candidates and the Party of European Socialists, under the leadership of the thoughtful Bulgarian , Sergei Stanishev, with his perfect English and sense of modern social democratic possibilities is a growing force.

An Oxford professor asks the question: ‘Is the EU Doomed?’ No. But his book shows how Eurodefeatism and Eurodespair now pervades Britain.

By contrast in Italy, in France, even in Germany there is a growing realization that a new EU is needed. Only in England do we refuse to accept the EU is here to stay. We can quit Europe as Ukip and many Tory MPs want. We can stay. But what we cannot do is continue to huddle under the duvet and hope the Europe question will just go away and does not need to be answered.


Denis MacShane is the former Europe Minister

Putin Has Lost Kiev – That’s Not a Win

The note below is a contribution to Linked In’s Friends of EU discussion group which I find very interesting.

Don’t really want to plunge into this as we are all drowning in comments on Russia and they provide little real guidance.
It is worth look at Timothy Snyder’s NYRB article dated 19 Feb on who is who in Maidan and what is means.
I went down as UK minister to Kiev a lot in 2004 and saw Putin standing, small and not very significant beside the much bigger Yanukovich.
That was Putin’s first humiliation – when Ukraine rejected his nominee.
He got his revenge with the truly dreadful Orange Rev government besotted by corruption and personal rivalries.
His man Yanukovich won in 2010 but then to Putin’s despair made every mistake in the playbook.
The EU and US were utterly uninterested in getting Ukraine into the “western orbit” whatever that means. Is Germany any longer an ally of the US or a loyal economic partner of the EU (see Philippe Legrain in today’s NYT).
The EU could not make a serious financial, visa, or trade offer to Ukraine given its inward looking focus on the sheer incompetence of the EU leadership to rise to the 2008 financial crisis challenge.
Yanukovich in best Lukashenko style flung his chief rival into prison like a replay of Fidelio and then tried to enact absurd repressive denials of core freedoms that enraged a cross sector of the population who were not anti-Russian but like all the Russians I meet in London think west is best and EU is for me as well as you.
Ukrainians took the matter into their own hands at least in Kiev.
Again Yanukovich went mad and opened fire on his own people.
Bloody repression either works by cowering people into retreat or fusing individuals into a mass determined on overthrowing the régime that killed their children.
The latter happened. The oligarchs fled. Azerov left for his schloss and Euros in Austria and Yanukovich had to flee or face the fate on Pinochet or Ceaucescu.
There was no coup and no Robespierre or Cromwell has emerged.
Now Putin is the first Voshd in Russian history to have lost Kiev.
Taking over Crimea or organising stupid provocations in east Ukraine is no substitute for his place in history as the first Russian chief to detach Kiev permanently from Russia – unless as in 1968 he sends tanks in.
To be sure the EU and US do not know what to do just as we did not know what to do in Tunisia or Egypt.
Essays on the character, innate or otherwise, of Russia are little help.
Britain is no different from Germany in not wanting to cut off the BP-Rosneft connection or the billions that transit through London from Russia’s nouveau riche. Last time I check France was cancelling its Mistral ship contracts with Russia.
Neo-cons in Washington long for a return to the cold war realities but in truth they have no real policy on Russia and are worried about a permanent BRIC foreign policy and UN alliance against the US.
What is interesting is that the commentariat in Russia all seem to say the same thing whereas the commentariat in Europe and the US all say different things – as can be seen in the above thread.
We shouldn’t worry about this as democracy’s diversity and permanent contradictions are its strength in contrast to the pensée unique on offer from Moscow intelligentsia who seem to think saying the same thing means they are intelligent.
Enough on Easter Monday but thank you for fascinating reads and if I have time I might offer some views on how to get the EU better engaged without a lose-lose debate on sanction and how we can show better solidarity with Ukrainians than has been on offer so far.

Manuel Valls, Tony Blair

Libération published this article by me on 11th April asking if the new French prime minister, Manuel Valls, can be compared to Tony Blair


Libération 11 April 2014

Manuel Valls, un Tony Blair français?



François Hollande, président assiégé, a franchi le rubicon en nommant Premier ministre le politicien le plus libéral et le plus atlantiste de toute l’histoire française de l’après-guerre. Manuel Valls, nouveau Premier ministre, ne cache pas son admiration pour Tony Blair ni sa conviction que c’est le marché et non l’Etat qui crée de la croissance économique, des emplois et de la prospérité. Il ne cache pas non plus sa vision pour «plus d’intégration» comme réponse au malaise de l’immobilisme européen, ce qui le met en désaccord avec le Britannique David Cameron qui affirme que «moins d’Europe» serait la solution pour aller de l’avant.

J’ai connu Manuel Valls avant qu’il n’émerge sur la scène politique internationale comme porte-parole et conseiller du socialiste Lionel Jospin, nommé Premier ministre en 1997, un mois après que Tony Blair eut intégré Downing Street. Car il serait opportun de mentionner la fatale attraction du nouveau Premier ministre français pour Tony Blair, le politicien qu’il admire entre tous. Pas le Blair de la guerre d’Irak qui reste une figure contestée de la gauche française et plus largement de la gauche démocratique européenne – mais celui que Valls aura vu aux manettes à partir de 1997 et pendant les quatre années où il fut proche conseiller de Lionel Jospin. Après la défaite socialiste de 2002, Valls passe une décennie à poser une question centrale et pourtant négligée par l’ensemble de la gauche française : «Comment une social-démocratie moderne peut-elle fonctionner dans une ère d’individualisation globale où les idées et l’organisation classiques de la gauche “façon XXe siècle” sont hors de propos ?».

Le titre de son livre, paru en 2008 Pour en finir avec le vieux socialisme… et être enfin de gauche ! - résume ses convictions et son engagement en faveur d’une gauche de marché en désaccord avec le socialisme étatique traditionnel à la française. Sans doute Valls, qui n’est pas à 100% français – comme Nicolas Sarkozy qui atenté de réformer l’économie du pays à rebours de l’opinion publique -, voit la France avec des yeux dessillés.

Manuel Valls, né à Barcelone en 1962, est devenu citoyen français à l’âge de 20 ans. Il parle le catalan, l’espagnol, le français et l’italien. Avec Anne Hidalgo, la nouvelle maire socialiste de Paris, née à Cadix, il est de ces politiciens d’envergure qui ont leurs origines de l’autre côté des Pyrénées, en contraste avec le Premier ministre sortant, Jean-Marc Ayrault, fonctionnaire d’Etat traditionnel et germanophone. Avec trente-cinq ans de Parti socialiste à son actif, Valls est un animal politique. A maints égards, il est l’antithèse de François Hollande, diplômé de la très élitiste Ecole nationale d’administration (ENA) et issu d’une famille bourgeoise conventionnelle. Le gouvernement Hollande est truffé de camarades énarques, alors que le nouveau Premier ministre a étudié l’histoire et, bien que communicateur chevronné, n’a aucune prétention à être un grand intellectuel. Toute sa vie d’adulte, il a fait de la politique plus que de l’administration d’Etat.

Chaque fois que nous nous rencontrions à Paris ou ailleurs en Europe, il posait une seule et même question : «Comment Blair fait-il pour remporter de nouvelles élections ?». Il voyait bien que le gouvernement socialiste français d’après 1997 n’allait nulle part, en comparaison de l’élan et des innovations de l’administration Blair d’avant la guerre d’Irak et qu’en 2005, Tony Blair l’avait encore emporté en dépit de l’hostilité présumée à sa décision d’en finir avec Saddam Hussein. Les socialistes français n’ont jamais obtenu deux majorités parlementaires consécutives. Les deux mandats de Mitterrand ont masqué le fait qu’en 1986 et 1993, les électeurs ont sorti les ministres socialistes. Pour Valls, qui a vu le même sort s’abattre sur le gouvernement Jospin de 1997-2002, le gouvernement Blair qui a gagné trois élections consécutives est apparu comme un miracle.

Manuel Valls n’a jamais caché sa conviction que sans croissance économique appuyée sur le marché et non sur l’Etat, la gauche deviendrait simplement prisonnière d’intérêts particuliers, de la pression permanente de syndicats rejetant les réformes innovantes, les choix des citoyens et toute forme de compétition.

La décision des Verts français, menés par la ministre de l’Environnement, Cécile Duflot, de quitter la coalition en opposition à la nomination de Valls, souligne à quel point la nouvelle orientation de Hollande en faveur du marché et de l’industrie bouleverse le pays. Toutefois, la sortie des Verts permettrait à Valls de revisiter la déclaration de Hollande contre l’exploration des gaz de schiste avant l’élection présidentielle de 2017. En terme de politique énergétique, l’Union européenne a été mutilée par les Verts allemands – leur position contre le nucléaire ayant donné une carte majeure à la Russie de Vladimir Poutine qui soumet une Europe dépendante des ressources énergétiques russes aux ambitions géopolitiques du Kremlin. Sous Valls, cette tendance à la subordination aux Verts et à leur idéologie, ainsi qu’aux courbettes faites à Moscou pourrait s’inverser.

Manuel Valls incarne l’antithèse de la gauche française traditionnelle. Il est profondément atlantiste et pro-israélien. Comme ministre de l’Intérieur, il s’est montré dur envers les demandeurs d’asile et les criminels en tous genres – et intransigeant envers les atteintes au principe de la laïcité et les communautarismes qui cloisonnent la communauté nationale. Mais il s’est battu pour le droit des homosexuels contre une féroce campagne antimariage gay menée par la droite française, soutenue par l’UMP et l’église catholique. De toute évidence, il est pour un social libéralisme moderne.

Pro-européen engagé, ne s’est-il pas affirmé en faveur d’un contrôle plus ferme des budgets nationaux européens par Bruxelles, si cela conduit les gouvernements à dépenser et taxer plus intelligemment ? Cela le place fermement dans le camp de Berlin, en faveur d’une plus grande intégration européenne et à des années-lumière de l’euroscepticisme britannique et de l’europhobie du Front national de Marine Le Pen.

Quant à Hollande, n’est-il pas lui aussi un réformiste ? Après les quelques remous provoqués par l’annonce en début de mandat d’une taxe à 75% sur les hauts revenus, son orientation vers un centre promarché est confirmée par l’arrivée de Valls à Matignon. Quoi qu’il en soit, la France a besoin de réformes massives autant que d’une révolution à l’encontre des groupes d’intérêts particuliers et de la sclérose étatique. Manuel Valls, qui ne manque pas d’ambition, aura-t-il le soutien de sa majorité parlementaire et même du PS ? C’est la grande question sans réponse. S’il l’emporte, la France rejoindra l’Allemagne dans une Europe moderne, s’il échoue – et de toute évidence les partisans de la gauche étatique française y compris au sein de son propre parti et la majorité parlementaire s’opposeront à son succès – alors la victoire de Hollande en 2012 se transformera en défaite en 2017.

Traduit de l’anglais par Florence Illouz.

Denis MACSHANE Ancien ministre britannique des Affaires européennes dans le gouvernement Blair

Top US Banker Urges Wage Hikes

This appeared in the OMFIF bulletin 11 April 2014

Chicago central banker’s medicine to get US economy moving

By Denis MacShane

The normal duty of central bankers (especially in Europe) is to denounce inflation as the work of the devil and call for labour market flexibility as a barely disguised code for reducing wages.

But a gathering of academic economists at the annual Minsky Conference this week in Washington heard an impassioned plea from one of America’s top central bankers that it was time to increase wages and let inflation rise again.

Charles Evans is president of the Federal Reserve Bank in Chicago, where he has worked much of his professional life, in addition to stints as an economics professor and author of heavyweight academic articles on monetary policy.

Evans, currently a non-voter, is among the more dovish members of the Federal Open Market Committee. In his paper at the Bard College Levy Institute’s Minsky Conference, commemorating the work of depression-fighting economist Hyman Minsky, Evans said the US economy now needed a serious boost in wages to help business demand.

Evans used moderate, cautious language. However, the message was clear: Deflation and low wages are the new dragons to be slain.

‘Low wage increases are symptomatic of weak income growth and low aggregate demand. Stronger wage growth would likely result in more customers walking through the doors of business establishments and leading to stronger sales, more hiring and capacity expansion,’ Evans said.

He suggested a target wage growth figure of 3.5%, which he argued ‘is sustainable without building inflation pressures.’ This compares with the current range of 2-2.25 in compensation growth, coinciding with labour’s historically low share of national income.

Evans is right to underscore the dramatic change in the amount of US added value that goes to employees. Until 1975, wages normally accounted for more than 50% of American GDP, but this fell to 43.5% by 2012.

Evans said fears about inflation which have hovered over monetary policy-making since the 1970s have been exaggerated. Evans argued: ‘No one can doubt that we [the Fed] are undershooting our 2% [inflation] target. Total personal consumption expenditure (PCE) prices rose just 0.9% over the past 12 months; that is a substantial and serious miss.’

‘Below-target inflation’, said Evans, ‘is a worldwide phenomenon and it is difficult to be confident that all policy-makers around the world have fully taken its challenge on board. Persistent below-target inflation is very costly, especially when it is accompanied by debt overhang, substantial resource slack and weak growth.’

‘Despite current low rates, I still often hear people say that higher inflation is just around the corner. I confess that I am somewhat exasperated by these repeated warnings given our current environment of very low inflation. Many times, the strongest concerns are expressed by folks who said the same thing back in 2009 and then in 2010.’

Denis MacShane is former UK Minister for Europe and a member of the OMFIF Advisory Board. He was a speaker on European politics at the Minksy Conference.