Unequal societies do encourage criminality

Colm O'Doherty: According to Dan O'Brien there is no relationship between inequality and law breaking (Irish Times 24/08/12). This bogus statement is grounded in the same kind of statistical modelling which economists relied upon to predict ‘soft landings’ for economies with sound ‘fundamentals’ . The predictive capability of economics here is based on a positivism which seeks generalizations which are independent of culture. For Dan O’Brien and other neo-liberal commentators the hubris of positivism is manifested as a fetishism of numbers, an illusion of precision and the donning of the status shield of science. As we now know the so called pragmatism of economics as trumpeted by a large technocratic mainstream was nothing more than a policy driven skate on the thin ice of casino capitalism.

There is more than a whiff of this neo-liberal policy agenda in Dan O'Brien’s promotion of a mechanistic relationship between objective conditions and human behaviour. There is no natural science of society, and of crime in particular. The perspective on social order which is espoused in this article is well known to us all : it is the ‘orthodox’, the ‘conventional’ the ‘taken for granted ‘ world carried by mass media and the establishment. Namely that society is a fundamentally rational and consensual arrangement where deviance and crime is seen as a marginal and minority category. The deviants and criminals are seen as different from the ‘ normal’ population and there is generalised agreement on what constitutes criminal behaviour.

However, in reality, during the boom years, when inequality between the bankers, speculators and property developers and the rest of the population spiralled, particular types of criminal behaviour flourished. Consider anti-social behaviour. The concept of anti-social behaviour which has been disseminated by the media and the establishment in recent years is focused on a whole range of behaviours such as begging, neighbourhood disturbance/nuisance, public drunkenness etc. It is fair to say that poor and socially excluded populations are portrayed as the culprits here and that cracking down on anti-social behaviours is viewed as an exercise in the creation of social order in such neighbourhoods. If we examine anti-social behaviour using an interpretative rather than a mechanistic and positivistic orthodoxy lens we will see that the fallout from the anti-social behaviour of the bankers, speculators and developers has major repercussions for everybody. Our health services are in crisis, our education system is under stress and the vulnerable are abandoned. So the figures and statistics used to advance the arguments in the piece are concealing the reality that as inequality has increased in the US, the UK here and in other highly marketised economies so has the incidence of serious white collar crime. During the boom years poverty decreased but the crimes of the wealthy – as we are now discovering- increased. Crime statistics do not reflect this increase.

Apart from the conceptual limitations of his arguments Dan O’Brien also takes some liberties with the available statistics. There is a large body of evidence showing a clear relationship between greater inequality and higher homicide rates –see Heisch and Pugh’s (1993) review and Wilkinson and Pickett’s (2006) review.

Europe's crisis: market competition instead of social bonds

TASC today issued a new discussion paper by James Wickham in which he argues that the elites dominating Europe have abandoned any commitment to 'Social Europe' and have instead turned European institutions in what he terms 'market-making' mechanisms. A PDF of Europe's Crisis: Market Competition instead of Social Bonds is available for download here, and a digital version is available here.

Stiglitz on the Euro deal

Paul Sweeney: We need vision and leadership in Europe. The lack of this leadership among the Europe elite/authorities, of which its citizens are fully aware (and will punish them for it), finally appears to have forced this “leadership” to realise that there was a threat unless it acted decisively. It appears that some major decisions may have, at long last, been made at the 20th summit last Thursday which could get Europe moving again and may give hope to Ireland – if executed.

However, as the Irish government leaders have admitted a lot more needs to be done, around the opportunities provided in the deal for this country. Ireland did get a leg up, but as Joe Stiglitz says here, the deal will not stabilise the euro. Much more needs to be done, overall. I think we are in an era where the role of the state and states acting together makes markets. This is an era of real political economy at work. At present, markets, in crisis due to governments’ continuing indecision on the rules governing them, are causing chaos. This is understandable.

I don’t blame “Germany” but I blame those conservatives who are in power in Germany. They are wedded to 1930s economics.

The advocates of austerity are now calling for growth

Paul Sweeney: When all of the advocates of austerity are now calling for growth as well as more cuts, is it no wonder the public is confused?

The peoples of Europe have clearly decided a) that the level of austerity imposed on them is too harsh, b) it is hitting the poorest hardest (what is new?) and c) it is not working (after four years, they know it for sure!). So the conservatives have a new hymn sheet with the word growth peppered at the end of every refrain instead of amen. But people are not fools. They know that the growth policies being proposed are “Structural.” They are impacting only on supply side, with cuts in minimum wages, basic hours, benefits and all the rest of it where it impacts on the precariat.

Our own government is deeply disappointing in its slavish adherence to the Supply Side Approach to the economy. Four years on, plummeting domestic demand – by 26 per cent and still falling - and large falls in GNP and GDP are worrying. There was a rise of 0.7% in GDP last year. This fact has been trotted out at every opportunity as a great economic “fact”. Unfortunately, this piddling performance could be revised down to 0.0 shortly and even at this pace, it will take 15 years to get back to where we were.

Sebastian Dullien has a good critical perspective on what needs to be done here. It ties in nicely with the finely honed Demand Side analysis, recently undertaken by the Irish Congress of Trade Unions for boosting jobs and confidence in Ireland’s collapsed economy.

Reflections on Greece

In a commentary written yesterday, Paul Krugman noted that the "Greek election [...] ended up settling nothing. The governing coalition may have managed to stay in power, although even that’s not clear (the junior partner in the coalition is threatening to defect). But the Greeks can’t solve this crisis anyway. The only way the euro might — might — be saved is if the Germans and the European Central Bank realize that they’re the ones who need to change their behavior, spending more and, yes, accepting higher inflation. If not — well, Greece will basically go down in history as the victim of other people’s hubris".

You can read the rest of his piece here. Comments?

Remote scenarios?

Consider the following scenario. After a victory by the left-wing Syriza party, Greece’s new government announces that it wants to renegotiate the terms of its agreement with the International Monetary Fund and the European Union. German Chancellor Angela Merkel sticks to her guns and says that Greece must abide by the existing conditions.

You can read the rest of Dani Rodrick's post on 'The end of the world as we know it' over on Social Europe Journal.

Paul de Grauwe on the need for action

Paul Sweeney: With all the events happening in Europe and the lack of leadership by the Prime Ministers, Finance Ministers, the economic Commissioner s of the Union itself and most of all from the unelected leaders (laggards?) of the ECB, it is refreshing to read a view that gives some ideas on leadership.

Paul De Grauwe, formerly of Leuven University and now of LSE, has been on top of comment and in my opinion, sound solutions for the past three or four years of the crisis.

This is a well-written, clear and concise viewpoint, well worth reading in full.

Joseph Stiglitz on the price of inequality

[...] America has the highest level of inequality of any of the advanced countries – and its gap with the rest has been widening. In the “recovery” of 2009-2010, the top 1% of US income earners captured 93% of the income growth. Other inequality indicators – like wealth, health, and life expectancy – are as bad or even worse. The clear trend is one of concentration of income and wealth at the top, the hollowing out of the middle, and increasing poverty at the bottom.

Click here to read the rest of Joseph Stiglitz's piece on the price of inequality, courtest of Social Europe Journal.

Krugman - on just about everything

Nobel Laureate Paul Krugman's visit to Britain has given rise to a number of interviews and articles. Click here here to read a full transcript of his very wide-ranging interview with the Independent's Ben Chu. Seperately, in a piece reprinted by Social Europe Journal from the New York Times, Krugman takes a look at that mythical Irish creature, austerity-generated recovery.

Eurozone crisis: Updated version of Varoufakis' and Holland's 'Modest Proposal'

Yanis Varoufakis and Stuart Holland have reworked their 'Modest Proposal for Resolving the Eurozone Crisis'. Click here for Version 3.0.

The Fiscal Compact - crisis resolution?

Tom McDonnell: Sebastian Dullien has a useful piece on the Fiscal Compact over at the Social Europe Journal.

Sebastian correctly argues that none of the Fiscal Compact rules will make a direct impact on fiscal policy for at least half a decade. In part this is because most countries are already in an Excessive Deficit Procedure (EDP) agreed with the European Commission. Ireland’s current EDP ends in 2015. The Stability and Growth Pact and the Six Pack, rather than the Fiscal Compact, are driving the current austerity.

And the austerity itself is a major part of the problem. The cumulative effect of each Euro zone country accelerating the austerity drive is a recipe for prolonged stagnation and high unemployment across the continent. Sebastian calls for a longer adjustment period, a reorganisation of public investment financing with the European Investment Bank playing a central role and a move towards euro-bonds or some form of European debt redemption fund.

One hopeful sign is that Francois Hollande is evidently calling for the ESM to be given a banking licence. See here.

Germany will resist. Hollande’s success or failure on that issue will go a long way to determining the outcome of the crisis. With a banking licence the ESM (or indeed the EFSF) could perform real time unlimited Lender of Last Resort functions. Without such an institution in place it is difficult to see how the Euro can survive in the long run.

Terrence McDonough on the Fiscal Treaty

IRELAND MAY well need a second bailout after 2013. And as treaties are currently worded, a No vote on the fiscal compact treaty will forbid us from accessing funds from the European Stability Mechanism (ESM).

It is claimed this situation will result in disaster, and that even if we believe the fiscal treaty is a serious mistake, we have a gun to our head. In fact, Ireland will have a number of options in this event.

Click here to read the rest of Terrence McDonough's opinion piece in today's Irish Times.

Why we need an Economic Plan B

The NERI (Nevin Economic Research Institute ) will hold a seminar on Wednesday 25th April 2012 entitled ‘Why we need an economic Plan B?. Further information here. To register your interest in attending and for further details please e-mail info@nerinstitute.net.

Brendan Howlin responds to open letter on economic policy

Last Friday, the Irish Times published an open letter on economic policy signed by a number of economists, social scientists and economic policy analysts, many of whom are contributors to this blog. In today's Irish Times, Minister for Public Expenditure and Reform Brendan Howlin responds.

Open letter in Irish Times: austerity breeding stagnation

Today's open letter in the Irish Times, signed by many names familiar to PE readers, is available here. Comments?

Keeping that inflation monster in check

Over on Social Europe Journal, Andrew Watt has a link to a priceless educational video produced by the ECB on the dangers of inflation. As Andrew explains, "Apparently produced about a year ago, the animated video explains (to children?, adults?, heads of state and government?) just how important it is to keep money tight so as to prevent inflation. Otherwise the dreaded ‘inflation monster’ – yes, seriously – might return. Thankfully the kind-but-tough ECB official has tamed the monster and keeps it in a jar on his desk."Click here to watch the video, and here for the rest of Andrew Watt's take on it.

TASC issues new report on State Assets

Click here to download TASC's new report, The Strategic Role of State Assets - Reframing the Privatisation Debate. Comments?

Karl Whelan's briefing paper for Oireachtas Finance Committee

Karl Whelan, Brian Lucey and Stephan Kinsella are appearing before the Oireachtas Finance Committee this afternoon to discuss ELA and promissory notes. Click here for links to Prof Whelan's briefing paper and opening remarks.

Oireachtas Committee on European Affairs

The Oireachtas Committee on European Affairs met yesterday to hear briefings on the International Agreement on a Reinforced Economic Union. TASC's Tom McDonnell was one of those invited to address the Committee, along with Dr Alan Ahearne, Professor Karl Whelan and Professor John McHale. Tom's presentation is available here, and there is also a thread on the hearing over on Irish Economy. Comments?

Major state investment plan needed for recovery

Writing in today's Irish Times, Paul Sweeney says: "All are agreed that Ireland is in deep trouble. However, there is now clear evidence that the level of austerity being imposed is causing damage. While it is important to be upbeat, policymakers must base their prescriptions on evidence, not on hope. There appears to be a growing intolerance of those who are critical of current failing policy, even as the evidence becomes overwhelming".

Click here to read the full article.