Thursday, March 8, 2012

Barbgate: How Western elites opened the gates and what to do about it

Battle of Lepanto, 7 October 1571, at which the Spanish, 
Venetian and Papal fleets, led by Don Juan of Austria defeated
the Turkish fleet, at Lepanto, near Navpaktos in the  Gulf of 
Corinth. Painting by Sebastian de Caster. Source.
The Slog, or evidence-based bollocks deconstruction (John Ward, Prop.), not only offers among the most entertainingly written political commentaries, but raises real questions never to be seen in the MSM. On occasion, it even attempts the subversive task of answering the questions it raises.

Today, the SLOG poses a question about the ongoing, and ever accelerating decline of the West with such clarity that I have been able to answer it, not only with authority, but with finality and extreme simplicity.

The question, in brief, and stripped of all puns, riddles and scintillating allusions is this:

Europeans, having borrowed their brains out in a many-nation property boom, are now experiencing horrendous debt deflation and mass unemployment.

So, asks the Slog: WTF do we do now? (I paraphrase.)

To which I responded:

You pose the right question, the necessary prerequisite to the right answer, which I am happy to provide.

The reason for mass unemployment in the west is in plain sight. It is the 1994 GATT agreement that opened the Western nations to unrestricted free trade with the rest of the World, which is to say with the teeming masses of Asia, the Middle East and Africa, where hundreds of millions of workers are sweated for pennies an hour.

The reason for the 1994 GATT round is obvious. "Wages plus profits, together, are always the same," as David Ricardo tirelessly repeated. In other words, cheap Asian labor = max western-owned multinational corporate profits.

In the short term, the resultant mass unemployment can be avoided through mass indulgence in debt, to fuel property booms, retail mall construction and the consumption of wonderfully cheap Chinese stuff. But at the point now reached, the cost of debt service approaches total income and the bubbles burst.

There are thus, now, only two ways mass unemployment in the West can be eliminated. One is by a return to protectionism, which is out of the question, given that we are ruled by corporate-owned governments, e.g., the Golden Sacks, Nobel-Peace-Prize-winning, wholly-owned-subsidiary, Barak O'Bomber. The other is through wage convergence between the West and the Rest. That's what governments are working on now.

The Germans are doing rather well in this environment (a) by making Germany Europe's center for snapping together components made by cheap labor elsewhere, and (b) by disciplining the workforce, for example, by requiring the unemployed to take -- what do they call them -- mini-jobs, which provide a few hours of work a week for a few tax-free Euros, which provides some on the job work experience and lowers the unemployment rate.

The rest of Europe wants to adjust the easy way, by debasement of the currency. The Brits are going at it full bore, with six hundred billion newly minted and freshly printed quid in the pipeline fueling the mother-of-all government deficits.

The terminally discredited MerKozy want the ECB to follow the same route. Unfortunately, this would contravene the German constitution. Still, what's a constitution, in the post-
George-Wunfinger-Bush era? Only a goddam piece of paper.

But government "stimulus" spending is a bad idea.

Government spending generates wasteful boondoggles such as windmills that pay the British Prime Minister's father-in-law a thousand quid a day, while generating energy at ten times the cost of that from gas turbines, with little or no net saving in carbon emissions.

What's needed is a full employment policy implemented by means of a job subsidy program.

How does that work?

Easily: the Government auctions job subsidies equal to the full minimum wage. There could be an E-Bay style online auction. Employers bid competitively for the subsidies (for new hires). So if the minimum wage is five Euros, or whatever, an hour, the work year is 2000 hours, and on average subsidies sell for half the minimum wage, each subsidy will cost the Gov. five K a year.

Which means a million jobs will cost five billion. So to create, the approximately six million jobs, full- or part-time, that are required in the UK, the program would cost a total of under thirty billion a year, which is practically less than peanuts, for a government that has 120 billion to spend on land-owning friends and relatives -- I mean windmills.

There is a comment at the Slog, providing a mass of facts and figures confirming my claim that German prosperity depends in large part on snapping together components made with cheap labor elsewhere.

What these data show is that Germany prospers by adding value, through design, assembly, packaging and marketing, to goods made in cheap labor areas, which are exported to high-wage markets. In some cases, German companies "export" directly from abroad, "the made in Germany" label being strictly a book-keeping attribute.

The success of Germany's export model depends on international domination in a zero sum game. By definition, this means that Germany's success cannot be emulated by Germany's trade partners.


  1. Very well put.

    - Aangirfan

  2. Don't forget the Lima Declaration of 1975, nearly 20yrs before GATT. The de-industrialization of the west (and its attendant unemployment) has at least as much to do with Lima as GATT.