• Laski - The Roosevelt Experiment - The Atlantic (February 1934)

Harold Laski's 1934 assessment of FDR (hat tip Anthony) is full of echoes for Obama and 2009.

What is different today is that we are now so aware of the 1930s and the parallels. The New Deal invented the restoration of confidence as it went along. It was part of FDR's greatness that he got so much of this muddling blind progress right. But today, we had got used to Bernanke being the expert on the economics of the Depression when Obama appointed Christina Romer, also the expert, to chair the Council of Economic Advisers.

The self-consciousness means that there is a certain script-like feel to the unfolding of the crisis. The car makers ask for a bail-out; the government asks for symbolic humiliation and a business plan; pay-checks will keep being sent ... Little by little, year by year, fear will subside and the the government will slowly retreat.

But if we know this, then what do we need to fear? If the whole process is too script-like, the crisis may be wasted beacuse the period of fear is when public policy can  make change. The change will be slowly dismantled over generations after the fear is over, but, just as the 1930s legislation defined the broad outlines of consumer capitalism for us, so our policy changes over the coming years will define the context (and the countervailing ideology) for three generations of social development. Chicagoism needed Keynes; what we do today will determine the dominant counter-ideology of tomorrow.

Although Roosevelt was right that fear was fearful, that it needed to be conquered to re-establish some normality to the economy, he must also have known that only fear permitted a genuine, if not permanent, reallignment of interests.

Things to absolutely keep on the agenda: anti-poverty, international, green. Ford understood this in the green business plan it offered up to Congress, but was it only for show?

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Highlights from the article

• • He is attempting a revolution by consent; and it is the latter term in his equation that is fundamental to the formation of a judgment.
  • In Europe and the Far East, in fact, force and unreason dominated the minds of men. Traditional values were in the melting pot; and, as in all epochs where basic changes are under discussion, panic and doubt and even persecution prevented any calm estimation of the effort Mr. Roosevelt had undertaken.
  • than the sober conservatism upon which they have been built.
  • a question as to whether Mr. Ickes and his colleagues can discover undeniable objects of beneficent expenditure.
  • For it cannot be too often insisted, as Mr. Keynes has so often emphasized, that capitalism, by the law of its psychological being, needs to be immensely more successful than any alternative economic arrangement if it is to retain the allegiance of a multitude which possesses political power. The disparities of its results are too irrational for any alternative attitude to be possible over any long space of time. And the changed temper was made the more inevitable by the crude optimism of its defenders in the era of Coolidge and Hoover. They had raised the expectations of the multitude to such dizzy heights that their failure to satisfy them was bound to result in a scrutiny of foundations.
  • We must not forget that the election of 1932 was the expression of nothing so much as a demand for this scrutiny by angry and bewildered men who had entered the Promised Land only to discover that it was a desert. In dealing with their discontent, President Roosevelt has shown high qualities of enterprise and courage; but those who doubt the wisdom of his effort ought to remember that unless he had shown those qualities the patience of the multitude would have been brought to breaking point. He is not a revolutionist pursuing some private Utopia by the light of an inner wisdom. He is the logical expression of social forces and could hardly have acted otherwise if he wished to retain the characteristic contours of American life.

TechCrunch reports on the continuing decline of revenues in US newspapers – down $5bn since the start of 2008 compared to 2007. Even online revenues are falling. The “Rusbridger Cross” that was meant to see online revenues rise to compensate for print declines, is looking compromised in the US market. All of this matters a great deal to journalism -- “quality” journalism has, I have argued, always been cross subsidised inside the newspaper. As the fat goes, so will the recipients of cross-subsidy.

I asked David Elstein, well-known media executive and watcher, how the US picture related to what was happening in the UK. Things are even worse here for the commercial sector, he says. Much of this is due to the BBC's dominance. All the more important to understand, then, what the BBC, by its nature, cannot do.

Here is David's reply in full:  

“The US position is largely reflected in the UK. Regional newspaper revenues are particularly hard hit, and companies like Johnston Press and Trinity Mirror have suffered massive drops in value (94% and 89% respectively). That is why Ofcom and the BBC Trust were so emphatic in rejecting the BBC's plan to add video to local news websites.

National newspapers are also suffering revenue declines, but are mostly shielded by parent company finances - even then, thousands of jobs are being cut, and some titles are vulnerable - notably The Independent, which has just run for shelter under Associated's roof. The recession is simply amplifying the long-term drift of ad revenue from print to on-line.

Advertiser- funded television is in serious trouble. Ad rates are back down to 1992 levels, but total ad revenue is still in decline, despite TV viewing levels being seemingly unaffected by online activity. However, much of this damage to ad revenues is self-inflicted. The CRR (Contracts Rights Renewal) mechanism that ITV invented five years ago in order to get the merger of Granada and Carlton through the competition authorities effectively torpedoed the commercial TV market-place. Put simply, it allowed advertisers to reduce their spend percentages committed to ITV (typically, 70% of total budget) year by year in direct relationship to ITV's reduction in delivery of commercial impacts (ie total number of 30-second spots viewed in commercial breaks) - an entirely predictable reduction in a world with ever-growing multi-channel viewing share.

ITV's suicidal policy at first appealed to competitors like Channel Four and five, imagining that revenue leaving ITV would turn up in their pockets, but what actually happened was that advertisers found that the impacts they had been buying from ITV at top of the market prices could be bought much more cheaply elsewhere - so revenue simply drifted out of TV.  In this, the UK was unique - all similar markets saw an average 22% rise in cost per thousand (CPT) over the last five years, whilst the UK suffered an 11% decline.  As I said, we are now back to 1992 CPT, but still cannot pull back the advertisers.

What adds to the pressure on ITV in particular is the guaranteed strength of the BBC, which prevents ITV from cutting its spend on programmes (till now, anyway - rumours are it will be cut by over 10% next year), so leaving it with the lowest operating margins of all similar operators in Europe and the US.

Commercial radio is in similarly poor condition, as the BBC inexorably increases its share of viewing off the back of a massively larger programming budget.

However much we love the BBC, it is increasingly hard to deny the displacement effect of the BBC's strength.  This was well-demonstrated by the 2005 Ofcom Public Service Broadcasting Review, which (without acknowledging such) showed that the high GDP territories with the highest GDP share spent on public broadcasting (the UK and Germany) had the lowest ratio of private spending on broadcasting (1:1), whereas the US, with low public spending, had an 8:1 ratio (ie 8 times as much spent on private broadcasting as on public).  Other West European economies filled the space in between, with a steadily corresponding increase in ratio as the proportion of GDP spent on public broadcasting declined.

In the UK, this effect is felt by commercial TV, local newspapers and commercial radio, and it is exacerbating the exogenous impact of online growth and economic recession.  All in all, a nightmare scenario.

Belgian defense minister lashes out at blogosphere after having his juncket reported.

Of many fascinating things he said, three stood out:

1. that there should be publicly funded financial advisors who are not also selling products. As he said, only the rich get real advice about financial products. Imagine, he said, a world in which we had only drugs companies and no doctors ... This is what we have when it comes to financial health.

This is an application of Lessig's "no shill" principle---this times proposed by Shiller about our shillings:

2. a New Deal is not a return to the Old "New Deal": we have to realise that economic policy, especially in such extreme circumstances, works on animal spirits. And the new spirit that the New Deal ushered in cannot be ushered in by copying the policies. We need to implement policies -- including reflationary policies -- that make sense in the context of the next 100 years, not in the context of the next 100 days. Thinking about 100 days will not change the animal spirits ... indeed quite the opposite.

3. (... and this followed from a question I asked him prompted by "2"): Economists have to become more like Keynes: an understanding of animal spirits requires an understadning of sociology, history, psychology, and responsible economists are one who will integrate all of these in policy pronouncements. He said something like: "I did not become a theoretical physicist. Many economists wish they were theoretical physicists. I admire theoretical physicists. But our responsibility is to understand the wider world." Bloomberg apparently video'd the event. I'll post a link to it if I find it on the free side of their web site.

Since Shiller seems so good at timing his books with great prescience, I think it is important to know that he has a book with George Akerlof on Animal Spirits coming out in March that will be talking about sociology in economics. Now, we just need to work out why that will have been so prescient...

Texans are taking their cues from Londoners these days with the establishment of a CCTV-based surveillance program for monitoring the US-Mexico border. A public-private initiative between the Texas Border Sheriff’s Coalition and the digital surveillance program Blue Servo, the program has erected cameras in areas along the Rio Grande known for drug smuggling and human trafficking. Explaining the need for the cameras to France 24, Donald L. Reay, the executive director of the Texas Virtual Border Watch Program, noted, “We have a pretty open border with our neighbors to the south and bad people could take advantage of that.” Internet users are the eyes of the program. When a user logs on Blue Servo as a “Virtual Texas Deputy” they may select from 11 cameras at various stations along the Rio Grande. At this point they may sit back and let their civic duty take over. When they notice bad people, they can file a report at Blue Servo which will alert the local authorities.

David MacKay, physicist at Cambridge's Cavendish laboratory, has written and made available for download a wonderful looking book: Sustainable Energy: without the hot air. The whole PDF is here. Chapter 1 is here. The book goes on sale in early December here.

The author takes seriously the scientist's role in teasing apart Fact from Value. He -- mostly -- want to give us facts.  Here is from the end of the introduction:

I went straight to the nuclear power chapter, because I think this is the issue where fact and value get most confused. Witness, for example, Mark Lynas's apostasy in the eyes of the Green party after he came out "not-against" nuclear.

David MacKay does a masterful job of the facts on nuclear power. It doesn't make any of the ethical questions go away, but it clears the air.

One of the political implications that I got from the chapter---and this is a forecast, not a desire---is that nature will not do the work for us of forcing change to our energy-hungry way of life. I have often thought of the political configurations around energy/environment issues with this kind of matrix:

Politically and ethically, people sympathise with materialists or simplicitarians. In their judgement of "facts" they tend towards the pessimistic or optimistic in terms of the sustainability of energy-rich life-styles. Value and facts overlap for the pessimist/simplicitarians and for the optimist/materialists.

I am suspicious of conclusions that derive from this convenient overlap. I think of myself in the bottom right corner---a simplicitarian energy optimist. Vast amounts of energy are plausibly available for human use, and nuclear energy does not pose a climate change threat. That is why I think that politics and consciousness need to do the work of changing our lifestyles. Nature will not ride to the rescue.

I have asked David if we could do a group read of the book. He's happy for us to do it, and we are working through the technical headache of translating the book into html. If you'd like to get involved -- and even lend a hand at creating the html, get in touch with me at tony dot curzonprice at opendemocracy dot net.

It comes at the end of a failed enterprise. A day when three small-time crooks inject purpose into their life by planning to steal an American Buffalo, a rare-ish coin. Its value comes from nothing at all except rarity; a collector bought one from them at a knock-down price. The three come to feel that he took advantage of them, that the buffalo is theirs by right. Out of indignation they create meaning. Out of meaning, they develop a project. There is now in their lives excitement, virtue, the promise of glory, cooperation, adventure.The American dream is reborn.

Then the illusion of it hits. Teach's speech is as weary and heavy as MacBeth's "Tomorrow" soliloquy.

(Unfortunately, the moment is not that well captured in the Dustin Hoffman film. As Mamet made clear in an answer to a question in his BBC lecture tonight, plays should be reproducible on radio, and films are the antithesis of this -- if the can be reproduced on radio, they are bad films. "Buffalo" is a real play. It needs the intimacy of radio or a small theatre.)

There are other great moments like this in Mamet. Glengary Glenross has a few and makes a much better film than Buffalo. Watch this clip  and think of how subprime happened.

But however subtle a world he constructs in his drama, it fails disappointingly to translate to the lecture. Culture evolves, and leave it to the market of ideas ... free speech good ... Blues is poetry ... political correctness is un-American ... democracy is bloodless change of power ... the genius of America is Liberty ... small government good. All this is arguable, by others sometimes fascinatingly so (Nozick? Mill?) .

But if you are going to devote an hour to Mamet---and I recommend it---read Buffalo and skip the banalities of his BBC lecture.

Here's a fascinating chart of spam activity on oD's forums for the past 2 months:

So, has Mollom beaten the site spamsters? It certainly looks as if they eventually learn that their spam messages are getting blocked ... Now we just need Mollom to implement this for Drupal 4.7 so we can apply to the main site and I'll be singing the praises of Mollom to all who care to listen.

The big headline is that recession for the next 12-18 months is almost certain.

A comparison with August's forecast is interesting:

Although the shape of the downturn is broadly similar, the current forecast has essentially shifted down between 3/4% and 1.5%. Note also that the BoE has been consistently optimistic in its forecasts---if you look at the balck "ONS Data" line, that is how things actually turned out. You might have thought that the statisticians at the BoE might have learned by now to take the pinch of salt into their own forecasts by now. (Actually, the optimism seems even worse than the graphic suggests. The Quarter 3 out-turn growth was a whisker above 0%, which is right on the outside edge of the outside August probability band. However, the BoE has decided to represent this graphically in the November chart as being on the inside edge of the outside band. (Ah! The rhetoric of charts!)

Anyway ... what we now know is that the BoE thinks we have a nastier and sharper depression coming than it thought in August. It is interesting -- particularly so given the election cycle that sees a general election by May 2010 -- to see what kind of shape they predict for the end of the depression.

Their central estimate is that things are getting better very fast by May 2010, with growth around 2% and the rate of change of growth very rapid --- things have been pretty bad just 6 months earlier. Sounds good for Brown. Indeed, one assumes that an independent bank must play the election calendar into its scenario-building, and must be assuming heavy government action in its central case.

In this respect, it is interesting to compare the August and November inflation forecasts. This is the current forecast of inflation:

And this was the August forecast:

In August, the rate of price growth rate was expected to fall for the whole 3 year forecasting period. Now, inflation starts to rise again (although from a lower base) already by mid-2010. This seems clearly compatible with a change in the basic assumptions about increased government borrwing and a lower sterling exchange rate.

Based on these BoE forecasts, Brown's window for an election in 2010 looks very tight---when incomes have started growing again and before inflation has shown the economy to come out of the depression in a pretty unproductive state.

And remember the BoE pinch of salt -- that will make the window even tighter.

Open Circle, ODD Group

A brief reminder that the theme tomorrow evening, Tue 28 Oct, will be 'Consciousness 2'.
I've had a brief chat with Bob on the phone, who will again chair the session, and I enclose a few additional notes which may be used during the evening.

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-1Consciousness

Additional notes for Tue 28th Oct.

From The Conscious Brain  by Steven Rose - former Professor of Biology, the OU.
(Penguin Books,  Revised Edn,  1976).  

“Consciousness means many things, sometimes simultaneously, often contradictorily.
Thus, it may simply mean a state different from being asleep or in a coma;  the reverse of being ‘unconscious’.  It may be used to relate to the private world of the mind in contrast with a presumed ‘public’ world of observed behaviour.  People speak of ‘altered states of consciousness’ which may be induced by drugs, often implying by this altered awareness or altered perception of the world around.  
Consciousness may have a Freudian meaning in which some human acts, or the motivations for them, occur at a level out of reach of the thinking ‘conscious’ mind with its overt rationalisations,  buried in some relatively inaccessible ‘subconscious’.   Finally, there is the Marxist sense of consciousness.  
The difference between these uses of the term is that whilst most of the earlier ones are essentially static definitions, of consciousness as a ’state’ of being, in the Marxist sense consciousness is a dynamic force which emerges in interaction between the individual and his or her environment….

Consciousness in my sense of the term, is a continuously unrolling, continuously developing activity of minds/brains in interaction with their environment, modified, either temporarily or permanently, by changing circumstances.”