Category Archives: Austerity

Trend-Setter: Thilo Sarrazin?

“Coolhunting for the World’s Thought Leaders” is an actual academic paper by actual academics (Peter Gloor at MIT; Karin Frick and Detlef Guertler at the Gottlieb Duttweiler Institute in Switzerland). Its purpose: To create “a novel ‘Thought Leader Map’ [that] shows the select group of people with real influence who are setting the trends in the market.

from “Are These The Most Influential And Trend-Setting Thought Leaders?”

Today, inbetween the identification of operational risks and internal controls (my daily job nowadays), I came across this article about the biggest ‘thinkfluencers’ of 2012.

For my surprise, one of the trend setters happened to be this guy named Thilo Sarrazin, described as someone who wrote a “bestselling book arguing that genetically inferior Kurds and Turks were dumbing down Germany”.

I was surprised not because of the apparent popularity of such arguments in Europe but instead because of the lack of refinement, the rawness, of his discursive practice.

Sarrazin, a trend setter in 2012, is a good old-fashioned, no non-sense, straight shooter racist, using classic xenophobic language in public in ways that few germans have since the Holocaust.

That explains, in big part, his success: he’s breaking the taboo and trying to capitalize from being a frontrunner.

And that’s about it, mostly because his arguments are total shit.

Sarrazin defends two main stands of view: he’s “anti-euro” (“Europe Doesn’t Need the Euro”) and “anti-immigrant” (“Germany Does Itsfelf In”). His book “Germany Abolishes Itsfelf” sold over 1.3 million copies, proving that unconvincing books can convince quite a few readers (here in Portugal such books tend to be read by people who have yet to meet an immigrant).

He’s anti-euro because the southern economies of the euro zone are not ready and have culture and mentality issues that lead to lack of discipline. Because corruption, mismanagement, and indolence are endemic to southern European culture and Germany is being “black-mailed” to bail them out because it perpetrated the Holocaust.

Sarrazin defines himself as a man of numbers; but also as a man of poor sensibility. He believes that human life follows strict rules such as “hereditary factors”. Muslims and southern Europeans are hopeless because there are relevant genetic differences among ethnic groups working against them.

Some, like him, still (choose to) believe that some born smart and some born stupid. Traditionally, those belonging to the elite tend to think they born superior as a mean to justify their priviledges.

I don’t know if intelligence (or economic performance, for that matter) is hereditary.

I think one may have all the potential in the world but he’ll need the right conditions to make it grow. Inteligence (another arguable concept by itself) can be a difference maker in a world in which we all share equal opportunities; but it plays a minor role when we compare individuals in different contexts.

The real magic happens when people have the creativity and the ability to transcend the rules and prove reductionist theorists like Thilo Sarrazin wrong.

Let’s hope to get inspired by more open-minded, forward-thinking  trend-setters in the future. Let’s get inspired by those who approximate people, instead of separating them; by those who work to find solutions, not to agravate the problems (normally promoting their own personal agenda).

As for us Europeans, an isolated Germany serves no one.


What we really pay taxes for

«Taxes» must be the most employed word in Portugal these days and with tax increases always comes the same question: what do we pay taxes for?

Those on the right side of the political spectrum can give you a clear answer: for nothing (unless, of course, there are ‘urgent’ and ‘unavoidable’ needs for ‘budgetary consoliation’, as we, they say, experience today).

Hardcore neoliberal policy markers often defend the called ‘trickle-down economics’ approach, arguing that tax cuts on the rich, at expense of cuts on the welfare state machine, «the fat», would pump both savings and investment, leading the way to the construction of vibrant societies. Such circumstances, they would continue, constitute environments prone to economic growth and job creation, benefits shared, in relatively equal fashion, among all citizens of a country or region.

Short version of the story: the rich get a banquet, while the poor put on a fight for the crumbs. That’s ok, that’s just normal not to throw privileges out the window.

Culturaly speaking, most common arguments from the right emanate from prejudiced conceptions of «the poor» as lazy, perhaps drunk, perhaps dirty, primitive, weak and most certainly unvirtuous – as an object or some sort of a dead body, with no soul. A zombie. The decent folk, they say, must not carry such weight on his shoulders. Autch, be aware of the back spasms sir.

However, and here starts the interesting part, the right is not alone such dehumanizing discoursive practices. The leftist rational for charging taxes to feed of the social state has been disappointing so far and it goes something like this: «the poor are not so well off as we [the rich], they are victims of quite a lot of hard luck and it won’t hurt us to give them some help». Oh thank you my lord for such kindness and generosity!

Such ‘paternalism’ derives itself from unfairness, verticality and distance, reinforcing the oppressive structures operating within our societies. Charity represents an act of oppression as long as it does not imply a real feeling of «togetherness», a feeling of unity around the common struggle against a system that exploits some in benefit of others.

I believe taxes and, more broadly, the Welfare State, to be necessary to promote inclusive development, social change and poverty erradication, by providing universally the tools necessary to deliver emancipation.

Those who have the resources must understand they need to contribute not to maintain the status quo but to level the playing field instead, helping those in the bottom of the social pyramid to build the new capacities they need to live fulfilled lifes.

Social justice, in this sense, and quoting from the great Paulo Freire, is about getting everybody out there «living for themselves instead of living for others».

State Budget 2013 Portugal: housekeeping?

Portugal’s PR approved today the State Budget proposal presented by the Government for 2013. The adjustment will, not surprisingly, continue to be pursued by collecting an additional revenue of 4,3 billion € on taxes.

This additional revenue will be created  by increased income taxes. This year the Value Added Tax on goods and services, which represents about 36% of the whole fiscal revenue, will remain stable, mostly because the increases verified in both 2010 and 2011 did not lead to any additional returns. In fact, the revenues derving from VAT are today lower than they were in 2007 or 2008 and tend to shrink even further with prospects of anemic economic activity.

In this sense, the option for the increase of income taxes can be explained with their greater degree of  imunity to the effects described by the Laffer’s curve, a graphic representation that sugests the existence of an inverted U shaped relationship between tax rates and tax revenues.

A number of other tax increases will contibute to cut further on households’ available income for the year to come, despite the alerts coming from all different sources about the importance of counter-cyclical policies and, more generaly, of economic growth. There’s no doubts that the absense of economic growth in recent years, notably in the last decade, is the main catalyst for the whole crisis, yet very little is being done to put the Portuguese economy on the growth path again.

This budget targets, as its predecessor did, the effects and not the causes of the crisis. Not only will it cause great pain among Portuguese families as it will prove to be insufficient to achieve its own goals. Probably the greatest danger of this budget is the unrealistic macro scenario supporting it, far more optimistic than anyone but government officials is expecting.

The biggest problem of the Portuguese economy has been, for several years, on the supply side and, until production is back on track, very little can be done about the economy aside, as the budget proposal shows very clearly, housekeeping measures.

Appart from it, the sacrifices demanded from the families are unethical and raise old questions about democracy and the legitimacy of today formal politics. First of all, we don’t know who the hell is governing this country but we are very sure that they are not the people we appointed, very democratically, to do so.

Finally, the whole deterministic concept of “hey fellow citizens we all have to do this, whether we want it or not, because there is no choice” is anti-democratic, anti-humanistic and reveals, if not other things, a deep lack of ideas, courage and pragmatism.

Transparency International CPI2012 shows Portugal must target corruption

Transparency International has just released its Corruption Perceptions Index 2012 and Portugal scores 63/100, ranking 33rd this year, one place below last year’s position and 3 points above the Cape Verde islands.

As austerity strengthens there’s no similar counterpart in anti-corruption measures to be issued by the political and governmental power in order to provide greater accountability of its actions and that of its employees.

It’s sad to verify such reality as prevalent corruption constitutes a “dirty tax”, leading to the appropriation of resources by public officials and to undesirable allocations of public investment from a development perspective.

Austerity combined with corruption leads to increasingly higher taxes with increasingly lower returns, a familiar cenario to most southern Europeans. On the other side, less corruption means better public investment with lower costs.

Said that, it’s frustrating to see Portugal ranking a barely positive grade as government officials demand so much from its citizens. Not only corruption takes away scarce resources from the economy but it also deteriorates competitiveness, budget consolidation and social stability, three major vectors of the structural adjustment programme itself.

Public distrust undermine political institutions,  triggering widespread trickle-down corruption and the construction of rent-seeking societies as a whole. In other words, if the wealthy and the powerful are corrupt and their corruption is tolerated by the guardians of the law, then there’s no real incentives for any other citizen to comply other than their ability to sleep at night.

Quality public investment is one of the most important channels of development and poverty alleviation. Low quality public investment often hurts the more vulnerable households who need it most, enhancing inequality and perpetuating poverty cycles. That playing along with the lack of information and accountability of the government officials creates the potential for greater social arrest and, consequently, further corruption, as can be seen in the case of Greece.

The above constitutes argument for the implementation of a strong anti-corruption policies, enhancing transparency and accountability towards closing the ever increasing gap between formal political institutions and the civil society.

Governance is an issue for a 38 years old Portuguese democracy approaching its midlife crisis at a fast pace. Portugal CPI (63/100) is below EU15 average CPI (72/100) and in line with EU27 average CPI (64/100). However, Portugal CPI is above PIGS (Portugal, Italy, Greece and Spain) average CPI (51,5/100), mostly because of the aberrant CPIs presented by both Italy (42/100) and Greece (36/100).

The 16 point difference between the Portugese score and the EU15 – PIGS average CPI (79/100) sugests that Portugal can learn something from the experience of its neighbours, although there’s no applicable recipe for erradicating corruption.

It is clear that anti-corruption measures must play a significant role in shaping the future of the structural ajustment plans applied in southern Europe as Italy and Greece, especially, are perceived to be among the 3 most corrupt EU nations (the other is Bulgaria). In case these national governments don’t deal directly with such problems it is likely that further pressions for deviant behaviour emerge along with strengthened austerity.

The PALOP (African countries with Portuguese as official language) average CPI is 36/100. Mozambique (31/100 CPI), Guinea-Bissau (25/100 CPI) and Angola (22/100 CPI) rank among the most corrupt countries in the world. Botswana (65/100 CPI) and Cape Verde (60/100 CPI) are among the examples to emulate in Africa.

Some thoughts on US upcoming elections

I’m no expert in none of the topics below. However, and since there is a widespread disbelief about the importance of next American elections, I felt like pointing out a couple of points I believe to be worthy of consideration for non-American citizens. It isn’t like we have a voice but, in the age of globalization, we sure could use some.

First of all, America’s approach to economic policy remains very influent, while setting the tone for economic policy worldwide. As Stiglitz points out:

(…) Romney has not really distanced himself from the Bush administration’s policies. On the contrary, his campaign has featured the same advisers, the same devotion to higher military spending, the same belief that tax cuts for the rich are the solution to every economic problem, and the same fuzzy budget math.

Therefore, if you are not exactly in line with “austerity politics” or, more broadly, with “structural adjustment” and economic contraction, then Romney’s not your guy. While we global citizens are trying to make the push for the implementation of adjustment policies more prone to economic growth, job creation and to overcome deprivation, we can use some support from a candidate like Obama, more keynesian-oriented, than the righ-winged, business as usual, Reagan-inspired Romney.

In fact, the area where we can express greater praise for Obama is precisely in fighting deprivation – health deprivation, to be concise. As the The Economist explains:

The other qualified achievement [of Obama’s Administration] is health reform. Even to a newspaper with no love for big government, the fact that over 40m people had no health coverage in a country as rich as America was a scandal.

Obama deserves praise not only for doing the right thing, building capabilities for the more vulnerable american households, but also for the example Obamacare represents for all the developed states, urging to get rid of their social responsabilities in favor of budget consolidation. I’d like to see similar commitment to providing better education for the very same vulnerable households, in a country where the poor get poor health, poor education and very poor opportunities.

However, there’s a major challenge in chasing such noble social goals: America cannot continue to tax like a small government while spending like a big one. Some adjustments are necessary and they need to be done as soon as possible and in a way that reduces the widening gap between the rich and the poor.

Additionaly, environment and climate change cannot be ignored no more. While both Romney and Obama did not pay great attention to this issue during the campaign – at least before “Sandy” crushed in – Obama is more likely to do something about it than the very skeptic market-solves-all-bads Romney, trapped in a party of “climate deniers”.

Regarding trade, well, we don’t need a trade war between America and China at this point of our lives. We really don’t, Mr. Romney. Obama wins again.

Is is also commonly accepted today that balanced regulation enables markets to operate better, not the contrary, as some highly iluminated minds around Romney seem to believe. Even though Obama has not excelled on his trade and commerce policies, it is hard to imagine how Romney could even do better.

Said this, Obama has not been perfect. Far from it. As strange as it may sound, it was during Obama’s mandate that China overtook the US as Africa’s largest trading partner. Quoting from Reuteurs:

In 2009, China overtook the United States as Africa’s largest trading partner. According to the Brookings Institution, President Hu Jintao of China has made up to seven trips to Africa, five as head of state, and has visited at least 17 countries. In contrast, Obama’s 20-hour 2009 sojourn in Ghana has been his only trip to sub-Saharan Africa as president.

“We would have expected to see more American involvement instead of a retreat. If you go to many countries and ask them about who is doing more, they will tell you China,” said Mwangi Kimenyi, a senior fellow at the Brookings Institution.

In my personal opinion, Obama’s lowest point was reached in the day America got their public enemy number one, Osama Bin Laden.

I did appreciate the departure from the previous approach to the «War on Terror», sustented on “all muslims are suspects of terrorrism and all suspects of terrorrism can die and suffer if for the good of National Security”. Obama has managed to focus on terrorrists, dropping religion.

Anyway, war is still war, an invasion is still an invasion, aggression is still aggression and I still don’t understand why the Americans forced the occupation of  Afghanistan andI still don’t like OTAN and what it represents. It just doesn’t make sense in today’s world, I have expressed it before.

I must say I was extremely disappointed with Obama the day I saw him celebrating cheerfuly the murdered of another human being, even though it was for the good of National Security (or was it revenge?). Osama Bin Laden was a criminal and I do not support criminals; however, criminals belong to justice, not to graveyards. Martyrs belong to graveyards, and, as I see it, we sure didn’t want any more of those.

Four years ago, I had great expectations for Obama. I’ve spent Election’s night celebrating his announced victory. We all thought he could make the difference in a increasingly multipolar and globalized world. He proved he cannot do such thing, at least alone. He proved to be a lot weaker than we thought, in a variety of topics.

But Romney just shouldn’t represent a viable option in today’s world.

The New Politics of Resistance

Today is appointed another General Strike in Portugal. As usual, it turns out to be little more than a public transportation strike. It is true that other public employees are not leaving their homes to work but, overall, the representation of the event is ridiculously low comparing to the discourse of the leaders of the national labor unions (portuguese sindicatos), who tend to emphasize such events as trustful signs of the will of the national workforce. I’m working today and so are my mother and my stepfather, both of them professors in a public school. Additionally, I actually came to work using the same customary public transportation (CP) I always do – just like in the last general strike.

The question here is: why should this happen in a country where people feel so discontent and exploited? Other demonstrations, like this one, one year ago, managed to combine nearly 300 thousand people, so the problem has nothing to do with loss of faith or will to change, whether by the youth or the more conventional labor movement. The problem may, very probably, be the labor unions. Soares dos Santos, an influent person (and employer) down here, used such an argument yesterday, adding that the labor unions are in the middle of a crisis themselves, falling short on associates and facing decreasing power and representation.

Labor unions, like other formal political institutions, are organisms embedded in the social and cultural context of the country. As the context evolved, such institutions managed to stay increasingly steady and rigid, unable to move forward together with social change. This is why they fail to assemble support in a context where class struggle lost significance comparing to other forms of identity, based on post-materialistic values. Other groups, built upon other forms of identity, such as religion, cultural meanings, sexual orientation or genre, and using other forms, more decentralized, of mobilization and organization, symmetrically, are gaining importance by the day. These groups promote autonomy, don’t require formal membership or affiliation and give the people the possibility of being part-time activists, preferentially outside their workplace and after their working hours.

This is a big change in the way of making bottom-up politics and this explains, in part, the growing importance of the what happens in the periphery – the outside that belongs, of the formal political system. People prefer new forms of organization, other than labor unions; have new concerns, broader than materialistic, production based, traditional issues; and privilege other forms of action, outside their workplace and favoring individual autonomy.

Said this, this is why, although being actually very concerned with the current path of the country, I’m going to work now: because disruptive times deserve disruptive measures. And traditional labor unions chronically fail to provide anything new. New social movements already proved to be important vectors of social change, but new steps are required in order to take back politics to the people and to increase representation and resistance.

Conhecer a Crise

Sob o mote “a crise tem muitas caras, conheça os números”, surge o sítio electrónico Conhecer a Crise, irmão chegado do Pordata, disponibilizado pela Fundação Francisco Manuel dos Santos. Reunindo mais de uma centena de indicadores numa interface amiga do utilizador autónomo, esta ferramenta incita-nos a comparar a nossa imagem da Crise com os dados puros e duros, promovendo a consciencialização, a emancipação e o espírito crítico responsável, informado e fundamentado, dos Portugueses. A provisão de informação deste género é um importante contributo para a construção de indivíduos capazes de fazer a diferença enquanto agentes do seu próprio processo de desenvolvimento pessoal, social e económico.

Para criar a nossa visualização basta escolher a opção “A CRISE COMO EU A VEJO” no menu principal e começar a brincar com os indicadores.

Bom trabalho.

[This recent Portuguese website provides a database of more than 100 indicators about the current state and the impact of the Sovereign Debt Crisis in the country and on its people; additionally the site offers the option of creating interactive visualizations through the articulation of the different indicators in the same screen. No english verson available so far.]