Venezuela Campaign: Workers betrayed
“I stake my future with the working class,” boasted Hugo Chavez, as he set out his plans to transform the Venezuelan economy.
The reality has turned out to be very different. An astonishing story recently came to light: hundreds of laid-off Venezuelan workers are still turning up to work in order to protect their workplace from looters. The factory where they worked, owned by the Irish company Smurfit, had been seized on spurious grounds by the Maduro regime. The workers are desperate, for anyone – other than the regime – to restart operations.
“Help, we need a boss here. We’re desperate,” said Ramón Mendoza, who has been a forestry division worker for 17 years. “We’re so scared because we now know that all the government does is destroy everything, every business.”
The closure of Smurfit’s packaging plant not only made 1,600 workers unemployed but also damaged other companies, who now lack vital materials. According to Carlos Rodriguez a union leader at Colgate Palmolive, production at one its plants has been halted because of an absence of boxes to package soaps and detergents.
The 1,600 former employees of Smurfit have lost more than their jobs. Smurfit had been providing interest-free loans for their houses and free education for their children. Smurfit used to finance the Agricultural Technical School in nearby Acarigua, where 200 children in extreme poverty could receive an education, accommodation and hot meals. That school has now closed, and the teachers are unemployed. According to Maria Vielma, the school’s psychologist, “This used to be a family. I just don’t have words right now. We have a government that is dedicated to destroying, not constructing.”
That feeling of betrayal has spread throughout all sectors of the economy. After the destruction of the Venezuelan cement industry under state ownership, the general secretary of the cement workers’ union said this to a rally of protesting cement workers:
“[W]hen the government took control of the facilities, it did so under the premise that it would improve the quality of life of the workers; that the companies would be self-sustaining; that they would guarantee the product at fair prices to the people; and that they would use the least harmful mechanisms possible for the environment, neighbours & workers. However, the opposite has happened….they owe labour liabilities and have a collective contract that does not guarantee benefits for the working masses…the cement is only available at speculative prices, and pollution levels are increasing.”
Public sector workers feel particularly betrayed by the regime. While Chavez had focussed on increasing public sector employment, the regime can now no longer afford to pay its workers. Collective bargaining agreements have been torn up and a flat payment for all public sector workers imposed, all without consulting the workers or their union leaders.
Iván Freites, head of the United Federation of Oil Workers of Venezuela (Futpv), denounced the government’s action as one that “violates the National Constitution and the Framework Law on Labour which is the basis for collective bargaining agreements.”
One worker at the nationalised CANTV telecommunications company said: “It makes no sense that someone who’s just starting at the company gets the same as someone with 15 years here. Now the janitor, the manager, the secretary, everyone earns the same. Nonsense. I can’t complain to my bosses, because they’re screwed too.”
Moreover the regime frequently interferes in union elections and undermines workers’ representatives. For workers, the Chavista regime has truly been a disaster. Not only is the Government rolling back rights acquired by the unions over many decades, but many employees are losing their jobs. No wonder that over 3 million Venezuelans have already fled the country. As one worker at the state oil company said recently, "Now what we ask each other is: 'When are you leaving and for where?”
More information on the Venezuela Campaign can be found on their website.
Who should we blame for the British level of illiteracy?
That large numbers of we British are functionally illiterate is not a good look nor a decent outcome. The point being that we’ve got to work out what is going wrong, wherever it is in the system, so that we can fix it. If it can be fixed of course, there is always going to be some irreducible minimum number of people who simply cannot grasp such complicated concepts. That’s a sadness of the human condition to be sure but something we’ve got to accept.
However, the claim is that we’re well above that level:
Millions of British adults are functionally illiterate but the subject is ignored because it is not a “fashionable” cause, according to the most powerful woman in publishing.
Dame Gail Rebuck founded the Quick Reads scheme, which distributes specially-written books designed to encourage adults to discover the joy of reading.
The scheme began in 2005 and attracted some of the country’s best-selling authors, including Joanna Trollope, Adele Parks and Andy McNab. But this year it faced closure after failing to find a corporate sponsor and was only saved after Jojo Moyes, the writer, stepped in with £120,000 of her own money.
“It’s a huge sum of money but not to a corporate sponsor,” Dame Gail told the Telegraph. “But the point is, it’s not fashionable, is it? You can talk about little kids reading - we can all relate to that, we all want children to read books, it’s lovely.
“But adults not reading? Or adults in the workplace not having enough literacy to fill in a form, to work on a computer, to be promoted? That’s not something that people like to talk about. But it exists.”
We think that talking about it should become very much more fashionable, we agree there. But then that’s because we do so like to play the boy’s part in the Emperor’s clothes story.
Currently the State insists that each and every child be placed into its care for some 30, 35 hours a week for some 13 years - it does now at least with the rise in the school leaving age. That’s many thousands of hours of instruction time and the claim is being made that this doesn’t result in general literacy.
We tend to think that thousands of hours of instruction time is enough to ensure general literacy. That it doesn’t might just be the State not being able to do things. Could be that the mechanism has been taken over by ideologues insisting upon teaching something else - how to be an ecowarrior perhaps, or be nice to people. Might even be political fashion as with whole words and teaching kiddies their letters.
But we will insist that this is where the failure is. The State has spent the last century insisting upon many years of exclusive access to children and the end result is that millions of the system’s graduates are functionally illiterate. That system’s not doing what we pay for it to be doing - that’s where the solution will be found, where the reform needs to be.
We will be able to test how much people like the environment
Or perhaps slightly more accurately, soon enough we will be able to test how much those who insist they are environmentalists actually do like the environment. The test will come in the form of a reaction to this latest news about the possibilities of genetic manipulation:
For photosynthesis itself is inefficient and it looks like it is possible to make it more efficient with one of those GM tweaks:
In some of our most useful crops (such as rice and wheat), photosynthesis produces toxic by-products that reduce its efficiency. Photorespiration deals with these by-products, converting them into metabolically useful components, but at the cost of energy lost. South et al.constructed a metabolic pathway in transgenic tobacco plants that more efficiently recaptures the unproductive by-products of photosynthesis with less energy lost (see the Perspective by Eisenhut and Weber). In field trials, these transgenic tobacco plants were ∼40% more productive than wild-type tobacco plants.
Making rice, wheat and so on 40% more productive would, if consumption levels stayed the same, mean we need something like 40% less land to feed ourselves. Which then means rather more land for nature to go be wild nature in.
We’d be greatly reducing our footprint on this Earth that is. The interesting part here being that the most vociferous opposition is going to come from those who supposedly support all matters environmental.
It’s going to be a useful sorting mechanism between those who really do care about the environment and those who only say they do, isn’t it? Support a method of freeing up 40% of cropland for nature, or continue to oppose GM?
University jobs aren't very good ones so perhaps we should have fewer of them?
If only those who run our universities actually knew stuff. For they’re making an economic claim about how wondrous our university system is, a claim which shows that we’d probably be better off with rather less of our university system. Not what they’re trying to achieve at all.
“University leaders are united in the view that the UK leaving the EU without a deal is one of the biggest threats our universities have ever faced,” the letter says. “As a sector which contributes over £2bn to UK GDP every year and supports 944,000 jobs, it is critical to the national interest, to the economy, communities and wider society, that the UK’s universities thrive post-Brexit.
A million jobs producing £2 billion of GDP. That’s about £20,000 per job. And as any fule kno GDP is all incomes, so we can say that the maximum income being produced by these jobs averages out at that £20,000. But median income for the UK is some £22,000 when measured for both part and full time. Meaning that university jobs are below average.
Thus we’d be better off if we had rather less university and rather more of just average jobs and incomes.
There is, obviously enough, also that point that universities do more than just produce GDP:
University leaders have said that a no-deal Brexit would constitute “one of the biggest threats” ever faced by the sector, as figures revealed a further decline in EU student enrolment, particularly in postgraduate research.
According to the Russell Group of universities, there was a 9% decrease in the number of EU postgraduate research students enrolling at its institutions this academic year. The fall follows a 9% decline the previous year, and has potential consequences for Britain’s research capacity.
The thing is, research is a public good. It’s actually the textbook description of a public good. It doesn’t matter who does it nor where we all benefit from it being done. Further, that the people who do it - or the society which finances it - isn’t able to capture the economic benefits precisely because it is one of those public goods.
That is, there’s absolutely no argument at all that we have to be the people who do the research nor that we finance the creation of the public good. Things discovered by a German postgraduate student in an Italian university enrich us just as much as the same work undertaken here does. If this isn’t true then there’s no argument in favour of any of that public subsidy they’re worried about.
We could well be better off if we had less of this university stuff in our society that is.
From the Resolution Foundation - if you raise taxes then you've raised taxes
We find that we’ve got to do that most unlikely thing here, agree with the Resolution Foundation. If you raise taxes then yes, you will indeed have raised taxes. Can’t really disagree with that point although whether it’s a good idea to increase taxes, whether these are the right ways to do so are more interesting questions we think. Possibly ones where the answer isn’t quite so obvious.
Hammond 'can raise £7bn a year by scrapping tax breaks'
Scrapping a break and raising taxes are the same thing.
Philip Hammond could raise an additional £7bn a year for the Treasury by scrapping tax breaks for the richest in society and tightening up existing wealth taxes, research from one of Britain’s leading thinktanks shows.
In a report prepared ahead of the chancellor’s government spending review, which is due later this year, the Resolution Foundation said that the additional funds could be raised to help finance the higher spending on public services needed to meet the demand of Britain’s ageing population.
Except, of course, it isn’t quite that simple. What they’re suggesting is that wealth taxes should pay for those desired services. Instead of ludicrous rates of income tax that is. And yet we do know something about taxes - all have deadweight costs. That is, the ill effects upon the economy from the simple existence of the tax. And wealth taxes have greater such effects than income.
What this tells us is that if spending would need to be financed by unsupportable levels of income tax then the financing of that spending is even more ludicrously damaging if done through wealth taxation.
The Resolution Foundation warned that, should the government opt to fund the increase through income taxes, the basic rate of income tax would need to rise from 20p in the £1 to 39p.
The very insistence that 39% is an insane starting rate is the proof we need that wealth taxation ain’t the way to do it either.
All of which underlines a point we’ve been making for decades now. We can’t afford the welfare state we’ve already promised ourselves. That’s exactly why they’re all shouting that taxes must rise to fund what we’ve already promised ourselves.
It's not what The Guardian doesn't know, it's what it thinks is but ain't that's dangerous
As Mark Twain pointed out to us it’s not what we don’t know that poses the danger, it’s what we’re sure is but ain’t that causes the problems. So it is with The Guardian and their ideas about business. Here they manage to get one thing about right but then go completely off the edge in their second belief about how it all works:
Gadgets: the hardest thing to make now is a profit
Well, yes, that’s always been true. As many - near every perhaps - attempt at business proves, four out of five such attempts not surviving the first five years. Adding value, the same thing as making a profit, is difficult. They do get this part correct as well:
That’s the challenge for many consumer electronics firms. Not how to make things, or how to distribute them and get them in front of potential buyers. It’s how to make a profit.
The only correction we’d make is that this is difficult for all forms of organisation attempting to produce anything - it’s not limited to capitalist firms trying to make consumer electronics. Actually, 12% of British businesses fail this test every year for that’s the rate of business deaths.
But then what The Guardian believes goes off the rails:By contrast, in software, all the significant costs are in development; reproduction and distribution are trivial – a digital copy is perfect, and the internet will transport 0s and 1s anywhere, effectively for free. If your product is free and ad-supported, you don’t even need anti-piracy measures; you want people to copy it and use it. Software companies typically have gross margins of around 80%, and operating profits of 40% or so.
No. If this were true than absolutely all of the capital in the world would be in software in pursuit of those profits and none would be in hardware or anything else. They’re measuring the profit margins of successful software companies, not the universe of all software companies. This is the equivalent of observing Apple’s 40% margins and concluding that phone making’s a really great business to enter. Entirely missing that Samsung and Apple between them often enough account for more than 100% of the industry’s profits. Meaning that everyone else in the industry is, in aggregate, making a loss.
Yes, this is important, for we’ll never be able to make sense of capitalism itself unless we understand how difficult it is to make a profit and how few manage to do so. It’s only once we do grasp that that the system’s rewards to those who achieve that most difficult task make sense.
Ruse of the Reciprotarians
Trump’s protectionist trade policy and May’s post-brexit trade dilemma have fuelled trade reciprotarians on both sides of politics. They argue that free trade is only a sensible policy proposal if it is mutual. But is this really the case, or are we merely appeasing the whims of proud politicians at the cost to the consumer?
Those with a beady eye on trade-related academic literature will realise that the title of this piece is a twist on Bhagwati and Irwin’s seminal work ‘Return of the Reciprotarians’. However, they never did leave in the first place, for it was all a ruse. We didn’t stop appeasing politicians’ whims either and Britain has had and still has her fair share of politicians on their high-horses.
The early 19th century bore witness some of the biggest battles — including in a literal sense with duels fought over the matter — concerning reciprocal trade. The arguments echo the rhetoric prevalent today.
They say we need a level playing field on principle and that asymmetric tariffs would damage the British economy. “We are to lose the great industries for which this country has been celebrated. Sugar is gone. Let us not weep for it, jam and pickles remain!”
Replace “sugar” with steel, coal or farming and you have the editorial line of your girl-next-door protectionist journo and it sounds all too familiar. Jokes on you though, it is only Joseph Chamberlain; 19th century grassroots organizer of democratic instincts. Nonetheless, one only need to look to their nearest supermarket or kitchen cupboard to realise that we still have sugar, coal and farming produce — in abundance because they’re cheaper too — what a surprise.
More interestingly, Lord Randolph Churchill was a leading advocate of using tariff policy as an instrument to pry open foreign markets. Foreign markets, like oysters, he said, needed to be opened with a ‘strong clasp knife, instead of being tickled with a feather’. This approach to open markets is tedious and requires the wishful skill of politicians. Though the apparent ‘strong clasp knives’ may appear to acquire votes in the short term, to quote Gladstone, “this quack remedy is under the special protection of quack doctors”. For the avoidance of doubt, the quack doctors here are politicians. This tit-for-tat strategy has been advocated by many sympathetic to ‘right wing protectionism’ but it is fallacious; politicians and economies are uncertain by nature.
Standing in stark contrast to protectionist tendencies of Randolph Churchill, Robert Peel, at the expense of votes and his cabinet loyalty, became a catalyst in the history of unilateral free trade measures by repealing the Corn laws in 1846. Richard Cobden, even more so than Smith given his ideas’ influence on the government of the day, was a driving force on this issue. When the French proposed mutual tariff reductions, Cobden objected that the “treaty was opposed to the principles on which the great English tariff reform of 1846 had been based”. The principle was not just free trade, but unilateral free trade.
Unilateral free trade measures may even result in reciprocal liberalisation. Waves of unilateral reciprocity followed the repeal of the Corn Laws and again after the US sponsored the General Agreement on Trade and Tariffs (GATT) which did not require “substantive reciprocity from its major trading partners” after World War II. In this way unilateralism may be reciprocated without a formal agreement to do so. Why kill two birds with one stone when you can kill a flock?
At present however, May’s pitiful attempt to negotiate a constructive trade agreement with the EU reveals that the argument for unilateral trade is yet to be won. A nation’s willingness to unilaterally cease trade barriers is the best measure of its commitment to free trade. Britain doesn’t just need better politicians, she needs a fundamental change in economic doctrine.
Earlier in 2018, during a meeting with industry representatives Trump announced, “you will have protection for the first time in a long while, and you’re going to regrow your industries”. Trump is often caricatured as a charlatan and inconsistently ‘conservative’ on trade based on his protectionist pursuits or attempts to pry open foreign markets in the Randolph Churchill tradition depending on your view of his intentions. Although his critics may be correct, even some of the more ostensibly liberal traders such as Reagan have succumbed to this fallacy; “we are always willing to be trade partners, but never trade patsies,” he claimed at the State of the Union Message in 1987, revealing his ideological fickleness.
This not just a national issue; even the WTO has reinforced the fallacy. Its aims and principles use the milk-and-water lexicon of the reciprotarian, espousing words like: ‘non-discriminating’, ‘stable’, or ‘fair’ to describe trade relations. The word ‘free’ is sadly either non-existent or has been replaced by the more euphemistic adjective: ‘open’.
The Joseph Chamberlains and Randolph Churchills did not win in the 19th century; almost 70% of overall trade liberalization since the 1980s has been unilateral. Let us stop their spiritual heirs from winning today.
Rail discounts given a free pass for no good reason
So, we are going to have a new rail pass, giving half price travel to 16-17 year olds. It has been universally welcomed. I am not so sure. Actually I think it is a bad idea.
In the first place, money doesn’t grow on trees. The cost of carrying XXXX young people on an off-peak train may be marginal, but it is real. Second, when politicians do dish out benefits (paid for by other people’s money, much of it the beneficiaries' own), they hang around for ever: there is never a good time to scrap a state benefit. And once you have created the benefit, you have also created a vested interest group that lobbies against its repeal. So the list of vote-seeking benefit schemes just gets bigger and bigger.
That’s why, on the rail network, we have literally dozens of different railcards and discounts. There’s the 16-25 Railcard, the 26-30 Railcard, Club 50, Family & Friends Railcard, Group Save Discount, HM Forces Railcard, Senior Railcard, Two Together Railcard, Under 25 Advance Fares, the South Yorkshire Student Pass, Season Loyalty Discount plus regional railcards in Cumbria, the Dales, Devon & Cornwall, Esk Valley, Wales, the South East, Pembrokeshire, Yorkshire, Scotland—and a lot more beside. (Not to mention all those free bus passes.)
It makes you wonder who is actually paying for their rail travel. But you know who it is: all those commuters and working families struggling to make ends meet despite higher and higher peak-time fares. It’s a massive—and disguised—transfer of wealth from workers to everyone else. Everyone, including young kids from rich families and older people, who on average are wealthier than the rest of the population anyway. I don’t mind wealth transfers: I prefer to live in a country where people who need support get it. But I can’t see why poor bus users and car users should subsidise rich pensioners for their public transport travel.
Sure, railcards have a benefit in that they discourage people who can travel at any time of day from clogging up the trains and buses at peak hours. But off-peak fares at real term discounts would do that, and would be a lot simpler and fairer than the subsidy to particular groups that politicians think deservice (or are seeking votes from). Let the market take the strain.
Yet another reason why this planning economies thing is so tough
The only thing which should surprise about this commentary on the difficulty of planning is the place it appears. Given that The Guardian usually tells us how government, unions and large companies must all plan together to face the white heat of this technological dawn - or other mixed metaphors - it’s interesting to see a piece there telling us why this is not possible:
Technology in particular has a way of defeating the most ambitious agenda. It is impossible, say, to stand at the foot of the astonishing staircase of locks at Devizes on the Kennet and Avon canal without feeling some sympathy for the pioneers who invested more than £1m to build a southern inland water route linking the river Avon to the Thames – only to be driven out of business by the Great Western railway before they had got their money back. Or, even shorter lived, America’s transcontinental Pony Express, which lasted just 18 months before the advent of the telegraph demolished its business model.
The thing about tech is that even if you can see it coming, you can’t be sure quite how it will arrive or what it will do when it gets here.
Well, yes, obviously enough. We don’t know therefore we cannot plan. It is only if we know what we want to do, how we’re going to do it, what others are going to be doing around us, that we can in fact plan. Given that we don’t know any of those things about new technology then we cannot plan, can we?
The SMS message is one of the textbook examples of this. The ability to do this was there really so that engineers testing the network could do so. No one did predict that consumers would then send them by the billions. Yet we did. The point being that we can’t - OK, if you prefer, we don’t, successfully - predict what combinations of new technological possibilities we out here will use to do what.
The only method we’ve got of working it all out is for everyone to just try stuff out. Offer the ability to do something, see what works, do more of that and less of what doesn’t. Or, as we continually say around here, markets do the heavy lifting for us for planning simply doesn’t work.
Note that this particular point is nothing about the government doing stuff or the private sector. Either still has to use market processes to find out what people do want out of the new technological possibilities.
The world is a better place
There are many predictions of doom and gloom, from global warming to water wars, from trade wars to AI taking jobs or even seizing control. One school of thought suggests that as we evolved, a keen sense of danger helped us to anticipate hazards and try to escape them. This could explain why prophecies of coming catastrophe far outsell those that tell of the progress we've made. By many measurements, the world is a better place than it was. An article by Dylan Matthews draws attention to some of them. For those who want to face the New Year and the future with optimism and a determination to keep things improving, here are a few indicators.
1. Extreme poverty is down to a record low. In 1987 35% of humanity lived below the internationally recognized subsistence line. That figure is down to 10% today.
2. There is far less hunger in the world. The continuing Green Revolution in crop yields has defied Malthus to give us a population that is both larger and better fed.
3. There is less child labour. Just this century it is down from 16% to 9.6%.
4. We have more leisure time than our ancestors did. Typically (1870-2000) it went down from about 65 hrs a week to about 37hrs for non-agricultural work. There has also been a spectacular decline in domestic work that has especially benefitted women.
5. Life expectancy has risen. Since 1770 it has gone up from 29 years to 72 years today. In Europe the rise was from 35 to 80. The last 25 years (1990-2016) saw a gain of 6 years.
6. Child mortality is down. Between 1990- 2017 for under-5s, it went from 90 deaths per 100,000 live births to 35 deaths per 100,000.
7. There are fewer deaths giving birth. Between 1990-2015 it fell from 392 per 100,000 to about 180.
8. Cases of guinea worm went down from 152,814 in 1996 to just 30 last year. Similarly, there have been steep falls in many other diseases.
9. Literacy is up from 11% in 1800 to 85% by 2015.
10. Renewable energy has become much cheaper. The cost of wind power is down from $140 to $45 per mwh (2009-2017), and solar power has dropped from $360 to $50 per mwh over the same period.
These indicators, among many others, show that humanity is dealing with many of the problems that have plagued it for millennia, and is overcoming some of its ancient enemies. Malaria will be conquered soon, just as smallpox was, and many cancers will be. Some people will nonetheless prefer to look to a future of fear, but for those of an optimistic nature, there is a past of progress and the hope of more it.