Tuesday, June 18, 2013

Politics & Economics Ahead of the G-8 Meeting: confusing, insincere or plain politics?

(European Politicians, Robin Hood Tax/Flickr)
Ahead of the group of 8 industrial nations meeting in Northern Island, Jose Manuel Barroso, the European Commission president talked  to the New York Times, European Commission President Criticizes Opposition to Globalization.  While reading this article, I started wondering how come so many of the current political leaders, dealing with the biggest economic challenges in their lifetimes, are not able or willing to be honest about the direction they want to follow and flexible when confronted with evidence against their initial policies. Are they insincere, not that smart, or is this plain politics?

One of the  issues to be discussed at the G-8 meeting is a new trade agreement, a trans-Atlantic accord between the U.S. and the European Union. Barroso specifically criticized France's insistence on its l'exception culturelle, whereby cultural products are treated differently than other commercial products (see also my previous post European Backlash Against Amazon.) In this case, "the French government had successfully argued that Europe's movie and television industry will be excluded from the trade negotiations in order to protect the region's cultural diversity."

“It’s part of this anti-globalization agenda that I consider completely reactionary,” Mr. Barroso said, adding that he believed in protecting cultural diversity but not in sealing off Europe. “Some say they belong to the left, but in fact they are culturally extremely reactionary.”

What mr. Barroso calls reactionary, someone else might call conservative or even progressive for that matter. No matter what,  Barroso, like many other politicians, seems to choose policies out of confusion or insincerity. He is obviously supporting globalization, the same globalization that has caused the downfall of his fellow European countries, such as Greece and Cyprus, not to mention that has brought his own country, Portugal, to the brink of bankruptcy. 

The other issue to be discussed at this G-8 is the state of the economy and the supposed calls from Washington for a retreat from austerity measures. Barroso says:

“We should keep the fiscal consolidation,” referring to the budget cuts and tax increases that are the main pillars of austerity.

If there is one topic a poster child for confusion, then that's the austerity debate. The neo-liberal economists argue for austerity, the Keynesians against. The politicians follow accordingly: the right argues for austerity, and the left against. The leading neo-liberal economic institution, the IMF generally argues for austerity. So far so good, till recently. First, the IMF has admitted "that cutting government when growth is weak, simply leads the economy to contract further."  Then at the beginning of this year the U.S. under its "left wing" administration adopted austerity measures as part of the sequester, but President Obama feels he can still lecture Europe against continuing its own austerity measures. Furthermore, the IMF recently reported that the handling of the Greek bailout by the Troika (i.e. the IMF, the European Central Bank and the European Union) had been wrong, further tarnishing the credibility of these institutions.  And now mr. Barroso, still following the standard neo-liberal policy, and maybe not aware of the changes taking place within the IMF, keeps supporting austerity no matter what. (Again, in his own country Portugal, the discussion is moving in a different direction when its constitutional court judged a few months ago that a number of austerity measures were unlawful.) So, is austerity good or bad? Who knows for sure, what is clear that where austerity measures are being taken, very few citizens are upbeat about it. In the meanwhile, politicians are not open to a real discussion and stay put.

Then back to the discussion about a new trans-Atlantic trade deal, and confusion in politics. Who is pushing this agreement? The smaller EU countries from the periphery? No. The Scandinavian countries in the North? No. It is the host of the G-8 summit, British Prime minister David Cameron, a conservative, who earlier this year released the genie out of the bottle by promising a UK referendum on whether the UK should stay in or opt out of the EU.  Cameron, generally not seen as a great friend of Europe, suddenly wants to be part of a new U.S. -European deal, why? Well, a study released this week by the Bertelsmann Foundation explained that "the greatest benefits will go to the US and to Great Britain (!). Gross domestic product per capita would rise by 13.4 percent in the US and by 9.7 percent in the UK. More than a million new jobs would result in America. That number would be 400,000 in Britain."

It's true that also many other EU countries, notably Germany would gain from such a deal, but according to this study "the rest of the world would likely suffer as a result of a trans-Atlantic free trade agreement, including job losses and slower economic growth." Maybe this deal can address those rest of the world issues, but my bottom line is that when David Cameron is speaking to his Conservative constituents, he commiserates with them about the ineffectiveness of "Europe' and all these useless meetings in Brussels, but when presiding over a G-8 meeting, he suddenly becomes an elder statesman, representing the common good of Europe and the U.S. What is this all about? I have to give these politicians the benefit of the doubt that it's not that they are not smart enough - they clearly are in order to get to and stay in power -; they are probably not sincere enough - and that's where media and the electorate should play their respective roles of policing the politicians and voting them out - but what it is in any case is plain politics. As the Arab spring, Greek, Portuguese, Spanish, Brazilian, Indonesian and Turkish protests show, I doubt whether that's good enough for the challenges of the 21st century.

See for a critical view on the G-8, British MP George Galloway in below video clip from wearechange.org:


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