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Manifesto of Appalled Economists: The Shocked and the Outraged

by Ralf Streck Wednesday, Aug. 24, 2011 at 10:46 AM
mbatko@yahoo.com

Tax cuts for the super-rich and corporations promised economic growth and more jobs but produced exploding inequality and generalized insecurity. The US faces a revenue crisis and a war spending crisis. Tax cuts, wars and bailouts of banks and firms caused massive US deficit.

THE “SHOCKED’ AND THE “OUTRAGED”

The manifesto of appalled economists in France becomes a bestsellery redu

cState debts may be caused by reduced corporate tax revenues, not excess spending. Through "location competition," corporations play off states and countries and harvest tax write-offs and sweetheart-assessments. Through "state capture," lobbyists write laws and corporate campaign contributions make the state into a trough for corporations and the super-rich. China's Yuan is not responsible for the US' lack of competitiveness caused by militarization and financialization. nding. Through "location competition," corporations play off states and countries against one another anharvest tax write-offs and sweetheart-nts. Throuh "state capture," lobbyists make thlaw and campaign contributions turn the state into a trough for corporions and the super-rich.

By Ralf Streck

[This article published in the German-English cyber journal Telepolis 8/14/2011 is translated from the German on the Internet, http://www.heise.de/tp/druck/mb/artikel/35/35302/1.html.]

A little book has become a bestseller in France amid the turbulences on the financial markets in which France is drawn intensely [Buying bond issues becomes costly for the European Central Bank (1)]. In Manifeste d’economistes atterres,” “appalled economists” [2] blamed the power of financial markets and neoliberalism for the developments on the financial markets. Dogmas are sold here as seemingly scientific discoveries. These economists emphasize “subordination under a dictator” and making a clean break with 10 false “obvious facts.” They demand a control of the financial markets to make possible a socially just development.

In Germany, the little book of the four economists Philippe Askenazy, Andre Orlean, Henri Sterdyniak and Thomas Coutrot is largely unknown. However their manifesto has become a bestseller in France. Right after its publication, nearly 1000 economists at universities signed the manifesto [3]. Ten thousand copies were sold for 5.50 Euros. The work is available free on the Internet in French [4], Spanish [5] and Portuguese [6]. While the book is not yet published in a German translation, Stephanie Hessel [The people put the government under pressure (7)] describes the rebellion against dominant conditions.

While the book “Be Outraged!” by Hessel became a bestseller, it is more astonishing in the case of the manifesto of four economists of whom Askenazy, Orlean and Sterdyniak work in state research institutes while Coutrot is an academic advisor to Attac-France. They take apart the neoliberal dogmas drummed into our heads day after day as supposed universal pieces of wisdom. Unlike Hessel, the authors are not limited to criticism but propose alternatives.

“Europe is caught in its own institutional traps,” they declare in the introduction. States must borrow money from private financial institutes that receive money at favorable interests or at practically zero interest in many cases. The US Federal Reserve (FED) assures this up to 2013 [8]. Therefore the financial markets hold the key for financing the state. The deficient solidarity of European states is striking in statements by German chancellor Angela Merkel when she speaks of the supposed “lazy” in the South who allegedly take more vacations, retire earlier [9] and work less [Merkel snubs Spain, Portugal and Greece (9)]. This promotes speculation. The economists also criticize the rating agencies for driving this speculation as shown in the last months.

They criticize the improvised emergency relief efforts in the bailout umbrella [10] with “often blind plans for reducing public spending” along with wage cuts for public servants and thinning the number of employees. Public services would be endangered and social benefits reduced in all states. A rise in unemployment as manifest in Spain, Greece and Portugal goes along with that. “These measures are irresponsible from a political and social perspective and even on a purely economic plane,” they argue. They join the opinions of Nobel Prize winners for economics Joseph Stiglitz and Paul Krugman. The latter even says “mad men are in power” [11]. More than six months before, they rightly predicted that the situation could only be temporarily calmed with such measures. What is now occurring in the torrid European summer has doubtlessly confirmed them.

They had rightly forecast that this austerity policy would intensify the tensions in Europe and even endanger Europe since Europe is more than an economic project. In their opinion, the economy should help build a “democratic, peaceful and united continent.” But instead a market dictatorship is forced on countries like Portugal, Spain and Greece that suffered under dictatorship 40 years ago. This new “dictatorship” has long proven its inefficiency and its “political and social destructiveness.” A real democratic debate is necessary. They also do not exclude the nationalization of the banking system.

DECONSTRUCTION OF THE DOMINANT IDEOLOGY

They make a clean break with the dogmas, the general privatization, the reduction of state budgets, the flexibilization of labor markets and advancing trade, financial services and financial markets to increase competitiveness. This claim should be critically scrutinized since the supposed “efficiency of the financial markets” is always argued.

The financial crisis has shown that this efficiency does not exist. Transparency of markets does not function here. The law of supply and demand does not prevail on these markets. Rather higher prices attract more buyers instead of limiting demand. This leads to the formation of enormous speculative bubbles. Therefore the prohibition on the speculation of banks and the general reduction on speculation through control and taxation of financial transactions and the limitation of certain businesses are imperative. That this happens in case of emergency as now demonstrated by France, Italy, Spain and Belgium is astonishing. Permanent market regulation has not occurred in three years in the financial crisis.

Ten supposed “obvious facts” are simply false. The absurd assumption that the rising state indebtedness is caused by the social systems is included here. In the financial crisis since 2008, indebtedness was inflated as never before to bailout banks and firms. Therefore the deficit grew in the crisis from an average 60% of the gross domestic product (GDP) at the end of 2007. Before the crisis, most states remained below this largely unnoticed EU- stability criterion. As documented in Eurostat [12], the indebtedness swelled to almost 75% in 2009 (in the Euro countries to 80%) and in 2010 to 80% (85% in Euro-countries).

The false assumption that markets rightly estimate the solvency of states is refuted. Spain was downgraded several times and the fall of the country can hardly be stopped although Spain is one of the EU lands whose state indebtedness at 60% is below the average. The responsibility for rising indebtedness and for a “fiscal counter-revolution” is ascribed to the crisis. For example, tax gifts of 100 billion Euros were awarded in France between 2000 and 2010. It was always claimed that this would automatically promote economic growth. But the fact is that social inequalities intensified.

Other platitudes like the fairy-tale that the Euro protects from crises, financial markets promote growth, financial markets must be calmed and the Greek crisis leads to a European economic government are also illuminated. Altogether it is a very readable document. National single-handed efforts are not demanded here as urged by the former Attac-France spokesperson Jacques Nikonoff whose wish list to Santa Claus approached rightwing populist positions of the Front National.

Besides the individual measures, the authors urge abandonment of the consensus principle. They point to the origin of the European Union. Breaking with the present line that leads deep into the swamp will certainly not be carried o9ut by all 27 EU member states. A reorientation in which different countries take different paths will only be ventured by some of the states. The founding of the alliance of states is only recalled by six states. Agreements between different states are likely.

“Some national governments will take innovative measures. Enhanced cooperation and bold steps in the realms of financial regulation and fiscal and social policy are necessary. Through specific measures, these countries will hold out their hands to other peoples so that they can join the movement.”

LINKS

1]

http://www.heise.de/tp/artikel/35/35279/1.html

[2]

http://atterres.org/

[3]

http://atterres.org/?q=les-%C3%A9conomistes-atterr%C3%A9s

[4]

http://atterres.org/?q=node/1

[5]

http://atterres.org/?q=node/42

[6]

http://atterres.org/?q=node/11

[7]

http://www.heise.de/tp/artikel/34/34882/1.html

[8]

http://www.heise.de/tp/artikel/35/35279/1.html

[9]

http://www.heise.de/tp/artikel/34/34777/1.html

[10]

http://www.heise.de/tp/artikel/35/35175/1.html

[11]

http://www.heise.de/tp/artikel/34/34732/1.html

[12]

http://epp.eurostat.ec.europa.eu/cache/ITY_PUBLIC/2-26042011-AP/DE/2-26042011-AP-DE.PDF

PSEUDO "OBVIOUS FACT" # 1 : FINANCIAL MARKETS ARE EFFICIENT

PSEUDO "OBVIOUS FACT" # 2 : FINANCIAL MARKETS CONTRIBUTE TO ECONOMIC GROWTH

PSEUDO "OBVIOUS FACT" # 3 : MARKETS ASSESS CORRECTLY THE SOLVENCY OF STATES

PSEUDO "OBVIOUS FACT" # 4 : THE SOAR IN PUBLIC DEBTS RESULTS FROM EXCESSIVE SPENDING

PSEUDO "OBVIOUS FACT" # 5 : PUBLIC SPENDING MUST BE CUT IN ORDER TO REDUCE THE PUBLIC DEBT

PSEUDO "OBVIOUS FACT" # 6 : PUBLIC DEBT SHIFTS THE BURDEN OF OUR EXCESSES ON OUR GRANDCHILDREN

PSEUDO "OBVIOUS FACT" # 7 : WE MUST REASSURE FINANCIAL MARKETS IN ORDER TO FUND THE PUBLIC DEBT

PSEUDO "OBVIOUS FACT" # 8 : THE EUROPEAN UNION PROTECTS THE EUROPEAN SOCIAL MODEL

PSEUDO "OBVIOUS FACT" # 9 : THE EURO IS A SHIELD AGAINST THE CRISIS

PSEUDO "OBVIOUS FACT" # 10 : THE GREEK CRISIS WAS A SPRINGBOARD TOWARDS AN ECONOMIC GOVERNMENT OF EUROPE AND EFFECTIVE EUROPEAN SOLIDARITY



RELATED LINKS

Haushild, Florian, “The Game with Ignorance and the Growth Panacea,”

http://portland.indymedia.org/en/2011/08/409913.shtml

Walthar, Rudolf, “Manifesto of Appalled Economists,” February 2011

http://www.raisethefist.com/?Manifesto_of_Appalled_Economists_:_Indybay-43

http://nyc.indymedia.org/en/2011/02/114019.html

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