The Clash of Myths


 The late Samuel Phillips Huntington was an American political scientist who is best known for proposing the contemporary Clash of Civilizations theory.  Huntington is of course commonly referenced in discourse about clashes between the so called ‘West’ and the ‘Islamic World’.  While I was still a student at St Mary’s College, I remember my Form 3 History teacher, Ms Fabian, explaining that ‘ideology’ was at the core of most if not all historical conflicts.  What made Huntington’s position interesting to me was that he believed that the age of ideology had ended and that the world had reverted to a normal state of affairs characterized by religious / cultural conflict.

I say that we forget the clash between civilizations and look at the clash happening within civilizations.  Of course, the ‘West’ is by no means a homogeneous entity as within the ‘West’, there continues to be healthy debate on the core ethos or mythologies that frame it.  As a film fan, I have found documentary film-maker Michael Moore particularly adept at challenging some of these myths.  By ‘myth’, I mean a story that explains the world view of a people.  Today, two of these central myths that I see debated almost daily in the press are around social inequality and how should leaders take us out of the present economic difficulties. US Tax Singapore

I will briefly consider social inequality first.  On one hand, many believe that social inequality is the inevitable result of a meritocratic socio-economic-political system that rewards hard work with upward social mobility and punishes so-called ‘lazy’ people with life on the lower end of the social spectrum.  On the other hand, others see what Alan Greenspan called in 2008, a ‘flaw’ in our system.

There are many flaws in our present system in the West which require careful government intervention.  So the debate about social programs including support for the unemployed and the socially disadvantaged continues.  Almost daily, we can read the most scathing and vicious attacks on various government-funded social programs.  Yet these people seem oblivious to the other point of view.  Harvard University’s Louis Hyman has demonstrated that income inequality in the U.S. peaked at two times in the twentieth century – 1929 and 2007.  We all know what happened right after each peak (1929 and 2007) – the great depression and the 2008 crash.  Among supporters, the debate over income inequality is too often framed within a moral context.  That is, it is not ‘fair’ or it is not a ‘good thing’.  Here we have an argument for greater levels of income inequality being bad for the entire society and the entire economy.  It may actually contribute to economic instability (we already know that it is contributes to social instability).  

My position on the issue of social inequality is crystal clear.  The debate needs to and will continue to shift away from attacking/defending social spending / social programs (sometimes called entitlement spending) to re-engineering these programs to reduce dependency, reduce abuse, encouraging education / training and entrepreneurship.  My position on the second myth is more uncertain.  The second somewhat related debate surrounds the right approach for pulling our Western economies out of their present slump.

In terms of this second myth, I will shy away from terms like Keynesian and Monetarist and speak about those who believe that when the economy is in a slump, governments need to cut spending to stay within our means versus those who believe that the government needs to use debt to keep spending high to pull the economy out of the slump.  Neither side can really draw from history to support their position because our economies have never been so interrelated and so structured to make such comparisons valid.  So like two people passionately arguing in favor of their own religion, it sometimes degenerates into a case of who can shout louder.  Personally I honestly do not know which side, if any, to support so I just sit back and watch.

I have been trying hard to find a credible yet optimistic take on the challenges facing our Western economies.  Specifically it is hard to find anyone confident about our western economies pulling out of the present slump in a timely fashion.  Last year there was talk about ‘green shoots’ but celebrations were premature.  It seems as if what is really required is not more patch work but a radical redesign of our present economic arrangements.  A word of caution - we should hope for the best, but prepare for the worst.

My name is Derren Joseph and I love my country and I love my region.  Despite our current challenges, I continue to have the audacity of hope that we will all enjoy a brighter tomorrow.  Read more on derrenjoseph.blogspot.com

Comments

  1. As Karl Marx would say, economic slow down is simply capitalism correcting itself. Capitalistic economies require the exploitation of labor as well as a transfer of capital between the exploited to the exploiters. The goal of a true capitalist is to produce with the lowest possible costs. Part of reducing that cost is cutting back on labor and demanding increased productivity.

    What gives these companies the ability to make money is having consumers buy their product. When consumers stop buying, as we witnessed post 2007, economies collapse. However, the reason for the collapse is purely self-inflicted. Industries wish to cut labor costs, yet still have these workers maintain their consumer identity. With less income, these workers cannot buy therefore there is a depletion in the transfer of capital from consumer to capitalist.

    Recently, we've witnessed workers' productivity increase (Americans being some of the world's most productive workers) whilst wages remain stagnant. As those wages began to increase, the American economy also regained traction. What we've been witnessing is a reality check; cost cutting that went as far as to cut into consumer spending.

    Government attempted to do their job of reallocating capital to failing companies because when it comes down to it, a huge loss in working people results in a huge loss in consumer spending which is the driving force of the American economy. Sure globalization diversifies companies portfolios, but capital gained over U.S. boarders should be reinvested, at least partially, back into the U.S. economy. As overseas markets become stronger, America's economy needs to return to its powerhouse days in order to generate jobs and remain attractive to investors. This requires cooperation between industry, government and citizen, and a unification to achieve a common-goal: recovering and strengthening.

    When we fail to make decisions collectively, the bigger picture is ignored. Take the debt-ceiling issue debated in the latter summer of 2011 among U.S. Congressmen and women into account. Parties didn't cooperate and failed to see the bigger picture of the situation, and resulted in the S&P's reduction of America's perfect triple A credit rating. America has the most significant global influence and decisions that big needs to be handled effectively and efficiently. Confidence in American markets resonate globally, and need to be treated as such.

    Sure entitlement spending is a huge burden to America's tax payers, but it's a necessary one. Get rid of social security and we have an influx of people searching for work. Get rid of welfare and we will have an overwhelming amount of people that can't afford to live. Get rid of medicare/medicaid and witness a lowered state of health among lower-income people. Get rid of unemployment insurance and we'll see workers taking any job they can get rather than taking efficient time to search for jobs that suit their skills. I'm sure these are all generalizations and the situation is more complex, but these points are still relevant. We are aware that change has to be made, but we need to come together in order to make the tough decisions as well as the easy ones. Hopefully my little rant adds some insight to your blog.

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  2. Hey bro


    Glad to hear from you. Hope all is well. You make some pretty powerful points. Thank you. Permit me to consider them in turn.

    >As Karl Marx would say, economic slow down is simply capitalism correcting itself.

    I deliberately avoided the theoretical terms monetarist and keynesian for the same reason I would avoid Marxist. These theories are great in an abstract sense and there is much to learn from reviewing it. At the same time, because of the complexities of the 'real' world, they have all, without exception, failed to properly predict and protect us from ourselves.


    >The goal of a true capitalist is to produce with the lowest possible costs. Part of reducing that cost is cutting back on labor and demanding increased productivity.

    I have found that in reality, economics is inextricably linked to politics. So what makes sense from an economic POV is abandoned because of politics...and vice versa of course

    >What gives these companies the ability to make money is having consumers buy their product. When consumers stop buying, as we witnessed post 2007, economies collapse. However, the reason for the collapse is purely self-inflicted. Industries wish to cut labor costs, yet still have these workers maintain their consumer identity. With less income, these workers cannot buy therefore there is a depletion in the transfer of capital from consumer to capitalist.

    I am unsure whether a decline in consumer demand was by itself, responsible for the post 2007 economic collapse. As they say in economics, it was a necessary but not sufficient condition. It was a perfect storm in which many factors came together to burst the financial bubble.

    >Recently, we've witnessed workers' productivity increase (Americans being some of the world's most productive workers)

    I tend to look at trends as opposed to numbers in isolation. So while American productivity growth vs other OECD countries has been strong, compared to BRICS and other emerging markets, I am not so sure

    Even US productivity has had its ups and downs within the last few years and the outlook for US productivty is less than encouraging in the medium to long term

    ReplyDelete
  3. > whilst wages remain stagnant. As those wages began to increase, the American economy also regained traction. What we've been witnessing is a reality check; cost cutting that went as far as to cut into consumer spending.

    I agree with you here. Furthermore, it is useful to distinguish between real and nominal wages. Ever since the economic reforms of the 1970s inflation has become something to keep an eye on. As 1999 turned into the new millenium, it only got worse especially with the decline in the dollar.


    >Government attempted to do their job of reallocating capital to failing companies because when it comes down to it, a huge loss in working people results in a huge loss in consumer spending which is the driving force of the American economy.

    Before one treats a patient, one must first diagnose the illness
    In fact, I would even go as far as to say that the effectiveness of the treatment lies in its ability to treat with the underlying illness as opposed to the symptoms
    So I have yet to find anyone who believes that the wall street bailouts did anything but to treat with symptoms as opposed to underlying causes

    3 weeks ago in my blog, I referenced a movie called the flaw...along with inside job, they are powerful insights into the underlying issues

    again, as alan greenspan pointed out in 2008, there is indeed a flaw that the mainstream seemed to have ignored until it was too late.
    this flaw has still not been completely addressed

    ReplyDelete
  4. >Sure globalization diversifies companies portfolios, but capital gained over U.S. boarders should be reinvested, at least partially, back into the U.S. economy.

    capital in any form, be it financial capital or human capital, tends to seek its highest reward
    the fact that capital is going elsewhere and the US dollar continues to be weak, is but a symptom...if and when the underlying issues are addressed, then capital flows would reflect this confidence

    >As overseas markets become stronger, America's economy needs to return to its powerhouse days in order to generate jobs and remain attractive to investors. This requires cooperation between industry, government and citizen, and a unification to achieve a common-goal: recovering and strengthening.

    :-)
    you sound like a politician
    :-)
    i smile because there are many times a politician needs to tell people what they want to hear, regardless of how divorced that may be from reality
    just remember "read my lips, there will be no new taxes" as a popular example
    Look at the stats for yourself....e.g. since 1970 the balance of trade between the states of the rest of the word went south...and it has never recovered except for that glimmer of hope in 1992 or so...i doubt the recovery in overseas markets would lead to any turnaround in the US economy given among other things, that of the GDP equation (C+I+G+(X-M)) domestic consumer spending is probably the biggest driver

    ReplyDelete
  5. >When we fail to make decisions collectively, the bigger picture is ignored. Take the debt-ceiling issue debated in the latter summer of 2011 among U.S. Congressmen and women into account. Parties didn't cooperate and failed to see the bigger picture of the situation, and resulted in the S&P's reduction of America's perfect triple A credit rating. America has the most significant global influence and decisions that big needs to be handled effectively and efficiently. Confidence in American markets resonate globally, and need to be treated as such.


    The legislature continues to kick the can down the road which may not make sense from an economic POV but it makes sense from a political POV....especially in an election year (which was the point I tried to make above with the dialectical relationship between economics and politics at times)

    My friend, times are a changing! I grew up in Trinidad and no matter how much someone explains carnival to you, shows you pictures and shows you film clips, it is nothing compared to experiencing our carnival first hand. Similarly, you can see all the stats and watch all the documentaries and read all the books but it is still hard to imagine just how real this shift of power really is until you experience it. In my line of business (travel industry) I can see it so clearly.

    After WW1, yes the US was left holding all the keys to all the gates but not anymore...here is what I saw on a blog on the economist website

    After WWII, the US produced more than 50% of all goods produced in the world. That has now shrunk to less than 10%.

    At one time, manufacturing (including agriculture) was 40% to 50% of the nation's GDP. It is now less than 10%, and much of that is in weapons and military production.

    The US has changed structurally, in very dramatic ways, during the past 60 years.

    The US once had the most advanced infrastructure in the world - highways, roads, bridges, dams, airports, power generation . . . Most of that has degenerated to the point of being dangerous. Many dams and bridges are unsafe. None of this has been updated or kept in repair for more than 40 years, the money having been spent on military and useless wars.

    Education is the same. The US educational system was once the envy of many countries. Today, beyond the dozen or so top tier universities, the US system is a joke to much of the world - including China.

    Last year, as in so many prior years, polls demonstrated that more than 50% of all Americans cannot find their own country on a map of the world. And a full 75% cannot find Canada.

    Today, 20% of all Americans and 25% of all US children, depend on food stamps to survive. Several millions are now living in tent cities around the country, and California says this is now the new normal and will not disappear.

    US income disparity today is greater than that of South America 100 years ago. The US middle class has been eviscerated, and half or so of it has already moved down to the lower class. By official US estimates, more than 25% of the population is living below the poverty line.



    >We are aware that change has to be made, but we need to come together in order to make the tough decisions as well as the easy ones.


    We are 100% on the same page here my friend!!!!!!!!


    >Hopefully my little rant adds some insight to your blog.

    yes it has....thank you
    Do feel free to comment anytime!!!


    d

    ReplyDelete

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