Barter economies are basically a myth

Most of us imagine that before currencies came along economies worked something like this:

Say, you made bread but you needed meat.

But what if the town butcher didn’t want your bread? You’d have to find someone who did, trading until you eventually got some meat.

In an article for the Atlantic, Ilana E. Strauss makes the argument that:

…various anthropologists have pointed out that this barter economy has never been witnessed as researchers have traveled to undeveloped parts of the globe. “No example of a barter economy, pure and simple, has ever been described, let alone the emergence from it of money,” wrote the Cambridge anthropology professor Caroline Humphrey in a 1985 paper. “All available ethnography suggests that there never has been such a thing.”………..When barter has appeared, it wasn’t as part of a purely barter economy, and money didn’t emerge from it—rather, it emerged from money. After Rome fell, for instance, Europeans used barter as a substitute for the Roman currency people had gotten used to. “In most of the cases we know about, [barter] takes place between people who are familiar with the use of money, but for one reason or another, don’t have a lot of it around,” explains David Graeber, an anthropology professor at the London School of Economics.

Barter economies were mostly hypothesised by people, notably Aristotle and Adam Smith, who lived in economies with currencies and wanted to explain what might have preceded them. They missed many of the subtleties of how such systems actually worked:

Communities of Iroquois Native Americans, for instance, stockpiled their goods in longhouses. Female councils then allocated the goods, explains Graeber. Other indigenous communities relied on “gift economies,” which went something like this: If you were a baker who needed meat, you didn’t offer your bagels for the butcher’s steaks. Instead, you got your wife to hint to the butcher’s wife that you two were low on iron, and she’d say something like “Oh really? Have a hamburger, we’ve got plenty!” Down the line, the butcher might want a birthday cake, or help moving to a new apartment, and you’d help him out.

On paper, this sounds a bit like delayed barter, but it bears some significant differences. For one thing, it’s much more efficient than Smith’s idea of a barter system, since it doesn’t depend on each person simultaneously having what the other wants. It’s also not tit for tat: No one ever assigns a specific value to the meat or cake or house-building labor, meaning debts can’t be transferred.

Asking economists about gift-giving misses the point

If we just bought ourselves stuff that would probably be more efficient but efficiency isn’t the point

It is the time of year for writers at publications that major on economics, finance and policy to trot out the economic case against gift giving.

These articles largely recycle the intellectual labour of the economist Joel Waldfogel. He has argued that:

As an economist, I see gift giving as a method of resource allocation that is entirely free of all of the good disciplines that we usually attribute to economic decision-making.

Normally we only make purchases for ourselves if we see something that’s worth more than the price. If we see something that costs $100, we buy it only if it’s worth at least $100. So normally, spending actually creates satisfaction. In fact, in dollar terms, normally the satisfaction associated with any amount of spending exceeds the amount of spending that occurs.

With gift giving, I’m buying something for someone else, so I don’t impose that discipline — I can’t, really. I don’t know what you want. I don’t know what you need. So I can spend $100 on you, and I might turn out to be unlucky and buy something that’s worth, well, in the worst case, nothing to you.

You can pick holes in this as an economic theory. For example, you might know less about my preferences than I do but you are also familiar with a different range of good and services than I am. For example, my secret santa from a few years ago knew fewer details of my love of Star Wars than I did. However, she did know that I loved Star Wars and that she could buy a coffee mug that looked like R2D2! Routinely making purchases that someone prefers to what they would likely be impossible but doing it once or twice a year feels doable. To be fair, Professor Waldfogel has used survey evidence to get empirical evidence to support his theory, so I am prepared to accept that the effect he highlights predominates over the effect I just highlighted.

However, that is only a knockdown argument if what we do indeed “see gift giving as a method of resource allocation.” That this is how Professor Waldfogel thinks in these terms is unsurprising. He is a microeconomist and that discipline is essentially geared towards assessing the costs and benefits of commercial transactions in a marketplace. The test it uses for that is whether the greatest quantity and quality of stuff  has been got into the right hands at the lowest cost. But this perspective only deals with half of the issue at hand. Gifts may come from the commercial realm but they do not stay there. You may buy a gift from a commercial entity – creating a conventional buyer and seller relationship – but that gift then moves out of the marketplace and into the more personal domain of families and friendships.

At this point, it starts making more sense to listen to anthropologists than economists, and they have built an entire subfield exploring gift giving and how it fits into a broader pattern of social relationships. This confirms what your intuition probably suggests, that we give gifts not only to get people more stuff they want but also to reinforce social bonds. It is, therefore, a mistake to think of the benefits of gift giving as the combined value of individual gifts minus their costs. Rather it is that plus the sense of reciprocity and solidarity created by the ritual of gift giving.

For example, Professor Waldfogel worries that the most wasteful gifts are those giving out of a sense of obligation to people we don’t have much contact with. But isn’t part of the point of giving them a gift to say that ‘despite our limited contacted I still feel a bond with you from which obligations arise’

To be fair to Professor Waldfogel, he does acknowledge the wider social context of gift giving and says that:

It can make both givers and recipients happy in ways that buying for oneself might not. So jumping to the conclusion that people should stop giving gifts is by itself is not necessarily warranted.

As that last sentence indicates, despite the fact that his articles often get given the headlines like “the economic argument for never giving another gift” he does not appear to actually believe that gift-giving is bad per se. Rather, he advocates doing it better by, for example, buying people you don’t know that well gift cards or making a donation to charity.

So popular economics writers this season give economists the gift of not reinforcing the stereotype of them as a bunch of Scrooges and stop writing these irritating articles.

The EU and steel: a forgotten but important story

Paul Krugman’s most recent NYT column reminded me of an incident that I’d largely forgotten about which seems relevant to the current debate about both the Port Talbot steel plant and the EU referendum. Here’s the Guardian from 2003 reporting that:

The US today stepped back from a trade war with the EU and Japan as George Bush lifted punitive tariffs on steel imports.

Mr Bush made his decision just days before a deadline that would have triggered retaliation from the EU, which was preparing to impose sanctions worth $2.2bn (£1.3bn) on US goods ranging from Florida citrus products to Harley Davidson motorbikes.

“These safeguard measures have now achieved their purpose, and as a result of changed economic circumstances, it is time to lift them,” Mr Bush said in a statement.

The measures were designed to inflict maximum political pain on Mr Bush, with the EU targeting products from states that would play a crucial role in next year’s presidential election. The World Trade Organisation last month ruled the US tariffs illegal and said the EU had the right to retaliate.

There are many areas where the EU punches below its weight but trade is not one of them. It is a field where all member states do co-ordinate properly and that creates the world’s largest trade bloc. There’s a power that comes with being the biggest kid on the bloc and discarding that would be a risky move indeed.

Some predictions for 2016

2016

So my predictions for 2015 proved to be rather mediocre. But on the theory that making mistakes is the only way to get better, here are my predictions for 2016.

Like last year, each time I make a prediction I also give it a probability as a %.

This time round I have also chosen some long shots that I don’t think are as unlikely as generally assumed.

The predictions in bold are the ones I will tally up at the end of the year.

UK POLITICS

All of the main party leaders will still be in place come the end of 2016. Individually I rate their chances of survival thus:

  • David Cameron (60%)
  • Jeremy Corbyn (70%)
  • Nicola Sturgeon (80%)
  • Tim Farron (95%)
  • Nigel Farage (80%)

N.B. I am counting this as 5 separate predictions rather 1 big prediction. Indeed the probabilities I have chosen imply a leader going.

If there is a vote on leaving the EU this year then I predict the UK will vote to remain (55%).

Sadiq Khan will become Mayor of London (50%). The fractious mood of the electorate and the strange personality driven nature of this election mean I am not discounting the possibility of a win by an independent or minor party candidate (10%).

The SNP will remain the largest party at Holyrood (90%) and will keep their majority (80%). Labour remain the main opposition (75%).

Labour stays the largest party in the Welsh Assembly (80%) but falls short of a majority (60%).

US POLITICS

 The Democrats will nominate Hilary Clinton (90%).

The Republicans will nominate Marco Rubio (35%).

If Hilary takes on either Trump or Cruz, she will win (80%). If she takes on Rubio, he will win (70%).

The Republicans retain the House (80%) and the Senate (70%).

ECONOMY

I interest rates in both the US (70%) and UK (60%) to be higher at the end of the year than the start. Nonetheless, I still expect unemployment to be lower in both countries (60% – 2 separate predictions for the different countries).

By contrast, I anticipate that the Eurozone will remain weak enough that the ECB will not feel able to raise rates (70%).

Chinese growth will be soft by Chinese standards but it will comfortably avoid a recession.

India will grow faster than China (65%).

Box Office

I anticipate that the highest grossing film released in 2016 will be Star Wars: Rogue One but as it is released in December it will, like the Force Awakens, end up with its earnings split between two years and therefore be unlikely to top either of them.

The battle for the top slot in both the US and globally will come down to a battle between superhero films. Which considering those films are Captain America: Civil War and Batman v Superman is rather apt. I’m somewhat hesitant to opt for Civil War. That’s partly because I was burned by choosing a Marvel film last year and also because I sense that audiences have ever so slightly cooled on the franchise. And with two films with such similar premises coming along Batman v Superman probably benefits from going first. Nonetheless, I’m choosing Captain America: Civil War as my top grossing film both in the US (30%) and worldwide (40%). The main reason is that to come out on top Warners and DC would have to dramatically change precedents. Age of Ultron, the last big Marvel team up movie, grossed $1.4 billion worldwide. By contrast, Batman v Superman’s predecessor Man of Steel grossed only $0.6 billion. Now we can assume that Batman’s presence will expand the new film’s haul but I doubt it will be by enough. His last big screen outing Dark Knight Rises drew in about a billion dollars. And there are good reasons to doubt this pattern will be broken. Marvel produces more child friendly fare. And its quality is more consistent: every single film in the Marvel Cinematic Universe has a higher score on Rotten Tomatoes than Man of Steel.

I’m less confident that Civil War will coming out on top in the US than globally because I see Independence Day: Resurgence as a contender in the market whose national holiday it’s named after but not more broadly. Though given the precedent of Jurassic World I’m not going to totally discount it.

I wonder if X-Men: Apocalypse might be a dark horse.  In the past, the X-men films have been much smaller than Marvel but I sense there’s some momentum coming out Days of Future Past and if they treat Jennifer Lawrence as the lead – at least for marketing purposes – then they might be able to do very well. But I put the chances of that happening at just (5%). Counting against that probability is that it’s released only a few weeks after Civil War, so they may cannibalise each other’s audience. A fact that counts against both of them.

The UK box office is probably even more open than the US. UK audiences seem less enamoured of superheroes than their American and Asian counterparts. For example, the last Captain America film wasn’t even among the year’s ten biggest films at the UK box office.  Therefore I’m choosing Harry Potter spin-off Fantastic Beasts and Where to Find Them (25%) to top the UK box office. I also wouldn’t discount the prospect of an Inbetweeners or Fully Monty style local hit pipping the Hollywood behemoths in the UK while, of course, remaining an also ran elsewhere (10%).

Oscars

Hard to make many predictions for these given how many potential contenders haven’t yet been released yet but going by chatter alone DiCaprio winning best actor for his part in the Revenant (50%) seems like a good bet.

I’d also be prepared to venture that Cate Blanchet will win best actress for the title role in Carol (35%). She delivers a great performance in the kind of lush drama the academy likes. Also deciding to make a bold progressive statement by doing something that’s no longer bold nor especially progressive would be classic academy behaviour.

TV [Spoilers]

Peter Capaldi will announce he’ll leave Dr Who (80%).

Game of Thrones series 5 [and remember there is going to be a spoiler] will not begin with the mutinous Nightswatchmen burying Jon Snow and then moving on (100%).

The global economy graphed

world-economy-gdp-voroni-a7d4.0

The map above divides up global GDP between countries and how those national economies break down by sector.

My main observation are that:

  1. Wow, the American segment of that graph is big!
  2. While Asia may be rising but it has not yet risen. A similar observation can be made about Europe’s decline. Medium sized European countries like France, Britain and Italy still make up a sizeable share of the World Economy. Germany’s economy is almost twice the size of India’s. Indonesia has a population fifteen times larger than the Netherlands but their economies are about the same size. Hence, while things like the Eurozone crisis might seem like purely regional affairs they matter for the World as whole.
  3. There are 54 countries in Africa. Not one of them has an economy larger than Austria. Indeed, the entirety of Africa’s economy can be found in the small South African section and in the modest ‘rest of the world’ one.

Hat tip: Vox

Don’t dream federalist dreams

The European Union is an immense force for good. A European state could well wreck all of that.

The European Union is curious thing. It’s not a state but nor is it a mere international organisation like the World Health Organisation. It has a currency but doesn’t collect its own taxes. Its laws override those of its member states but it has no police force to enforce them. It has a foreign policy but not an armed forces.

In a recent article for Vox, Dylan Matthews makes it clear he wants to see that change. He sees the Greek crisis as evidence that the EU’s semi-state status isn’t working: it constrained Greece from devaluing its currency and lowering its interest rates but did not enable automatic fiscal transfers from less battered parts of the Union. He wants to see the EU become a federal government al la the USA.

His case is partly economic:

A European superstate…. would create a common banking system and establish redistribution at the national level. Imagine if such a system had been in place when the 2008-’09 recession hit. Greece still would have suffered more than Germany — but its banks would not face the same risk of failure, and it’d be getting billions upon billions in welfare payments from the federal European government. They’d still have a recession — all of Europe did, after all — but it wouldn’t have been anywhere near as bad.

And also political:

Even since the European Coal and Steel Community, the idea was to grow closer economically so as to grow closer politically and culturally. After World War II and the generations of European wars that had preceded it, ensuring that war on that scale could never happen ever again was an absolute imperative.

European integration was a way to do that. It appears to be working. But the economic crises that have plagued the EU in the past few years are inherent to this current model of partial unification. In order to fulfill the European project of replacing the old, war-torn Europe with a new, peaceful, stable Europe, it has to complete the process of unification.

The EU has indeed been a great success. But what it has successfully done is provide a mechanism by which European states can co-operate. It does not follow from that it would be a good idea for it to supersede those states.

‘The United States of Europe’ (USE) would almost certainly be a dysfunctional entity. This point is illustrated by precisely the precedent Matthews invokes for it. America is still hobbled by the compromises made two centuries ago that made its initial inception possible. The fear of the states that their voice would not properly represented within the new union created an exhaustive set of systems to ensure they were. The problem was that all these supermajorities, constitutional restrictions of the role of the federal government and the like was that they make it hard for the US to make necessary decisions. Witness, for example, the absurd the spectacle of the federal government shutting down if no less than three separate entities cannot agree among themselves about the contents of the annual budget.

Now the new European State could theoretically avoid these pitfalls and create a constitution that allowed for effective decision making. However, that seems unlikely because the current EU certainly hasn’t. The treaties that serve as its constitution can only being amended with the unanimous agreement of all member states. Therefore, any change could theoretically be blocked by a Maltese government that represents just 0.08% of the EU’s population. In this context, it seems likely that the mechanisms for redistributing resources from rich to poor members would have to be pretty miserly not to be vetoed by those who’d wind up paying for them. Thus the USE flounders: its creation as a successful entity would require finding a solution to a problem for which it is supposed to be the solution!

Indeed, the entire notion that greater trust will arise from deeper integration looks suspect. The creation of a monetary union has lead Greece and Germany to share not in fraternal feelings but in misery and resentment. Unfortunately, the USE would probably be unusually prone to such mistrust because it doesn’t have a lingua franca:

A new paper* by Bodo Steiner and Cong Wang, two economists at the University of Southern Denmark, reach the conclusion that less linguistically diverse countries tend to prosper (rather than the other way round). Messrs Steiner and Wang set out to find the relationship between linguistic fragmentation and social capital. Social capital itself can be hard to define, but a few scholars have nonetheless put a number on it. Three scholars led by Dan Lee of Sungkyunkwan University in South Korea created an index** of 72 countries across criteria like trust (a feeling of societal fairness, confidence institutions like government, political parties and the press); norms (corruption, the rule of law, the prevalence of tax evasion and benefit fraud); and networks (for example how likely people are to join religious groups, arts and sports clubs and the like). Countries with high levels of social capital tend to be richer.

They also tend to be more linguistically homogeneous. Messrs Wang and Steiner found that the number of language spoken in a country is significantly negatively correlated with social capital…the authors…[plotted]…the probability that two citizens will speak the same first language against social capital. These measures….[were]…closely (negatively) correlated. Despite headline-grabbing levels of immigration, countries like Denmark and the Netherlands remain linguistically highly homogeneous; they also have the highest rates of social capital in the data set.  Uganda and India fall neatly along the trendline at the other end.

This makes sense: how much harder must it be to bridge social divides when those on each side can’t talk to each other?

Now, one could reasonably argue that many nations started out culturally disparate and later became more cohesive. In fact Matthews does:

It’s not unheard of for a young political union to be disharmonious, and for that disharmony to be worsened by its decentralized political institutions. In 1950, just a year into the European experiment, the Norwegian foreign minister wrote an essay in Foreign Affairs comparing Europe at the moment to the early American colonies, which were in some ways even more disparate and divided than the European nations. The foreign minister didn’t quote Benjamin Franklin’s 1754 “Join, or Die” political cartoon, but he might as well have. The colonies unified to fight the British, and then over the next century continued to build an ever-closer union because it was more effective, and because a weak union created too many problems.

Yes but a clear majority of citizens of the new nation already spoke English. And even then it took two wars to create a cohesive USA.

There are examples of successful examples of building nations from a polyglot population: Indonesia is perhaps the best example. However, the process of achieving this has often been rather unpleasant. It usually involves the suppression of national minorities and allows people who already speak the national language to gain social privilege. It’s not something that’s really compatible with the EU’s commitment to equality and diversity. So it seems likely that the USE would have to muddle through Indiaesque with its populace living in linguistic silos and needing an army of translators to make its government work.

There’s also the rather unfortunate fact that efforts to instil patriotism in the people of a new nation can easily tip over into creating an unfortunately aggressive form of nationalism. This perhaps explains America’s propensity to brash unreflective “USA, USA, USA”ing. Or looking at a vastly more extreme example: it’s probably not a co-incidence that the two European nations that spawned fascist regimes had only a few decades before been united from a succession of smaller principalities. It would be a cruel irony if a Union that has so successfully contained the harm European nationalisms cause, were itself to give rise to a harmful European nationalism.

It’s also probably worth noting that the greater demands of nationhood would probably exclude peoples who might otherwise belong to the Union. Are the French or Austrians really going to want Turks, Serbs and Macedonians as their compatriots? Countries like Britain and Greece that already find the being part of the club a difficult prospect would probably choose to depart. Thus an attempt to deepen European integration would probably wind up narrowing it.

All of which is to say that Europe is not a nation and should therefore not become a state. There are less difficult and dangerous routes out of the present difficulties in the Eurozone. Its members could push forward with a banking union and create better mechanisms for transferring resources to member states in distress. Or failing that the currency union could be dismantled, a painful enterprise fraught with risks. Nonetheless, the risks of returning to a recent and tolerably functioning past would be fewer that striking forward on the basis of dubious speculations about a future that might be.

Capitalism in the Socialist Republic

95% of Vietnamese tell pollsters they back a capitalist system: more than any other nation in the world. How to square that with the fact that Vietnam is still notionally Communist?

The Saigon skyline now dominated by block of luxury flats and the offices of large companies

That most guidebooks to Saigon recommend going to see a building called ‘the Ho Chi Minh City People’s Committee Head Office’* is perhaps somewhat surprising. Its name makes it sound like it should be a rather ugly piece of concrete brutalism. In fact, it’s a rather stylish piece of colonial architecture built by the French to serve as Saigon’s Town Hall. That’s still basically the job it does today. When the city fell to the Communist’s in 1975, its municipal government was rebranded as the ‘People’s Committee’ and made subordinate to the Party but kept its old base. However, it did not keep the prominence it once had. The People’s Committee building is now dwarfed by the Vincom Centre, an upmarket shopping centre just over the road.

That a commercial building, which is far from the largest in Saigon, now looms over the centre of state power in Vietnam’s largest city is a fitting symbol for the extent to which global capitalism has made itself at home in the country. A private sector that the Communist Party once tried to abolish is stronger than ever. As wages in China have risen, it has become a less attractive place for many of the Western firms looking for a place to outsource jobs. In many cases they have turned to Vietnam as an alternative. While doing teaching training in Hanoi, a traditionally less commercially orientated city than Saigon, I found that most of my classes were learning English to help them get jobs in finance. And a freewheeling informal capitalism of street stalls and small shops is still very much alive.

What is truly remarkable, however, are Vietnamese attitudes towards the market economy. 95% of those Vietnamese surveyed by Pew agreed with the statement “most people are better off in a free market economy even though some people are rich and some are poor”. That’s more than in any country surveyed, double the share in some countries like Spain and Greece and 25% than in the supposedly uber-capitalist US. That a communist country should be home to the most consistently capitalist people clearly requires explanation.

Support for Free Market System

Part of it may be that a market orientated approach is clearly getting results for Vietnam. It has not quite matched the staggering rates of economic growth achieved by China but it is not far behind. At present it is doubling the size of its economy roughly every decade.

Conversely, the Vietnamese have had recent experience of a socialist approach not working. Having gained control of the south of the country in 1975, the Communists would attempt for almost a decade to impose socialist policies upon it. This resulted in precisely the kind of inefficiency one associates with centrally planned economies: shortages, unfilled quotas and resources squandered on unviable projects. The country saw such massive inflation that a sandwich from a street stall now costs 20,000₫ and despite substantial Soviet support was falling deep into debt. The confiscation of private property and new restrictions on trade also proved provoked a substantial amount of hostility towards the party. Facing national ruin, the party changed course. Provincial party chairs in the south were given scope to experiment with more economically liberal policies. When these produced positive outcomes, their architects used them as a springboard for promotion to positions of power in the national Party. This in turn allowed them to disseminate these policies across the country as a whole.

A natural if rather smug conclusion to draw from this is that the Vietnamese have such a high regard for capitalism because they have tried the alternative. This is not wrong but I suspect the note of free market triumphalism is nonetheless misplaced. It doesn’t account for why the Vietnamese population view capitalism more favourably than do the Chinese despite the two countries’ similar trajectories and the fact that China has grown even faster.

I wonder if the difference is down to inequality. Vietnam is a substantially more egalitarian place than China. I’ve blogged before about the huge disparities within China: the average income in Macao is over $90,000, while in Yunnan it’s less than $1000. That’s the equivalent of having Luxembourg and South Sudan within a single country. The Vietnamese government has kept a lid on this in particular by more pro-actively redistributing revenues from richer regions to poorer ones. So while China now has levels of income inequality roughly on a par with the US, Vietnam’s levels are similar to those of European countries like Spain and Italy. The two countries also have similar life expectancies and literacy rates even though GDP per capita in Vietnam is less than half that in China.

One might therefore infer from the Vietnamese experience that the best way to prevent inequality eroding support for the free market is to prevent inequality from emerging in the first place.**

*Notwithstanding the official change of Saigon’s name to Ho Chi Minh City, I am referring to it by its old name as I figure this will be more familiar to my mostly Western readership and because it is still widely used in Vietnam.

**This suggestion should not detract from the fact that inequality has risen sharply in Vietnam since 1986. It has just not risen as fast as in many other countries.

Five big reasons NOT to vote Green

That it will hurt the Labour Party is not one of them!http://www.brightonhovegreens.org/assets/images/site_graphics/national/green_party_lockup.jpg

Britain has seen a swing towards the Green Party comprised mostly of young people concerned with social justice and climate change disenchanted with mainstream politics. Here are the main reasons I think people these are precisely the kind of people who should be horrified to see the Party on the up:

1. Their policies on trade amount to locking poor nations out of the world economy.

We are currently witnessing the fastest reductions in poverty in human history as a result of export driven growth in poorer nations enabled by a new era of free trade. Despite this the Greens claim that “free trade means freeing the powerful to exploit the vulnerable” and want to create more localised economies. They would therefore put barriers in the way of those living in the developing world to export to West and harness its greater spending power to pull themselves out of poverty.

2. They oppose nuclear power, the most viable way to produce energy without worsening climate change.

In 2012 the environmentalist Mark Lynas recanted his opposition to nuclear power noting that 70% of low carbon electricity in the UK is produced by nuclear power and noted words of another convert George Monbiot that:

The efforts some people will make to destroy a low-carbon technology are remarkable. We are facing perhaps the greatest crisis humanity has ever encountered – runaway climate change – and instead of tackling the source of the problem (fossil fuels), environmentalists are attacking one of the solutions. People will look back on this era and wonder how such madness took hold.

The Greens are very much proponents of such madness.

3. Their policies would make Britain’s housing shortage worse.

House prices in Britain are rising to ruinous levels. The reasons for this are not hard to fathom: our population has grown but the amount of housing available hasn’t. Britain has extremely restrictive planning laws in particular our cities are encircled by Green Belts that prevent them from growing organically. So the laws of supply and demand take effect and prices rise remorselessly.

This benefits those who already own homes (who are generally older and richer) at the expense of those who don’t (normally younger and poorer). Thus the organisations that defend the Green Belt tend to be those who supporters are old and rich: the Conservative Party, the Daily Telegraph and the National Trust.

It’s, therefore, very odd to read the Green Party promise that they will “retain and rigorously strengthen Green Belt legislation.”

4. They’ve only held power in one place and have made a total mess of it.

To date the Green’s have led one council: Brighton. Their record wielding power there does not suggest they deserve more of it.

Erstwhile Green sympathiser Memphis Baker wrote in the Independent that:

In Brighton, the constituency of Caroline Lucas, the Green Icarus has flown close to the sun already. Bin strikes hit the city in 2013, leaving seagulls to peck at piles of rubbish: a plan to have a referendum on a hike in council tax was dropped as it would have cost more to run the vote than would have been recouped; Brighton’s recycling rate has actually dropped, with the council’s record now 302nd out of 326.

5. They are as likely to break their promises as any other politicians.

For six years I was a local councillor on an authority that had a sizeable group of Green councillors. In general I got on well with them but they were as prone to the kind of game playing that so frustrates voters. They could engage in gesture politics, scaremongering and fudging what they actually meant when it suited them. Most depressingly, their alternative budgets were often astonishingly implausible, piling optimistic assumptions upon imagined revenue streams. The example that particularly stuck in my mind was them proposing a hotel tax that the council had no legal power to impose!

In short, the reason that the Greens have not let the people who vote for them down again is that, outside Brighton, they’ve not had the chance yet. I strongly doubt that given power at a national level they would be able to deliver their pledge to bring down the deficit without cutting public spending. It would require them to raise vast amounts of extra tax revenue while doing a lot of things that would probably reduce the size of the economy from which they are trying to extract that revenue. In short, we should treat claims by Green politicians that they would end austerity with the same scepticism we would any other political claim.

Vietnam is a country not a war

Say ‘Vietnam’ to someone from Europe or North America and the word that is almost certain to come to mind is ‘war’. This lamentable tendency to focus on a narrow slice of the past ignores how important the country is likely to be in the future.

Homo sapiens have lived in the land that now constitutes Vietnam for more than three thousand years yet in the English speaking world we only seem interested in about 20 years of that history: those during which Americans were fighting there.

This fact became rather obvious to me when I started looking for books about Vietnamese history. The war is covered in exhaustive detail: if want a book about a particular unit or piece of kit then chances are it exists.* By contrast, I’ve so far found only a single English language history of Vietnam for a general reader. It’s over a 1000 pages long and a friend who’d read some of the authors other work concluded he was ‘a tool’. Which probably explains why I’ve not been able to motivate myself to get beyond page 85!

This neglect is lamentable – though one I didn’t even notice until I decided to move to Vietnam – because Vietnam is an important country in world affairs and is likely to become more so in the near future. Here are some reasons why:

  1. It’s big. It has a population of 90 million people which makes it the 14th largest country in the world. It’s therefore larger than any of Egypt, Germany, Turkey, Iran, France, Thailand and the UK and South Africa: all of which are discussed much more widely in the Western press.
  2. It’s a rapidly growing economy. Since reforms began in 1986, it has moved from being a closed socialist economy to an open market based economy. That has led to an impressive growth rate: it has taken it a little more than a decade for Vietnam to double the size of it economy. Therefore, knowing about Vietnam may be literally as well as figuratively profitable.
  3. It’s geopolitically important. The curse “may you live in interesting times” is supposedly Chinese. This is fitting because bordering the rising global superpower is making things ‘interesting’ for Vietnam. The BBC correspondent Mark Mardell has warned about it becoming ‘the Ukraine of the Pacific’. Watch with interest how Vietnam charts a course between China and the US.
  4. Political controversy. The desire on the part of the US and other NATO countries to pull closer to a potential ally against China has and is likely to continue to run into anxieties over the Communist Party’s less than stellar human rights record.
  5. There’s a large Vietnamese diaspora. Over 3 million people of Vietnamese ancestry now live outside Vietnam, many of them in those countries that routinely reduce their country to a historic battlefield.

So even if you are not planning to move to Vietnam, it’s still worth finding out about. As my struggles finding books implies I’ve not got a huge amount to recommend that might help you. However, I did find Vietnam: Rising Dragon by former BBC correspondent Bill Hayton a good place to start.

 

 Next on Matter of Facts: Why Britain needs more Vietnamese food.

 

*It’s largely besides the point here but when I say histories of the War are ‘exhaustive’, I actually mean books about the American side are. English language discussions of a war in which the majority of the combatants and casualties were Vietnamese often reduce them to cameo roles. Even the actual fighting and diplomacy are often to relegated to discussion of ‘Vietnam’ as an inspiration for protest songs, movies and talking back to your parents.

Memo to Natalie Bennett: Not everyone in India is poor

The Green Party leader thinks being poor in India isn’t as bad as being on benefits in the UK “because at least everyone else there is poor too.” This suggests Ms Bennett has a strange view of India.

Business magnate Mukesh Ambani’s $1 billion mansion in Mumbai’s business district

 

A House in Mumbai

The house of Mukesh Ambani is a rather remarkable property. Forbes magazine describes this structure in Mumbai’s business district thus:

The twenty-seven story, 400,000-square foot skyscraper residence, named after a mythical island in the Atlantic, has six underground levels of parking, three helicopter pads, a ‘health’ level, and reportedly requires about 600 staff to run it. It is the world’s most expensive home far and away with construction costs topping $1 billion.

As you might have gathered Mr Ambani is a phenomenally wealthy man. The managing director and majority shareholder of Reliance Industries Limited has a net worth of upwards of $23.6 billion. He is far from being the only billionaire in India: there are at least a hundred others.

‘At least everyone else is poor…’

Men (and a much smaller number of women) like Mr Ambani came to my mind today while reading about what Green Party leader Natalie Bennett told the Economist’s Bagehot columnist:

[The Greens] talk about the world sparingly and mainly to illuminate leftist British issues. They are broadly against consumption, for example: “The world is sodden with stuff, it cannot have more stuff,” said Ms Bennett. Yet they do not appear to have considered what that would mean for billions of the world’s poorest people, almost none of whom live in Britain. When Bagehot suggested to her that there was a problem with this, Ms Bennett said he was worrying too much: to be poor in India wasn’t so bad as to be on benefits in Britain, she suggested, “because at least everyone else there is poor too”.

I disagree with the sentiment of the entire piece. Nonetheless, it was this final sentence that struck me as a particular clanger. India is second only to Africa as a recipient of condescension from rich westerners. Ms Bennett’s image of Indian’s contentedly living in shared poverty is as patronising as it is untrue. It is true that Indian has more people living in absolute poverty than the whole continent of Africa. But it also has a middle class numbering 250 million. The World Bank estimates that statistically speaking the gap between rich and poor in Britain and India is virtually identical. However, those statistics don’t really capture the starkness of that divide because it is often the divide between comfort and desperation, between your children being malnourished or not, or between having running water or not. What’s strange about this point is that it even needs making. These kinds of divides in Indian society are obvious as soon as you step off the plane. That’s not much of an exaggeration: during my taxi ride from Mumbai airport to my hotel a few blocks away from Mr Ambani’s pad, you could see people sleeping rough on the steps of massive branches of multinational banks!

Benefit of the doubt?

There are a few points that could be said in Ms Bennett’s defence. Firstly, she claims that the Economist’s article did not accurately reflect what she said. But her explanation of the purported error seems more like an elaboration rather than a correction. She clarifies that she was talking about relative rather than absolute poverty, which seemed to me crystal clear from what appeared in the Economist though not necessarily from the coverage that followed. However, I’d suggest that doesn’t really deal with the point we’re discussing here. If you’re worried about comparative poverty then you probably want politicians to realise that the second most populous nation on earth has rich people as well as poor ones.

Secondly, we could perhaps excuse her some sloppiness given that she was speaking off the cuff. However, one would have to be a very indulgent soul not to see her comments as reflecting poorly on her. Apart from anything else she actually has a degree in Asian Studies, so this is a point that really should have been familiar to her.

New India, Old India

Finally, I suppose she could (in the unlikely event that she addresses what I’m saying here directly) respond that it’s all very well for me to come along with my anecdotes about what’s going on in Mumbai where neo-liberalism has taken hold but she was talking about life in the traditional rural communities where the majority of Indians still live. This is fair enough up to a point. However, I would observe that the figures on inequality I mentioned earlier were for the country as a whole including both towns and cities. It is also not as if rich Indians only emerged with economic liberalisation in the 1990s. In the 1940s, when India was still a firmly rural and agricultural society, Osman Ali the prince of Hyderabad was reputed to be the richest man on the planet. And even in an Indian village where there is something approaching material equality, there may well still be deeply unpleasant status hierarchies arising from the caste system. How this is being affected by economic growth and the move to cities is a complicated area. However, we can hope that the sheer mass of humanity in large cities will render the most stigmatising elements of the caste system, the notion that the mere presence of a Dalit or a member of another ‘backward’ caste is a form of pollution, will become untenable when living and working in such close proximity to so many people as one does in a city. Lest anyone think these kind of status hierarchies are a peculiarly Indian phenomenon, I would observe that the Duke of Wellington disliked the building of the railways because it would: “only encourage the lower classes to move about”.

Why it matters

I find Ms Bennett’s misapprehensions about India concerning for several reasons:

  • As the Economist’s reporter observed it perhaps speaks to a frequent flaw with leftist thinking whereby they proclaim solidarity with those in less economically developed countries but wind up treating them as props for their chosen narratives. Far from wanting saving from capitalism, a recent piece of research by Pew suggested people living in developing and emerging economies are more supportive of free markets than those in wealthier economies.
  • I would like politicians to have a reasonable grasp of big economic trends like the fact that India is now one of the world’s fastest growing economies.
  • An implication of the Ms Bennett’s comments seems to be that we choose between absolute and relative poverty. In fact, there are countries like Sweden in which both are low and countries like India in which both are high.

Postscript

None of this is to say that there is not a legitimate debate about the role of economic liberalisation and growth in India. Witness, for example, the very public battle between economists Amartya Sen and Jagdish Bhagwati in the run up to the last Indian General Election. It’s just that such debates ought to be well informed and be about India and not the West by proxy.