I took the time to reflect yesterday.
A week of intense work required that I take a break, but my brain rarely turns off, and the events of the week kept me wondering just where we are and how big the crisis we are facing really is.
Little noticed in the media last week was the fact that oil prices continued to rise. They are now $110 per barrel, and diesel remains at record prices at pumps. Nothing Trump is doing with Russia is going to change that, but the international implications of his relaxation of sanctions on that country are enormous. The risk of growing instability and wider war is high. It is not just the price of oil that needs to worry us about this issue.
At the same time, the Trump regime descended into further chaos as it panicked about the midterm elections, brought lawsuits in advance of polls that suggest its acceptance of the result is very unlikely. Meanwhile, its White House operation showed ever-increasing strain as he sacked one ambassador, then a new press secretary after just five days, and is apparently considering firing his chief of staff. The fact that all three are women has drawn widespread attention. It is only MAGA men who appear to be supporting him in the USA anymore. This administration is in office, but whether it is truly in charge is an open question.
That said, the row over Starlink and the slowing of Ukraine's defence systems continues, with neither Trump nor Elon Musk accepting responsibility for what is happening, only increasing the risks conflict poses to people.
Conflict, however, takes many forms, and those in West Asia and Ukraine are not the only ones of concern.
France is demonstrating that civil unrest can be as destabilising as external conflict. It appears Macron has no answer to the issues arising there because he views them, and any solutions, through a neoliberal lens, and young people in France, and many older people who have suffered the consequences of neoliberal exploitation, are rejecting that approach. I find it hard to imagine those rioting back in the classroom, sitting in orderly rows on Monday morning. France continues to head in a direction that others will inevitably follow.
The risk from the right wing is very high in these circumstances. Their threat is growing. In that context, I noticed in the UK that Nigel Farage is suggesting that the journalists who have exposed the deep levels of racism and misogyny within Reform, and his own role in supporting candidates who display those beliefs, should be prosecuted. It is clear he is talking about taking on draconian powers if he ever reaches office. This is also true in France, and we have seen it, of course, in the USA.
The other country where the risk of civil war is being noted is Israel. There has been a lot of discussion about whether it will descend into internal chaos after the elections scheduled there, the outcome of which cannot yet be predicted. Whether Netanyahu would accept rejection from office is open to question; his commitment to democracy seems, in my view, as shallow as Donald Trump's. The whole nature of conflict in West Asia would change fundamentally if the focus turned to who has a right to govern Israel in accordance with the wishes of its people.
And amid all this, in many stock markets, and now in corporate bond markets, the backlash against AI is beginning.
I am aware that the AI industry is trying to represent the threat to its development as rogue AI breaking out and causing unpredictable damage. It seems politicians want to pick up that narrative and run with it, but while that risk may exist, no one really knows, and if it does, it is because human beings have instructed it to happen, whatever anyone claims.
The greater risks from AI will, however, exist a long time before these problems occur. They are threefold.
The first is that AI, despite all the hype, will be considerably more mundane than the industry would like to think. The hype about its power has been created to demonstrate why it is worth investing in, despite the risks. The reality is that AI might be considerably more boring than is being foretold, and they already know it.
I spoke to an accountant this week, well-versed in how that sector is thinking about AI, and interest is already waning fast. The whole of accounting is focused on getting repetitive tasks right continuously. This is what its obsession with what is called internal control is all about. You would think, therefore, that AI had the most perfect opportunity in this sector. However, the one thing that almost everybody is finding, so far, is that it is far from 100% reliable. It might be 97%, or even 98% reliable, but that is so far short of the required standard of efficiency that the assumption there is going to be an AI revolution displacing as many accountants as people once thought is receding by the day. And with that, so too are the prospects of AI profits.
At the same time, and secondly, the reality of actually delivering the vast numbers of data centres that the AI sector claims it needs is also receding. People do not want them. The resources to build them do not exist. Financing costs are rising rapidly, with even some of the larger AI companies now paying interest rates over 10% on some of their bonds, so risky they are perceived to be. And the fact is that now AI delivery has moved off the drawing board and into the hard world where diggers, with people on board, have to hit the ground, both the diggers and the people are in short supply, as is everything else required to deliver on the claimed AI revolution. The result is that sometime soon all of those who are throwing money at this industry will realise that all they are fuelling is inflation, and not an anticipated future return.
That, then, is the third risk about which I've been talking for some time, which is that quite simply none of this financial bubble makes any sense at all, and it will burst with all the consequences that I have previously predicted. It will start with hedge fund, private equity and secondary banking meltdowns. These will then spill over into the primary banking sector. This will then lead to another global financial crisis. This will happen at the same time the world is at war, climate change is becoming ever more real, and food and water supplies are becoming ever more difficult.
It is not hard to see why we are in the mess we are in. Failures of democratic accountability, the rise of despotic government, and the threat of gross inequality from obscene levels of personal wealth and power held by a few are inevitable consequences of neoliberalism, and that toxic philosophy underpins much of the crisis we face.
The IMF is responding to the resulting crisis by demanding another dose of austerity, as if we haven't tried neoliberalism hard enough yet and one final push will make it work as Hayek and Friedman always planned. That, of course, is absurd.
Nothing neoliberalism can prescribe now can solve the problems it has created. Instead, as I say in the podcast with Tony Groves in Ireland, which I published on this blog this morning, we need a better song to sing, and we will get it by asking a different question. This is the issue I am addressing in the book that I am writing, How to Govern.
In it, in essence, I ask three questions. The first is what government is for. The second is what it can do. And the third is the question we should ask of people who want to exercise control over it, which is why they wish to do so.
We've forgotten the answers to the first two questions, and the third reframes politics.
That's why I have been working so hard on the book. We need a better song to sing, and although the book will not, as far as I know, be transformed into a musical, I believe that is what it and its sequel, which I am already planning, represent.
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Awesome! Hope you get a rest today and so looking forward to reading the book.
Thanks
It is now my constant companion, whether I want it to be or not.
I was speaking to a chartered accountant who relayed the problems of British Car Auctions to me. The car seller said that we can’t move our diesel cars off the lot to make way for incoming 2nd hand cars and are having to discount them massively to get them moving. We’ve been telling prospective customers that the real price of diesel has been higher in 2008, 2012 and 2022 and made a poster to show that today’s price is below those levels. Some are convinced but most say “I’ll take things that didn’t happen for $500, Alex”.
As my mother used to say of the old and unchanging ‘It’s that old it’s got hairs on it’ – and so it is with Neo-liberalism’s song still dominating the charts.
I’ve recounted before that in Britain’s post war economy my working class father was able to work as a tool maker, educated by his union, did piece work and had bought and paid for his house by the time I was four. My mum could stay at home and look after us 3 kids. Anyhow, he was promoted and bought a new house in 1970. In 1971, some Yanks bought his engineering firm and then asset stripped and closed it down right under the nose of a British government. Dad managed to get the Yanks to pay his holiday pay with the help of the union (he won the case and the barrister gave him his turquoise Parker ink pen which I have to this day).
After that, Dad had a number of jobs, ending up working on the buses. Mum had to go to work, financial problems abounded, she was prescribed Mogadon for depression and was never the same again.
In the early 1990s, I was made redundant by the economy for third time at 27 despite working God knows how many hours a week since the late 80’s. This led to a dalliance with considering an early exit and the Samaritans.
And now I look at my own two children, and their challenges and I realise that nothing has actually changed has it? The same old song is still being played, my two degrees and efforts to ‘get on’, my children’s – they all seem to mean nothing at all to ‘some people’.
A new song?
Absolutely.
Thanks, PSR, and good luck to them, as I say to mine. They need it.
How neoliberal politicians seem to me (as an outsider) to answer your 3 questions:
Q: What [neoliberal] government is for? A: Creating relatively stable short-term conditions for the ongoing extraction and upwards redistribution of wealth.
Q: What it [neoliberal government] can do? A: Continue supporting anything that enables the above agenda (legal enforcement of contracts re. corporate and intellectual property rights, international “trade” agreements, national “defense” spending, etc.). For anything else, get out of the way as far as possible.
Q: Why they [the neoliberal politicians] wish to do so? A: it makes them feel important to be “in charge”? They are not deep thinkers: they genuinely believe alternatives to be impossible and see managed decline under them as the only possibility? (if a lie is repeated often enough…) Self (or, more charitably, family) interested career progression? (i.e. they look forward to lucrative post government positions as corporate “consultants”, etc.)
How progressive politicians might answer these 3 questions instead:
Q: What [progressive] government is for? A: Supporting citizens to reach their full potential (within planetary boundaries)
Q: What it [progressive government] can do? A: Create the economic conditions required to enable the above agenda (funding public services properly, supporting more small businesses and social enterprises, enabling more third spaces, addressing climate change, etc.)
Q: Why they [the progressive politicians] wish to do so? A: They care about alleviating suffering as widely as possible and supporting people to reach their potential? They want our species to survive climate change (and other existential threats) and have the humility required to listen properly to their leading scientists and take the actions they’re told are necessary?
I like your 3 questions. They force politicians to make their “priors” explicit and encourage us as citizens to more closely examine their motivations for seeking office.
Thank you, and much to agree with.
I was struck by 2 headlines over the weekend. The first was that the riots by students etc was a “leftist” revolt; the other article was about who will replace Macron – and it seems le Pen is the fave, and she is far right. When I look at each side, the only thing I see separating them is immigration, but they have a lot in common too. Immigration is an easy scapegoat to blame, but I believe that both sides are fundamentally angry about growing poverty, inequality and wasted lives. Yes, we all need a new song and I believe that it should fundamentally appeal to a lot of people.
But how do we move from words into action? I feel powerless, I have nobody that I can vote for on this, but how can I and others help?
I am considering a video on this.