Neoliberal economics (aka casino
capitalism) function from one crash to another. Risk is
pervasively underpriced under neoliberal system, resulting in bubbles small and large which hit the
economy periodically. The problem are not strictly economical or political. They are ideological. Like
a country which adopted a certain religion follows a certain path, The USA behaviour after adoption
of neoliberalism somewhat correlate with the behaviour of alcoholic who decided to booze himself to
death. The difference is that debt is used instead of booze.
Hypertrophied role of financial sector under neoliberalism introduces strong positive feedback look
into the economic system making the whole system unstable. Any attempts to put some sand into the wheels
in the form of increasing transaction costs or jailing some overzealous bankers or hedge fund managers
are blocked by political power of financial oligarchy, which is the actual ruling class under neoliberalism
for ordinary investor (who are dragged into stock market
by his/her 401K) this in for a very bumpy ride. I managed to observe just two two financial crashed
under liberalism (in 2000 and 2008) out of probably four (Savings
and loan crisis was probably the first neoliberal crisis). The next crash is given, taking into
account that hypertrophied role of financial sector did not changes neither after dot-com crisis of
200-2002 not after 2008 crisis (it is unclear when and if it ended; in any case it was long getting
the name of "Great Recession").
Timing of the next crisis is anybody's guess but it might well be closer then we assume. As Mark
Twain aptly observed: "A thing long expected takes the form of the unexpected when at last it comes"
This morning that meant a stream of thoughts triggered by Paul Krugman’s most
recent op-ed, particularly this:
Most of all, the vast riches being earned — or maybe that should be “earned” —
in our bloated financial industry undermined our sense of reality
and degraded our judgment.
Think of the way almost everyone important missed the warning signs of an impending crisis.
How was that possible? How, for example, could Alan Greenspan have declared, just a few years
ago, that “the financial system as a whole has become more resilient” — thanks to derivatives,
no less? The answer, I believe, is that there’s an innate tendency
on the part of even the elite to idolize men who are making a lot of money, and assume that they
know what they’re doing.
As most 401K investors are brainwashing into being "over bullish", this page is strongly bearish
in "perma-bear" fashion in order to serve as an antidote to "Barrons" style cheerleading. Funny, but
this page is accessed mostly during periods of economic uncertainty. At least this was the case during
the last two financial crisis(2000 and 2008). No so much during good times: the number of visits drops
to below 1K a month.
It was clear that 2017 stock market run was detached from fundamentals. Mostly speculative run. And the current stock market
decline could well happen three months aerler or three month later but it was in the cards. It is difficult to estimate the power of
inertia in such speculative runs. Also layoffs and decline of the standard liming of workers and lower middle class still can
continue to improve the balance sheet until "Yellow Vests" moment stops them.
Jobs created now are mostly "inferior" low paid or temp/contractor jobs and the numbers just mask the cruel reality of the USA
Which in reality is dismal, especially for young and old workers. several more or less paid specialties disappeared in 2018 due
to automation (cash office worker is one). automatic cashier is supermarkets are also now more visible. So spontaneous cases
of vandalism, killings of coworkers and other form of "action of desperation" (as well as the rate of death from opioids -- which is
yet another form of the same) would not be too surprising in such an atmosphere. Even with the power of the current national
security state. Trump is playing with fire trying to cut on food stamps and implementing some other action in this program of
"national neoliberalism" which is in internal policy is almost undistinguishable from neofascism. He risk facing "Macron
situation" sooner or later.
In any case at some point Minsky moment should arrive for the stock market. I am not sure that the current decline is that start
of such an event. It might be postponed further down the line for a year or two. But it will eventually come. We can
only guess what form it might take, but with the current Apple troubles and valuations of tech sector I think it might take the form
of something similar to dot-com bubble deflation No.2
I do not see Amazon, Google, Facebook and Microsoft and other tech high flyers completely immune to the stock crash of 50%
magnitude or more. For example, Google is overly dependent on advertising revenue which can grow only by strangulating small sites
owners which use it as the advertizing platform (which it successfully implements fro several years now). But at some point owners
might revolt and start dropping it for Microsoft or other platform. Facebook might face a backlash, if people understand that
selling data about them in the part of the business model, not an aberration.
One of the most unexplainable things that happened in 2018 was dramatic fall of oil prices in the Q4. This was quite surprising
(and destructive) after the period of little or no capital investment in the new fields for three years or so. Shale oil
production increases in the USA are only possible if junk bonds can be produced along with it. Junks bonds that will never be paid.
With the current debt load and prices below $50 most of the USA shale oil companies are zombies. Most if not all of thenm are losing
money. Only return of ~$70 oil prices can save them, if anything at all. WSJ touched this topic recently.
So this surprising fall of oil prices (from around $70 to around $43 WTI) looks connected to the speculations in the "paper oil"
Financialization allows for oil price to be completely detached from fundamentals for a year or even two (Saudis need over $80 I
think to balance the budget, I think; this represents "fair price" as they are one of the three largest producers).
But you will never know this unless there are shortages at gas stations. The difference is covered by inflated statistics from
IEA and similar agencies as well as "paper oil" -- future contracts which are settled in dollars.
This is the reality of "casino capitalism" ( aka neoliberalism ) with its rampant and destructive financialization.
"... The CAPE aims to correct for those distortions. It smooths the denominator by using not current profits, but a ten-year average, of S&P 500 earnings-per-share, adjusted for inflation. Today, the CAPE for the 500 reads 29.7. It's only been that high in two previous periods: Before the crash of 1929, and during the tech bubble from 1998 to 2001, suggesting that when stocks are this expensive, a downturn may be at hand. ..."
"... is 36.1% higher ..."
"... Here's the problem that the CAPE highlights. Earnings in the past two decades have been far outpacing GDP; in the current decade, they've beaten growth in national income by 1.2 points (3.2% versus 2%). That's a reversal of long-term trends. ..."
"... Right now, earnings constitute an unusually higher share of national income. That's because record-low interest rates have restrained cost of borrowing for the past several years, and companies have managed to produce more cars, steel and semiconductors while shedding workers and holding raises to a minimum. ..."
"... t's often overlooked that although profits grow in line with GDP, which by the way, is now expanding a lot more slowly than two decades ago, earnings per share ..."
"... The reason is dilution. Companies are constantly issuing new shares, for everything from expensive acquisitions to stock option redemptions to secondary offerings. New enterprises are also challenging incumbents, raising the number of shares that divide up an industry's profits faster than those profits are increasing. Since total earnings grow with GDP, and the share count grows faster than profits, it's mathematically impossible for EPS growth to consistently rise in double digits, although it does over brief periods––followed by intervals of zero or minuscule increases. ..."
"... The huge gap between the official PE of 19 and the CAPE at 30 signals that unsustainably high profits are artificially depressing the former. and that profits are bound to stagnate at best, and more likely decline. ..."
"... In an investing world dominated by hype, the CAPE is a rare truth-teller ..."
For the past half-decade, a controversial yardstick called the CAPE has been flashing red,
warning that stock prices are extremely rich, and vulnerable to a sharp correction. And over
the same period, the Wall Street bulls and a number of academics led by Jeremy Siegel of the
Wharton School, have been claiming that CAPE is a kind of fun house mirror that makes
reasonable valuations appear grotesquely stretched.
CAPE, an acronym "Cyclically-adjusted price-to-earnings ratio," was developed by economist
Robert Shiller of Yale to correct for a flaw in judging where stock prices stand on the
continuum from dirt cheap to highly expensive based on the current P/E ratio. The problem:
Reported earnings careen from lofty peaks to deep troughs, so that when they're in a funk,
multiples jump so high that shares appear overpriced when they're really reasonable, and when
profits explode, they can skew the P/E by creating the false signal that they're a great
The CAPE aims to correct for those distortions. It smooths the denominator by using not
current profits, but a ten-year average, of S&P 500 earnings-per-share, adjusted for
inflation. Today, the CAPE for the 500 reads 29.7. It's only been that high in two previous
periods: Before the crash of 1929, and during the tech bubble from 1998 to 2001, suggesting
that when stocks are this expensive, a downturn may be at hand.
The CAPE's critics argue that its adjusted PE is highly inflated, because the past decade
includes a portion of the financial crisis that decimated earnings. That period was so unusual,
their thinking goes, that it makes the ten-year average denominator much too low, producing
what looks like a dangerous number when valuations are actually reasonable by historical norms.
They point to the traditional P/E based on 12-month trailing, GAAP profits. By that yardstick
today's multiple is 19.7, a touch above the 20-year average of 19, though exceeding the
century-long norm of around 16.
I've run some numbers, and my analysis indicates that the CAPE doesn't suffer from those
alleged shortcoming, and presents a much truer picture than today's seemingly reassuring P/E.
Here's why. Contrary to its opponents' assertions, the CAPE's earnings number is not
artificially depressed. I calculated ten year average of real profits for six decade-long
periods starting in February of 1959 and ending today, (the last one running from 2/2009 to
2/2019). On average, the adjusted earnings number rose 22% from one period to the next. The
biggest leap came from 1999 to 2009, when the 10-year average of real earnings advanced
So did profits since then languish to the point where the current CAPE figure is
unrealistically big? Not at all. The Shiller profit number of $91 per share is 36.1%
higher than the reading for the 1999 to 2009 period, when it had surged a record 40%-plus
over the preceding decade. If anything, today's denominator looks high, meaning the CAPE of
almost 30 is at least reasonable, and if anything overstates what today's investors will reap
from each dollar they've invested in stocks.
Indeed, in the latest ten-year span, adjusted profits have waxed at a 3.2% annual pace,
slightly below the 3.6% from 1999 to 2009, but far above the average of 1.6% from 1959 to
Here's the problem that the CAPE highlights. Earnings in the past two decades have been
far outpacing GDP; in the current decade, they've beaten growth in national income by 1.2
points (3.2% versus 2%). That's a reversal of long-term trends. Over our entire 60 year
period, GDP rose at 3.3% annually, and profits trailed by 1.3 points, advancing at just 2%. So
the rationale that P/Es are modest is based on the assumption that today's earnings aren't
unusually high at all, and should continue growing from here, on a trajectory that outstrips
It won't happen. It's true that total corporate profits follow GDP over the long term,
though they fluctuate above and below that benchmark along the way. Right now, earnings
constitute an unusually higher share of national income. That's because record-low interest
rates have restrained cost of borrowing for the past several years, and companies have managed
to produce more cars, steel and semiconductors while shedding workers and holding raises to a
Now, rates are rising and so it pay and employment, forces that will crimp profits. I
t's often overlooked that although profits grow in line with GDP, which by the way, is now
expanding a lot more slowly than two decades ago, earnings per share grow a lot
slower, as I've shown, lagging by 1.3 points over the past six decades.
An influential study from 2003 by Rob Arnott, founder of Research Affiliates, and co-author
William J. Bernstein, found that EPS typically trails overall profit and economic growth by
even more, an estimated 2 points a year.
The reason is dilution. Companies are constantly issuing new shares, for everything from
expensive acquisitions to stock option redemptions to secondary offerings. New enterprises are
also challenging incumbents, raising the number of shares that divide up an industry's profits
faster than those profits are increasing. Since total earnings grow with GDP, and the share
count grows faster than profits, it's mathematically impossible for EPS growth to consistently
rise in double digits, although it does over brief periods––followed by intervals
of zero or minuscule increases.
The huge gap between the official PE of 19 and the CAPE at 30 signals that unsustainably
high profits are artificially depressing the former. and that profits are bound to stagnate at
best, and more likely decline. The retreat appears to have already started. The Wall
Street "consensus" Wall Street earnings forecast compiled by FactSet calls for an EPS decline
of 1.7% for the first quarter of 2017, and zero inflation-adjusted gains for the first nine
months of the year.
In an investing world dominated by hype, the CAPE is a rare truth-teller .
US reserves are estimated by some to about 50 billion barrels. Oil production, along with
reserve estimates, are growing in the US for one reason and one reason only, the advent of shale
oil. Reserve estimates before 2008 were based on conventional oil.
Onshore conventional oil production in the USA is in steep decline. Shale oil production is
intrinsically connected with financing and it produce along with oil a stream of junk bonds. At
some point investors might do not want them of the bubble start deflating. Then what.
"... Next three years for Shale Drillers may be a problem. I believe something like $150B in debt comes due between now and 2023. That's a lot of debt to roll over, as well as take on more debt to fund CapEx. ..."
"Dennis, with his calculation of a peak in 2025 + or – 3 years is about right."
That really depends on how much debt the Shale Drillers can take on, and presumes there is
not another global recession before 2025. Next three years for Shale Drillers may be a
problem. I believe something like $150B in debt comes due between now and 2023. That's a lot
of debt to roll over, as well as take on more debt to fund CapEx.
Without constant US Shale
production increases, world production peaks.
US reserves are estimated by some to about 50 billion barrels. Oil production, along with
reserve estimates, are growing in the US for one reason and one reason only, the advent of shale
oil. Reserve estimates before 2008 were based on conventional oil.
Onshore conventional oil production in the USA is in steep decline. Shale oil production is
intistically connected with financing and it produce along with oil a stream of junk bonds. At
some point investors might do not want them of the bubble start deflating. Then what.
"Dennis, with his calculation of a peak in 2025 + or – 3 years is about right."
That really depends on how much debt the Shale Drillers can take on, and presumes there is
not another global recession before 2025. Next three years for Shale Drillers may be a
problem. I believe something like $150B in debt comes due between now and 2023. That's a lot
of debt to roll over, as well as take on more debt to fund CapEx. Without constant US Shale
production increases, world production peaks.
I have been suspicious for some time that production numbers can be corrupted by fuzzy
definitions. Iran is being sanctioned, but Iran shares that enormous gas field under the
Persian Gulf with Qatar. Gas production yields condensate and it yields NGLs.
High vapor pressure NGLs get labeled liquefied petroleum gas, and that is used for
transportation fuel in India. Pentane Plus is used or called something akin to natural
You can see how the definitions are going to blur and they're going to allow declaring oil
production numbers to be anything that they want them to be. Iran is using this to dodge
sanctions, or they did use it when condensate was not restricted. Don't recall if that
loophole was closed in the current sanctions. That would be a good thing to know.
The same thing can happen with shale. We hear all sorts of talk about how much gas is
being flared and how much gas is being captured, and you know perfectly well there has to be
condensate involved. There was an article a year or so ago about NGL capture in the Bakken,
but I don't recall any follow-up. It shouldn't take too much of a stretch on the part of
state regulators to find a way to count the high vapor pressure portion of NGL as oil.
You can see how the definitions are going to blur and they're going to allow declaring
oil production numbers to be anything that they want them to be.
Exactly. And this, in turn, allows Wall Street to suppress the price of "prime oil"
using fake production numbers, fake storage glut (which is essentially condensate glut)
and similar tricks. Please note that the US refineries consume mainly "prime oil" while
the USA mainly produces (and tries to export at a discount) "subprime oil."
Pretty polished and sophisticated racket. It might well be that shale oil companies are
partially financed from those Wall Street profits as nobody in serious mind expect those
loans to be ever repaid.
So OPEC cuts are the only weapon that OPEC countries have against this racket.
In any case, I think all those nice charts now need to be split into "prime oil" and
subprime oil parts and analyzed separately. In the current conditions, treating "heavy
oil" and condensate as a single commodity looks to me like pseudoscience.
I do not follow Laredo Petroleum closely, however their recent year-end results and
operations summary contained disclosures that may affect north American shale production more
broadly, or perhaps they are company specific, I don't know.
Laredo is a nice sized E&P producing around 70,000 boepd in the permian, mostly in
Glasscock and Regan counties. Much of their production is horizontal Wolfcamp.
Laredo has been disappointed with its oil production recently, as well as an increasing
"Laredo has taken action to address the reduced oil productivity experienced in 2018 that
we believe was impacted by the tighter spacing of some wells drilled in 2017 and 2018.
Responding to these results, the Company began widening spacing on wells spud in the first
quarter of 2019. Laredo expects this shift in development strategy to drive higher returns
and increased capital efficiency versus 2018 as widening spacing is anticipated to address
one of the causes of higher oil decline rates."
They have changed their developmental strategy to widen spacing to improve recovery and
mitigate the increasing GOR. They have also reduced their capex by around 35 % from $575
million in 2018 to a planned $365 million in 2019.
"Responding to the current commodity price environment of WTI strip pricing of
approximately $54 per barrel, Laredo expects to invest approximately $365 million in 2019,
excluding non-budgeted acquisitions. This budget includes approximately $300 million for
drilling and completion activities and approximately $65 million for
production facilities, land and other capitalized costs. Laredo anticipates adjusting capital
spending levels to match operating cash flow if operating cash flow does not meet budgeted
expectations. Should operating cash flow exceed budget expectations, free cash flow could be
used to complete additional wells, repurchase stock or pay
By the third quarter of 2019, enabled by the Company's operational flexibility, Laredo
anticipates reducing activity from the current three horizontal rigs and two completion crews
to operating one horizontal rig and utilizing a single completion crew, as needed. The
front-loaded completion schedule and disciplined reduction in activity should drive free cash
flow generation in the second half of 2019 that is expected to balance capital expenditures
with cash flow from operations for full-year 2019."
Of course this is just one producers take on productivity concerns. Link below.
Interesting. They are more a gas company than an oil company with only 23000 of the 70000
BOEs being oil. Interestingly, they are forecasting oil production to decline 5% year over
year while BOEs rises high single digits, showing how gas to oil keeps rising.
As such a tiny oil producer (23000 barrels) its pretty meaningless in the grand scheme,
but very interesting nonetheless. Thanks for sharing.
"... The unplanned shutdown takes out another 1 million barrels a day of heavy oil from the market, Alex Schindelar, executive editor of content & strategy at Energy Intelligence Group tweeted Thursday, adding that the heavy crude oil market was already tight because of the OPEC output cuts and U.S. sanctions on both Iran and Venezuela. ..."
Saudi Aramco halts oil output at the world's largest offshore oilfield: report
Saudi Aramco halted oil output this week at Safaniyah, the world's largest offshore
oilfield, Energy Intelligence reported Thursday, citing sources familiar with the matter,
according to a tweet from Amena Bakr, senior correspondent at the news and research service
provider. Further information was only available through subscription-based Energy
The potential impact on oil prices depends on how long output at the oilfield is down,
said Phil Flynn, senior market analyst at Price Futures Group.
"The thinking is that the field produces heavy crude, and the world is short of that [type
The unplanned shutdown takes out another 1 million barrels a day of heavy oil from the
market, Alex Schindelar, executive editor of content & strategy at Energy Intelligence
Group tweeted Thursday, adding that the heavy crude oil market was already tight because of
the OPEC output cuts and U.S. sanctions on both Iran and Venezuela.
In electronic trading, March WTI oil CLH9, +1.06% was at $54.51 a barrel, after settling
at $54.41 on the New York mercantile Exchange.
Okay, you will have to read the article to see how Robert arrived at his conclusion. But
his conclusion is:
So, I have no good reason to doubt Saudi Arabia's official numbers. They probably do
have 270 billion barrels of proved oil reserves.
I find his logic horribly flawed. Robert compares Saudi's growing reserve estimates with
those of the USA.
First, the US Securities and Exchange Commission have the strictest oil reporting laws in
the world, or did have in 1982. Also, better technology has greatly improved reserve
estimates. And third, the advent of shale oil has dramatically added to US reserve
Saudi has no laws that govern their reserve reporting estimates.
From Wikipedia, US Oil Reserves: Proven oil reserves in the United States were 36.4
billion barrels (5.79×109 m3) of crude oil as of the end of 2014, excluding the
Strategic Petroleum Reserve. The 2014 reserves represent the largest US proven reserves since
1972, and a 90% increase in proved reserves since 2008.
Robert says US reserves are 50 billion barrels. I don't know where he gets that number but
it really doesn't matter. Oil production, along with reserve estimates, are growing in the US
for one reason and one reason only, the advent of shale oil. Reserve estimates before 2008
were based on conventional oil. Onshore conventional oil production in the USA is in steep
Robert Rapier is brillant oil man, but a brilliant downstream oil man. Refineries are his
forte. He should know better than the shit he produced in that article.
100 percent of Saudi Arabia's reserves are based on conventional oil. Their true reserves
are very likely somewhere in the neighborhood of 70 billion barrels.
As Ron Patterson explained several times here, OPEC members cheat. They cut from the
elevated, unsustainable level, achieved specifically to accommodate cuts.
So "after cut" level is often not that different from a reasonable "normal," sustainable
production level in their current production conditions, plus some, related to previously
delayed maintenance, shutdowns.
Four years of capital underinvestment bite production both in OPEC and non-OPEC. So
talking about excess capacity is somewhat problematic and we now need to distinguish between
"prime oil" and "subprime oil."
Most people who talk about "excess capacity" are interested in lower oil price (the list
includes US and EU governments ) That's why condensate and other "subprime oil" is counted in
total oil output. Supply of "prime oil" now is stressed.
In other words, everything connected with oil is now politically charged. That means that
it is not wise to take IEA data and their forecasts at face value. It should be viewed as an
opinion of the agencies deeply (institutionally) interested in the low oil price.
You need the ability to read between the lines, much like readers of the press in the
USSR. And as several experts here do. You need the acute ability to cut through "official
And neutral expert opinion is very difficult to come by. That's why this blog has so much
If you take a look at PXD announcements, I reach the conclusion that Permian is slowing. Like
Dennis Coyne, I look at growth after fourth quarter 2018. Oil production in fourth quarter is
199.2 Kilo barrels/day. The guidance for 2019 is between 203 to 213 Kilo barrels/day. PXD is
spending 300 MM dollars for gas processing and water treatment infrastructure.
OPEC says they have 1214.21 billion barrels of proven reserves. And they say non-OPEC has
268.56 billion barrels of proven reserves. Average OPEC C+C production, over the last four
years, has been 12.78 billion barrels per year according to the EIA. The EIA says the average
non-OPEC C+C production over the last four years has been 16.8 billion barrels per year.
Okay, here is the killer. If those numbers are correct then the average non-OPEC nation
has an R/P ratio of 16 while the average OPEC nation has an R/P ratio of 95. If you think
those R/P ratio numbers are even remotely correct then I have a bridge I would like to sell
I agree that the R/P numbers seem very suspicious. But if this is true then OPEC reserves
are closer to 400-500 billion barrels not 1.2 trillion barrels. That would give us another
trillion barrels at best to consume in the future in addition to the 1.3 trillion already
consumed. This brings the URR to 2.2-2.5 trillion barrels at best including extra heavy. What
do you think of the URR of 3.1 trillion barrels that is commonly assumed? Also canadian tar
sands and venezuelan heavy oil have very low EROI which brings down the extractable oil
reserves further. Do you think that is taken into account?
This fallacious narrative of the U.S. tight oil industry overcoming the oil price crash of
2014 through innovation and better efficiency is the product of bundling various tight oil
basins under one umbrella and the presentation of the resulting production data as a proof U.S.
To properly understand the impact of the oil price crash of 2014 on U.S. tight oil
production one must focus on shale basins with sufficient operating history prior to the oil
price crash and examine their performance post the crash.
To that end, the Bakken and the Eagle Ford are the perfect specimen.
The Bakken and the Eagle Ford are the two oldest tight oil basins in the United States, with
the former developed as early as 2007 and the latter in 2010.
Examining the production performance of these two basins in the 4 years preceding the oil
crash and contrasting it to the 4 years subsequent to it, offers important insight as to the
resiliency of U.S. tight oil production in a low oil price environment.
... ... ...
Both the Bakken and the Eagle Ford grew at a phenomenal rate between 2010 and
2014. The Eagle Ford grew from practically nothing in 2010 to 1.3M barrels by 2014, while the
Bakken grew five fold from 190K barrels to 1.08M barrels. Following the collapse in oil prices
in late 2014, the Bakken and Eagle Ford growth continued for another year, albeit at a slower
pace, as the pre-crash momentum carried production to new highs. However, by 2016, both the
Bakken and the Eagle Ford went into a decline and have hardly recovered since. It took the
Bakken three years to match its 2015 production level, meanwhile the Eagle Ford production
remains 22% below its 2015 peak. During the pre-crash years these two fields grew by a combined
yearly average of 600K to 700K barrels from 2012 to 2014. Post the oil price collapse, this
torrid growth turned into a sizable decline by 2016 before stabilizing in 2017.
Growth in both fields only resumed in 2018 at a combined yearly rate of 210K barrels, a 70%
reduction from the combined fields pre-crash growth rate.
The dismal performance of these two fields over the last few years paints a different
picture as to U.S. tight oil resiliency in a low oil price environment. The sizable declines,
and muted production growth in both the Bakken and the Eagle Ford since 2014 discredit the leap
in technology and the efficiency gains narrative that has been espoused as the underlying
reason beyond the strong growth in U.S. oil production. As we expand our look into other tight
oil basins, it becomes apparent that it was neither technology or efficiency that saved the
U.S. tight oil industry, although these factors may have played a supporting role. In simple
terms, the key reason as to the strength of U.S. production since the 2014 oil crash is better
rock, or rather, the commercial exploitation of a higher quality shale resource, namely the
Permian oil field.
... ... ...
The Permian oil field, unlike the Bakken and the Eagle Ford, was a relative latecomer to the
U.S. tight oil story. It was only in 2013, only a year before the oil crash, that the industry
commenced full scale development of that giant field's shale resources. Prior to 2013, the
Permian lagged both the Bakken and the Eagle Ford in total tight oil production and growth. As
can be seen from the preceding graph, the oil crash had only a minor dampening effect on the
Permian oil production growth. By 2017, Permian tight oil growth resumed at a healthy clip, and
by 2018, Permian tight oil production growth shattered a new record with production
skyrocketing by 860K barrels in a single year to 2.76M barrels. This timely unlocking and
exploitation of the Permian oil basin masked to a large degree the devastation endured by the
Bakken and the Eagle Ford post 2014. In essence, the U.S. tight oil story has two phases
masquerading as one: the pre-2014 period marked by the birth and rise of the Bakken and Eagle
Ford, and the post-2014 period, marked by the rise of the Permian.
To speak of the U.S. tight oil industry as one is to mistake a long-distance relay race
for the accomplishment of a single runner.
The performance divergence between the Bakken, Eagle Ford, and the Permian has major
implications as to the likelihood of U.S. tight oil production suppressing oil price over the
medium and long term. A close examination of U.S. tight oil production data leads to a single
indisputable conclusion: without the advent of the Permian, the U.S. tight oil industry would
have lost the OPEC lead price war. Hence, it's a misnomer to treat the U.S. tight oil industry
as a monolith, in many ways, the Bakken and the Eagle Ford tight oil fields are as much a
victim of the Permian success as the OPEC nations themselves.
... ... ...
Considering that the majority of U.S. tight oil production growth is
generated by a single field, the Permian, changes in the growth outlook of this basin have
major implications as to the evolution of global oil prices over the short, medium and long
term. Its important to keep in mind that the Permian oil field, despite its large scope, is
bound to flatten, peak and decline at some point. While forecasters differ as to the exact year
when the Permian oil production will flatten, the majority agree that a slowdown in Permian oil
production growth will take place in the early 2020s.
According to OPEC (2018 World Oil Outlook), the Permian basin oil production curve is likely
to flatten by 2020, with growth slowing down from 860K barrels in 2018 to a mere 230K barrels
cuts could erase the supply surplus in the near future. Saudi Arabia has promised to cut
more than required, lowering output in January by 350,000 bpd while also promising another
500,000 bpd cut by March.
"[C]ore-OPEC producers are adopting a 'shock and awe' strategy and exceeding their cut
commitment," Goldman Sachs said in a note, predicting that Brent oil prices will average $67.50
per barrel in the second quarter.
To accommodate steadily rising barrels of light oil, OPEC and its non-OPEC partners have
backed out their own supplies in order to prevent a crash in prices. But many OPEC members
produce medium and heavier blends.
The quantity of global supply may not be vastly different, but the quality of the crude
slate has changed dramatically. Refiners cannot easily swap out one type for another. The
upshot is that the world is seeing a glut of light oil at a time when supply of medium and
heavier barrels are relatively tight.
... ... ...
U.S. sanctions against Venezuela and Iran are magnifying this trend, knocking even more
medium and heavier barrels off of the market.
... ... ...
The IEA said that these quality differences could cause some problems this year. "In
quantity terms, in 2019 the US alone will grow its crude oil production by more than
Venezuela's current output," the agency wrote in its Oil Market Report published Wednesday. "In
quality terms, it is more complicated. Quality matters."
"... By Richard Murphy, a chartered accountant and a political economist. He has been described by the Guardian newspaper as an "anti-poverty campaigner and tax expert". He is Professor of Practice in International Political Economy at City University, London and Director of Tax Research UK. He is a non-executive director of Cambridge Econometrics . He is a member of the Progressive Economy Forum. Originally published at Tax Research UK ..."
"... Like much of political economy, this is a story of power. In the first instance this was professional power. The big firms did, as professional institutes developed, have the means to dominate them. They were in the capital cities where those institutes were usually based. They had the means to release partner time to manage those institutes' affairs. They had the motive to do so. That was ring-fencing their profit. The big firms, then, used their power to set the rules for their professions. ..."
"... Have been reading The Billion-Dollar Whale about the 1MDB mega-heist, facilitated by auditors and bank compliance officers at every step as the Malaysian people were fleeced of billions to pay for sickening rounds of parties, yachts, champagne baths, jewelry, gambling, and garish mansions. "Odious debt" if ever there were. ..."
"... Good topic to cover. The accounting firms are right up there with the ratings agencies as 'high priests' of capital whose blessing is required if your are to be welcome into the halls of power. ..."
And why don't shareholders who've been hurt due to professionals signing off on crooked corporate conduct sue? They can't. As
we wrote in ECONNED:
Legislators also need to restore secondary liability. Attentive readers may recall that a Supreme Court decision in 1994 disallowed
suits against advisors like accountants and lawyers for aiding and abetting frauds. In other words, a plaintiff could only file
a claim against the party that had fleeced him; he could not seek recourse against those who had made the fraud possible, say,
accounting firms that prepared misleading financial statements. That 1994 decision flew in the face of sixty years of court decisions,
practices in criminal law (the guy who drives the car for a bank robber is an accessory), and common sense. Reinstituting secondary
liability would make it more difficult to engage in shoddy practices.
In other words, the only party that can sue an accounting firm for engaging in fraudulent conduct is his immediate client .who
almost certainly is in on the con. Lovely.
I was asked very recently why it was that the big 4 firms of accountants survive. This is an issue I have been considering with
Len Seabrooke and Saila Stausholm at Copenhagen Business School. The academic paper on the subject is in progress. Let me offer a
plain English perspective for now.
Like much of political economy, this is a story of power. In the first instance this was professional power. The big firms
did, as professional institutes developed, have the means to dominate them. They were in the capital cities where those institutes
were usually based. They had the means to release partner time to manage those institutes' affairs. They had the motive to do so.
That was ring-fencing their profit. The big firms, then, used their power to set the rules for their professions.
Leading the way at a technical level as well, in a profession lead from these firms and not by either government or academia,
these firms also innovated in ways that ring fenced their market. I suspect that this may have provided the strongest incentive for
the creation of consolidated accounts – which were not a universal requirement for group companies until the 1940s. When consolidated
accounts required that multinational groups be treated as single entities their auditors, who I strongly suspect sold its benefit
to governments who then made it a legal requirement, could in turn demand that they were the sole group auditor. The global spread
of a select few firms was guaranteed. The rise of the global firm was the consequence.
These firms succeeded. The firms then sold consultancy advising other companies to copy the success of their global company clients
by also becoming global using a structure that guaranteed market growth in auditing for the big accountants. The market for the big
audit firms was reinforced.
As this was happening in the 50s and 60s another phenomena was growing, which was the tax haven. Slowly at first, but steadily
as the British empire (in particular) receded, the opportunity to hide nefarious activity, as well as profits and so tax bills in
such places, grew. Did the big firms go there before their clients? Or did they have to go because some clients had already gone?
It's a question to be answered. But if the firms were to maintain their demand that they must be sole auditor, worldwide, at least
in name, then if the global entities they were helping spawn moved to tax havens then they too had to go there.
And they did not miss the opportunity. Already used to lobbying and forming opinion on legislation in the countries from which
they originated, and well aware of the coercive power this gave them over their clients, the governments of new tax havens must have
seemed easy pickings to the big accountants of the day. And so they were. Whole rafts of legislation were influenced by such firms
as they peddled in tax havens the secrecy that opposed the transparency they sold elsewhere. The opportunities must have seemed unlimited.
But the timeline has now reached the 70s, and life was not so good for accountants. Airlines failed back then, with people noticing
that their accounts gave no hint that they owned or used planes. In contrast, aeroplane engine makers were claiming that they had
value when the products they were developing at enormous cost for the time were unlikely to push anything into the sky. Accounts
were not providing a true and fair view.
In the face of significant threats to the profession from an outraged public (well, at least those parts losing money as a result
of these failings) the big firms reclaimed the initiative. Accounting standards – supposedly written in the public interest and for
the benefit of all stakeholders – were created and governments that were too trusting by half gave them the force of law. The power
of the big accountants was reinforced, rather than diminished, by the accounting debacles of that era. Now they could write the rules;
say they had the power of law; force them onto their clients and the rest of the profession; and in the process pull themselves ahead
of the competing pack. They could do that by advising on the very rules they had created; by claiming to be the only people who could
audit them; and by making sure that because some only applied to larger enterprises the knowledge of their use did not trickle down
into the profession as a whole.
And they exploited this to the full. The era of capital market liberalisation and globalisation simply provided greater opportunity
to do this, whilst the new and more relaxed ethics of this period promoted the use of tax havens in ways previously unforeseen, and
the firms jumped with both feet into this market as well, producing tax avoidance schemes by the bucket load.
And things only got better. Although the accountants failed miserably to deliver what they promised when accounting standards
were first developed, because they entirely ignored the needs of almost all users of accounts, their capture of the process was so
complete that when the European Union was looking for a set of single accounting standards they adopted the Big 4 created International
Financial Reporting Standards as quasi law, which has now led to their adoption in more than a hundred countries worldwide, with
a parallel process taking place in the USA, Japan and other influential markets. The ability of these firms to control the world's
view of capitalism appeared complete, and they reaped the rewards.
And then some cracks appeared. There was a global financial crisis, which accounts had not anticipated. And there was a global
loss of tax revenue, which accountants appear to have facilitated through tax havens. And rather annoying people pointed out both
failings. You would have thought that the fundamental failure of their product, in the form of accounting standards, and the fundamental
failure of their ethics, evidenced by their use of tax havens and sale of tax avoidance products, would have done for these firms.
Nothing, however, could be further from the truth, hence the question I was asked. How are they surviving?
Let me reiterate how we got here, because the clue is in the process.
They captured the profession, long ago.
Then they captured government, and used it to create laws that suited their purposes in influential countries like the USA
They used this law to reinforce their own audit market.
And as a result they also created the image of the modern firm, which they then sold to aspiring rivals, who were required
to replicate it, and so provide yet more fee income to these firms.
In the process they captured the tax havens and their legislatures, and used them for their own purposes.
So complete was the capture that their accounting standards became de facto law. And when the EU wanted to extend that right
to create de facto law with regard to accounting standards, the big accountants were again given the chance to write the rules.
The result is that the big four are now integral to company law, auditing law, accounting law, the law of many tax havens, the
structure of the accounting profession and the structure of many of its clients. Their desire to protect their ability to make supernormal
profit has created a situation where the entire process of law surrounding companies has been captured for their benefit, and the
behaviour of whole markets has been distorted in their favour as a result.
But what they did to achieve this result was display an ability to innovate. Whenever under criticism, they delivered an alternative.
When their ethics were questioned, they produced a supposed new standard. When the market demand that they change, for example post
Enron, that's what they appeared to do, enough to keep people at bay. And all the time, chameleon like, they emerged from each threat
with their power reinforced because they are so integral to the process of corporate regulation that government has effectively abandoned
That is how they have survived. But that also suggests how the process is changed. Government has to reclaim this process.
It has to audit.
It has to create company law.
It has to say for whose benefit company law is created, and that is not the accountants any more.
And it has to determine who will write the alternatives. None of that will be easy. But with adequate investment it is entirely
possible. These firms have captured significant parts of the processes of capitalism for their own ends. If we are to still have
mixed economies, and I think we should, then this process of capture has to be disrupted, in the public interest. It is only by doing
so that the power of the Big 4 will be challenged. Nothing else will change it.
That's the issue we face. And since there is no challenge right now the Big 4 will go on. And on. Which is right now just as they
Have been reading The Billion-Dollar Whale about the 1MDB mega-heist, facilitated by auditors and bank compliance officers
at every step as the Malaysian people were fleeced of billions to pay for sickening rounds of parties, yachts, champagne baths,
jewelry, gambling, and garish mansions. "Odious debt" if ever there were.
"In the process they captured the tax havens and their legislatures, and used them for their own purposes." That is certainly
the case in Mauritius where the former deputy PM and finance minister, Xavier-Luc Duval, worked for KPMG in London and Port-Louis.
In the UK, Patricia Hewitt left the cabinet and Commons to head public policy and affairs for one of the Big Four.
It's not just the legislatures, the former CFO to the royal family, Sir Michael Peat,was senior partner at KPMG. So was his
great grandfather, a scion of the Barclay banking family and founder of Peat Marwick. Former KPMG employees hold and have held
senior regulatory positions in the UK. KPMG seems to be the go to firm.
2. Cape Town HQD and dual listed in Frankfurt and Joburg, retailer Steinhoff International has shed over 90% of its market
value due to an "accounting scandal" (with ordinary pensioners losing billions in the process).
3. The Guptas, through their companies and aided by their man Jacob Zuma as state president, brazenly looted state coffers
on a massive scale.
As the enablers-in-chief, KPMG is woven into the common thread running across all these scandals. Not to worry though, they've
thrown a few executives under the bus and are currently on a charm offensive reminding the public just how ethical a bunch they
all are in spite of providing cover for these nefarious activities and will surely emerge from this with their "power reinforced".
PS: Steinhoff has set up an "ethics hotline" run by who? KPMG, wonders truly never cease
I know Steinhoff well from my time at HSBC in Johannesburg and London, 2003 – 6. It had yet to become the plaything of Wiese.
KPMG is similar woven into UK scandals.
You are right to use the term "enabler in chief". It's the entire professional services industry. Law firms, too. The UK Big
Four are now setting up legal, advertising and corporate finance practices.
I was at the Blue Eagle, soon to be ABSA red in the rest of Africa, from 2014 – 6. A friend was fired from the nest after querying
why one of the Big Four was hired to manage its client on boarding remediation at a higher cost and on a longer timescale than
her team could do. The management wanted the Big Four as a firewall. Ironically, she joined one of the Big Four a few months later.
Her settlement, which included a gagging order, precluded her from working for six months.
A question for those of us not in the know. With Neoliberalism you can say that it has an intellectual back-office with places
like the Chicago school of economics. Is there an intellectual back-office of sorts for accountancy that enable these Big Four
to justify their accountancy rules as well? Or do they get to make it up as they go along?
Having the government do audits will make things worse. In the US, the PCAOB is the Big Four's cartel enforcer. The PCAOB should
be dissolved and the law changed to facilitate suits against CPAs. Let the plaintiff's bar discipline the CPA profession.
Uncle Sam had the FED create stress tests. Why? To convince the public the FED had things under control and the banking system
is sound. Why would government audits be better than the stress tests?
Uncle Sam could break up the Big Four into the not so sweet 16. Will it? Or does the Big Four do exactly what Uncle Sam wants?
Are the "problems" we see, feature or bug?
Yes, the plaintiffs bar worked very well in my early days as a CPA. Particularly because CPAs, like other professionals, had
PERSONAL liability and could not hide behind the corporate wall. This is one of those things that worked very well in real life
but someone (if it wasn't economists it was persons of the same ilk) proved it was theoretically impossible. Hence, all professionals
are now corporations where before they weren't even allowed to be called a business. From the perspective of a professional accountant
with years of watching how the system works we are, ironically, failing because of accountability. We have a smoothly functioning
form of capitalism that manifests in "Heads I win, tails you lose". That fundamental principal has been ignored from the late
'70s to today at our extreme peril culminating in the GFC where it was taken to the extreme of "Heads I win, tails I win more
and you lose more.
For anyone interested, NN Taleb writes eloquently about two subjects which are germane: experts and skin in the game, for the
same reasons as the author of this piece. The Big Four are so-called experts and they have no skin in the game. This as Taleb,
makes us all fools who have been hoodwinked because failure to understand that abuses of these two issues is what has ruined capitalism
in our lifetimes. Like the frog put in a pot of water which is slowly heated, I watched this happen over my career. It is our
formerly functioning capitalist system that is the frog in the water.
Thanks for this. There have always been some accounting practices that were supposedly "Generally Accepted" that made me scratch
my head as they didn't seem to lead to any greater transparency, and in fact often quite the opposite.
"... This assault on academic freedom by neoliberalism justifies itself by calling for "transparency" and "accountability" to the taxpayer and the public. But it operates used utter perversion of those terms. In the Neoliberal context, they mean "total surveillance" and "rampant rent-seeking. ..."
This book is the collection of more than dozen of essays of various
authors, but even the Introduction (Privatizing the Public University: Key Trends,
Countertrends, and Alternatives) is worth the price of the book
Trends in neo-liberalization of university education are not new. But recently they took a
more dangerous turn. And they are not easy to decipher, despite the fact that they are greatly
affect the life of each student or educator. In this sense this is really an eyes-opening
In Europe previously higher education as assessable for free or almost free, but for
talented student only. Admission criteria were strict and checked via written and oral entrance
exams on key subjects. Now the tend is to view university as business that get customers,
charge them exorbitant fees and those customers get diploma as hamburgers in McDonalds at the
end for their money. Whether those degree are worth money charged, or not and were suitable for
the particular student of not (many are "fake" degrees with little or no chances for getting
employment) is not university business. On the contrary, marketing is used to attract as many
students as possible and many of those student now remain in debt for large part of their adult
In other words, the neoliberalization of the university in the USA creates new, now dominant
trend -- the conversion of the university into for-profit diploma mills, which are essentially
a new type of rent-seeking (and they even attract speculative financial capital and open
scamsters, like was in case of "Trump University" ). Even old universities with more than a
century history more and more resemble diploma mills.
This assault on academic freedom by neoliberalism justifies itself by calling for
"transparency" and "accountability" to the taxpayer and the public. But it operates used utter
perversion of those terms. In the Neoliberal context, they mean "total surveillance" and
"rampant rent-seeking. "
Neoliberalism has converted education from a public good to a personal investment in the
future, a future conceived in terms of earning capacity. As this is about your future earning
potential, it is logical that for a chance to increase it you need to take a loan.
Significantly, in the same period per capita, spending on prisons increased by 126
percent (Newfield 2008: 266). Between the 1970s and 1990s there was a 400 percent increase in
charges in tuition, room, and board in U.S. universities and tuition costs have grown at
about ten times the rate of family income (ibid.). What these instances highlight is not just
the state's retreat from direct funding of higher education but also a calculated initiative
to enable private companies to capture and profit from tax-funded student loans.
The other tendency is also alarming. Funds now are allocated to those institutions that
performed best in what has become a fetishistic quest for ever-higher ratings. That creates the
'rankings arms-race.' It has very little or nothing to do with the quality of teaching of
students in a particular university. On the contrary, the curriculums were "streamlined" and
"ideologically charged courses" such as neoclassical economics are now required for graduation
even in STEM specialties.
In the neoliberal university professors are now under the iron heel of management and
various metrics were invented to measure the "quality of teaching." Most of them are very
perverted, or can be perverted as when a measurement becomes a target teachers start to focus
their resources and activities primarily on what 'counts' rather than on their wider
competencies, professional ethics and societal goals (see Kohn and Shore, this volume).
Administration bloat and academic decline is another prominent feature of the neoliberal
university. University presidents now view themselves as CEO and want similar salaries. The
same is true for the growing staff of university administrators. The recruitment of
administrators has far outpaced the growth in the number of faculty – or even students.
Meanwhile, universities claim to be struggling with budget crises that force to reduce
permanent academic posts, and widely use underpaid and overworked adjunct staff – the
'precariat' paid just a couple of thousand dollars per course and often existing on the edge of
poverty, or in real poverty.
Money now is the key objective and the mission changed from cultural to "for profit"
business including vast expenses on advancement of the prestige and competitiveness of the
university as an end in itself. Ability to get grants is now an important criteria of getting
"... they expect maybe 200 kb/d higher output in the GOM and my interpretation of George Kaplan's and SouthLaGeo's recent comments is that flat or possibly declining GOM output is a more likely scenario. ..."
The EIA's STEO released today. https://www.eia.gov/outlooks/steo/
They forecast US C+C production to increase +0.79 million barrels per day during 2019
From Dec 2018 11.93 million barrels per day
To Dec 2019 12.72 million barrels per day
The EIA's forecast might not be too far off, but I think they expect maybe 200 kb/d
higher output in the GOM and my interpretation of George Kaplan's and SouthLaGeo's recent
comments is that flat or possibly declining GOM output is a more likely scenario.
"... Erdogan has used it in Turkey ( less than three years ago ) and it was a common line in the forgotten 1930s used by none other than Mussolini. And now I quote Trump's US secretary of state Michael Pompeo on Maduro : "Now it is time for every other nation to pick a side either you stand with the forces of freedom, or you're in league with Maduro and his mayhem." ..."
"... Rigged elections? No doubt about it, although al-Sisi still maintains that his last triumph at the polls – a cracking 97 per cent – was a free and fair election. President Trump sent his "sincere congratulations" . Political prisoners? Well, the total is 60,000 and rising . Oh yes, and Maduro's last victory – a rigged election if ever there was one, of course – was a mere 67.84 per cent. ..."
"... Now the Americans are negotiating with the "terrorist" Taliban in Qatar so they can get the hell out of the Graveyard of Empires after 17 years of military setbacks, scandals and defeats – not to mention running a few torture camps which even Maduro would cough to look at. ..."
Erdogan has used it in Turkey ( less than
three years ago ) and it was a common line in the forgotten 1930s used by none other than
Mussolini. And now I quote Trump's US secretary of state
Michael Pompeo on Maduro : "Now it is time for every other nation to pick a side either you
stand with the forces of freedom, or you're in league with Maduro and his mayhem."
You get the point. Now is the time for all good people to stand alongside the United States,
the EU, the nations of Latin America – or do you support the Russkies, Chinese, Iranian
headbangers, the perfidious Corbyn and (of all people) the Greeks? Talking of the Greeks,
European pressure on Alexis Tsipras to conform to the EU's support for Guaido – proving
that the EU can indeed bully its smaller members – is a good argument for Brexiteers
(though far too complex for them to understand).
But first, let's take a look at our favourite tyrant, in the words of all who oppose him.
He's a powerful dictator, surrounded by generals, suppressing his people, using torture, mass
arrests, secret police murders, rigged elections, political prisoners – so no wonder we
gave our support to those who wish to overthrow this brutal man and stage democratic
Not a bad precis of our current policy towards the Maduro regime. But I am referring, of
course, word-for-word, to the west's policy towards the Assad regime in Syria. And our support
for opposition democracy there wasn't terribly successful.
We were not solely responsible for the
Syrian civil war – but we were not guiltless since we sent an awful lot of weapons to
those trying to overthrow Assad. And last month the notepad of US national security advisor
John Bolton appeared to boast a plan to send
5,000 US troops to Colombia
And now let's tick the box on another Maduro-lookalike – at least from the west's
simplistic point of view: the military-backed elected field marshal-president al-Sisi of Egypt,
whom we love, admire and protect. Powerful dictator? Yup. Surrounded and supported by generals?
You bet, not least because he locked up a rival general before the last election. Suppression?
Absolutely – all in the interest of crushing "terrorism", of course.
Mass arrests? Happily yes, for all the inmates of Egypt's savage prison system are
"terrorists", at least according to the field marshal-president himself. Secret police murders?
Well, even forgetting the young Italian student suspected by his government to have been
allegedly tortured and bumped off by one of Sisi's top Egyptian cops, there's a roll call of
Rigged elections? No doubt about it, although al-Sisi still maintains that his last
triumph at the polls – a cracking 97 per cent – was a free and fair election.
President Trump sent his
"sincere congratulations" . Political prisoners? Well, the total is
60,000 and rising . Oh yes, and Maduro's last victory – a rigged election if ever
there was one, of course – was a mere 67.84 per cent.
As the late sage of the Sunday Express , John Gordon, might have said: it makes you
sit up a bit. So, too, I suppose, when we glance a bit further eastwards to Afghanistan, whose
Taliban rulers were routed in 2001 by the US, whose post-9/11 troops and statesmen ushered in a
new life of democracy, then corruption, warlordism and civil war.
The "democracy" bit quickly came unstuck when "loya jurgas", grand councils, turned into
tribal playpens and the Americans announced that it would be an exaggeration to think that we
could achieve "Jeffersonian democracy" in Afghanistan. Too true.
Now the Americans are negotiating with the "terrorist" Taliban in Qatar so they can get the hell out
of the Graveyard of Empires after 17 years of military setbacks, scandals and defeats –
not to mention running a few torture camps which even Maduro would cough to look at.
Now all this may not encourage you to walk down memory lane. And I haven't even listed the
sins of Saddam, let alone our continuing and cosy relationship – amazing as it still
seems – with that Gulf state whose lads strangled, chopped up and secretly buried a
US-resident journalist in Turkey.
Now just imagine if Maduro, tired of a journalist critic slandering him in Miami, decided to
lure him to the Venezuelan embassy in Washington and top the poor guy, slice him up and bury
him secretly in Foggy Bottom. Well now, I have a feeling that sanctions might have been applied
to Maduro a long time ago. But not to Saudi Arabia, of course, where we are very definitely not
"Now is the time for democracy and prosperity in Venezuela," quoth John Bolton this week.
Oh, yes indeed. Maduro runs an oil-soaked nation yet its people starve. He is an unworthy,
foolish and vain man, even if he's not Saddamite in his crimes. He was rightly described by a
colleague as a dreary tyrant. He even looks like the kind of guy who tied ladies to railway
lines in silent movies.
So good luck to Guaido. Palpably a nice guy, speaks eloquently, wise to stick to aid for the
poor and fresh elections rather than dwell on just how exactly Maduro and his military chums
are going to be booted out.
In other words, good luck – but watch out. Instead of pleading with those who will not
support him – the Greeks, for example – he might take a closer look at who his
foreign friends are. And do a quick track record on their more recent crusades for freedom,
democracy and the right to life. And by the way, I haven't even mentioned Libya.
"... Neoliberalism has transformed education from a social good into a production process where the final product is a reserve army of workers for the information economy. What David Harvey calls the "state-finance nexus" pushes universities to play the part by withholding state funds until they expand their enrollment and increase the number of college graduates entering the workforce. In 2012, the Obama Administration identified increasing the number of undergraduate STEM degrees by one million over the next decade as a 'Cross-Agency Priority Goal' on the recommendation of the President's Council of Advisors on Science and Technology (PCAST). ..."
"... The present relationship between the university and the state flows from the dynamics of financialization. As financialization transforms the role of the United States in the global economy, it appropriates higher education to suit the needs of finance capital. Compared to the ever-expanding administrative apparatus responsible for managing contracts and investments, programs outside of STEM and business fields are considered superfluous. Humanities programs are often downsized and tenure tracks closed to push professors into permanent part-time employment arrangements. Meanwhile, schools like Northeastern and MIT are surrounded by high-tech and business firms that rely on students and research facilities for cheap labor and productive capital. ..."
"... The position of financial and credit institutions as the financiers of America's productive infrastructure has far-reaching consequences for social institutions like universities with the potential to absorb surplus capital in the form of credit or produce the 21st-century 'information' workforce. Students, and faculty at universities like Northeastern will struggle against market pressures on universities to attract outside investors while downsizing education for as long as the U.S. economy is dominated by finance. ..."
Last month at Northeastern University, the adjunct union reached a
tentative agreement with the university administration to avert a planned walkout after
more than a year of unsuccessful negotiations. Those familiar with the adjunct campaign know
that adjunct professors are contingent workers who comprise more than half of the teaching
staff at Northeastern and are paid a couple thousand dollars for each class that they teach.
From a budgetary standpoint, contingent workers are economical because they are easily replaced
and therefore can be paid less. Still, at a school like Northeastern University with an
operating budget of more than $2.2 billion, it is hard to argue that more than half of all
professors need to earn poverty wages for the school to remain profitable.
In today's neoliberal landscape -- a term which refers to the coordinated effort by capital
and financial interests after the 1980s to privatize public institutions and deregulate markets
-- Northeastern is not unusual in its treatment of adjunct professors. The neoliberal
university model of high tuitions, bloated administrative departments, and upscale student
facilities -- along with assaults on the job security and pay of professors -- is the new norm.
It is the image of a thoroughly financialized economy that has transformed the relationship
between universities and the state.
From the 19th century through the 1970s, the relationship between universities and the state
remained constant. There was an informal arrangement of mutual independence: Academics operated
autonomously with state funding on the understanding that they were willing to pursue research
in which the state had an interest, such as medicine or space exploration. Underlying this
arrangement was the assumption that as a social good, education should drive public research
The story of how universities became neoliberalized begins with the economic crisis of the
1970s and the subsequent free-market discourse that invoked capitalism's insatiable need for
economic growth in order to equate the interests of working people with the interests of
In the three decades after World War II, the U.S. established economic hegemony over the
global capitalist world. The Fordist
compromise between strong manufacturers and a strong, suburbanizing working class yielded
unprecedented wage growth. However, the Fordist model could not last forever. As a general
rule, whenever compound economic growth falls below three percent, people
begin to get scared . In order to sustain three percent compound growth, there must be no
barriers to the continuous expansion and reinvestment of capital.
The suburbanization of postwar America did sustain high demand for American-made automobiles
and home products, but reinvestment in manufacturing eventually became difficult for capital
because a widely-unionized and militant working class created a labor shortage (i.e. near-full
employment) which drove up wages and hurt profitability. To the extent that productivity
could be improved by technological innovations, organized labor insisted on "productivity
agreements" that ensured that machines would not be used to undermine wages or benefits. To
make matters worse for U.S. manufacturers, monopolies like the Big Three auto companies were
broken by foreign imports from a newly rebuilt Europe and Japan.
In The Grundrisse , Karl Marx remarked that "every limit [to capital accumulation]
appears as a barrier to be overcome." For Marx, sustained capital accumulation requires an
"industrial reserve army" to keep the cost of labor (i.e. wages) from impeding profitability.
To restore profits, American capital had to discipline labor by drawing from the global working
population. The Immigration and Nationality Act of 1965 addressed U.S. labor scarcity by
abolishing immigration quotas based on nationality so that cheap labor would flood the market
and drive down wages. However, it proved more effective for manufacturing capital to simply
relocate to countries with cheaper labor, and throughout the 1970s and 1980s capital did just
that -- first to South Korea and Thailand, and then to China as wages in those countries became
"Globalization" entailed removing barriers to international capital relocation such as
tariffs and quotas in order to construct a global market where liquid money capital could flow
internationally to wherever it yielded the most profits. Of course, wage suppression eventually
lowers consumer demand. The neoliberal solution was for financial institutions to sustain
middle-class purchasing power through credit. In The Enigma of Capital , David Harvey
writes that "the demand problem was temporarily bridged with respect to housing by
debt-financing the developers as well as the buyers. The financial institutions collectively
controlled both the supply of, and demand for, housing!"
The point of this history though, is that the financialization of the American economy,
through which financial markets came to dominate other forms of industrial and agricultural
capital, served as the backdrop for the transformation of higher education into what it is
today. Neoliberal ideology reframed the social value of higher education as a tool for building
the next workforce to serve the new "information economy" -- a term that emerged in the midst
of globalization to describe the role of U.S. suburban professionals in the global economy.
Simultaneously, finance capital repurposed universities as points of capital accumulation and
The discourse around the information economy sought to rationalize the offshoring of
manufacturing from the U.S. The idea was that due to globalization, America has reached a stage
of development where its participation in the global economy is as a white-collar work force,
specializing in technology and the spread of information. In this telling, there is nothing
to critique about the deindustrialization of the American economy because it was inevitable. It
was then simple to realign the social goals of universities with the economic goals of Wall
Street because the state repression of radical civil rights movements on the Left and the
emergent free-market discourse of the Right formed a widespread perception of the state as
problematic . State research and development at universities was easily dismissed as
inefficient, which cleared space for a neoliberal redefinition of higher education.
Neoliberalism has transformed education from a social good into a production process
where the final product is a reserve army of workers for the information economy. What David
Harvey calls the "state-finance nexus" pushes universities to play the part by withholding
state funds until they expand their enrollment and increase the number of college graduates
entering the workforce. In 2012, the Obama Administration identified increasing the number
of undergraduate STEM degrees by one million over the next decade as a 'Cross-Agency Priority
Goal' on the
recommendation of the President's Council of Advisors on Science and Technology
At the same time that neoliberalism transforms education into a production process for
high-tech workers, it transforms the university itself into a site for surplus capital
absorption through the construction of new labs, facilities, and houses to draw wealthy
students and faculty capable of attracting federal grants. In December 2015, Northeastern filed
a letter of intent with the Boston Redevelopment Authority to propose building a residence hall
for approximately 800 students. The Boston Globe
reported that the project is currently under review by American Campus Communities, the
largest developer of private student housing in the U.S. To an economizing university
administrator, private developers are very appealing because they assume the debt generated by
construction projects. The circular process whereby a large university endowment comprised of
financial assets is used to contract a debt-financed independent developer reveals how
neoliberalism integrates universities into the circulatory system of capital as circuits of
accumulation and investment.
The present relationship between the university and the state flows from the dynamics of
financialization. As financialization transforms the role of the United States in the global
economy, it appropriates higher education to suit the needs of finance capital. Compared to the
administrative apparatus responsible for managing contracts and investments, programs
outside of STEM and business fields are considered superfluous. Humanities programs are
downsized and tenure tracks closed to push professors into permanent part-time employment
arrangements. Meanwhile, schools like Northeastern and MIT are surrounded by high-tech and
business firms that rely on students and research facilities for cheap labor and productive
The position of financial and credit institutions as the financiers of America's
productive infrastructure has far-reaching consequences for social institutions like
universities with the potential to absorb surplus capital in the form of credit or produce the
21st-century 'information' workforce. Students, and faculty at universities like Northeastern
will struggle against market pressures on universities to attract outside investors while
downsizing education for as long as the U.S. economy is dominated by finance.
"... To that end, the senator from Florida on Tuesday unveiled a proposal to limit corporate buybacks. Unlike a plan pitched by Bernie Sanders and Chuck Schumer earlier this month, Rubio's plan would seek to end preferential tax treatment of share buybacks, by decreeing that any money spent on buybacks would be considered - for tax purposes - a dividend paid to shareholders, even if individual investors didn't actually part with any stock. ..."
"... Any tax revenue generated by these changes could then be used to encourage more capital investment, Rubio said. As part of the proposal, Rubio would make a provision in the tax law that allows companies to deduct capital investment permanent (that provision is currently set to expire in 2022). ..."
"... But before lawmakers take their next steps toward regulating how and when companies should return excess capital to shareholders, they might want to take a look at a column recently published by WSJ's "Intelligent Investor" that expounds a concept called "the bladder theory." ..."
"... But the law most likely to govern here is the Law of Unintended Consequences. ..."
"... That companies bought back a record $1 trillion worth of stock last year while employers like GM slashed jobs and closed factories has stoked criticisms of the Trump tax cuts, but as the gulf between the rich and the poor grows ever more wide (a phenomenon for which we can thank the Federal Reserve and other large global central banks) it's worth wondering: facing a simmering backlash to one of the most persistent marginal bids in the market place, have investors already become too complacent about proposals like Rubio's? ..."
"... Worse, since they're largely funded by increased corporate debt (!) they amount to corporate strip-mining by senior management. This is disgraceful and dangerous. The debt will bust some corporations when the inevitable next downturn comes. ..."
"... This buyback cancer, which has grown rapidly because of corrupt SEC thinking and perverse tax incentives, requires urgent treatment. ..."
For better or worse, Republican Senator and one-time presidential candidate Marco Rubio
isn't about to let
the Democrats own the fight to curtail one of the most flagrant examples of post-crisis
corporate excess. And if he can carve out a niche for himself that might one day help him
credibly pitch himself as a populist firebrand, much like the man who went on to claim the
presidency after defeating him in the Republican primary, well, that sounds to us like a
To that end, the senator from Florida on Tuesday unveiled a proposal to limit corporate
buybacks. Unlike a plan pitched by Bernie Sanders and Chuck Schumer earlier this month, Rubio's
plan would seek to end preferential tax treatment of share buybacks, by decreeing that any
money spent on buybacks would be considered - for tax purposes - a dividend paid to
shareholders, even if individual investors didn't actually part with any stock.
According to CNBC
, the plan calls for every shareholder to receive an imputed portion of the funds equivalent to
the percentage of company stock they own, which, of course, isn't the same thing as directly
handing capital to shareholders (it simply changes the tax rate that the company buying back
the shares would pay).
Ultimately, Rubio hopes that these changes would discourage companies from buying back
stock. Those companies that continued to buy back shares would help contribute to higher
revenues by increasing the funds that can be taxed, while also raising the rate at which this
money can be taxed. Any tax revenue generated by these changes could then be used to encourage
more capital investment, Rubio said. As part of the proposal, Rubio would make a provision in
the tax law that allows companies to deduct capital investment permanent (that provision is
currently set to expire in 2022).
But before lawmakers take their next steps toward regulating how and when companies should
return excess capital to shareholders, they might want to take a look at a column recently
published by WSJ's
"Intelligent Investor" that expounds a concept called "the bladder theory."
Overall, however, buybacks (and dividends) return excess capital to investors who are free
to spend or reinvest it wherever it is most needed. By requiring companies to hang onto their capital instead of paying it out, Congress might
- perhaps - encourage them to invest more in workers and communities.
But the law most likely to govern here is the Law of Unintended Consequences. The history of investment by corporate managers with oodles of cash on their hands isn't
encouraging. Hugh Liedtke, the late chief executive of Pennzoil, reportedly liked to quip
that he believed in "the bladder theory:" Companies should pay out as much cash as possible,
so managers couldn't piss all the money away.
That companies bought back a record $1 trillion worth of stock last year while employers
like GM slashed jobs and closed factories has stoked criticisms of the Trump tax cuts, but as
the gulf between the rich and the poor grows ever more wide (a phenomenon for which we can
thank the Federal Reserve and other large global central banks) it's worth wondering: facing a
simmering backlash to one of the most persistent marginal bids in the market place, have
investors already become too complacent about proposals like Rubio's?
We ask only because
the Dow soared more than 350 points on Tuesday, suggesting that, even as Rubio added a
bipartisan flavor to the nascent movement to curb buybacks, investors aren't taking these
proposals too seriously - at least not yet.
This still doesn't address the insider trading aspect of stock buybacks, with insiders front-running the buyback.
No one's arguing that if a company's groaning with cash then buybacks make sense. But it's the other 95% of of them that
are the problem. Compare the 20 year graphs of buybacks with corporate profits, corporate debt, corporate tax paid, corporate
They tell you what everyone in higher management knows - that they're a tax-free dividend mechanism pretending to be
Worse, since they're largely funded by increased corporate debt (!) they amount to corporate strip-mining by senior
management. This is disgraceful and dangerous. The debt will bust some corporations when the inevitable next downturn comes.
This buyback cancer, which has grown rapidly because of corrupt SEC thinking and perverse tax incentives, requires
james diamond squid
Everyone is in on this ponzi. I'm expecting tax deductions for buying stocks/homes.
Microsoft co-founder Bill Gates does not think the way
to increase U.S. tax
revenue is through policies like raising the tax rate on the wealthy to 70 percent – as
has been floated by some Democratic lawmakers like New York Rep. Alexandria Ocasio-Cortez.
During a podcast interview with
The Verge , Gates responded to a question about whether raising the top rate to 70 percent
in order to fund social programs – like infrastructure initiatives – appeals to him
by saying government can be more effective in running social programs, but that's not the best
way to raise revenue.
"You finally have some politicians who are so extreme that I'd say, 'No, that's even
beyond,'" Gates said. "You do start to create tax dodging and disincentives, and an incentive
to have the income show up in other countries and things."
Gates added that the country's richest people often don't pay the highest rate because their
wealth doesn't always show up as income, it can be in the value of their stock, for
"So it's a misfocus," he added. "If you focus on that, you're missing the picture."
The billionaire businessman, however, does believe there are ways to make the current tax
code more progressive. Some of those ways include more progressive policies regarding the
estate tax, the tax on capital, or reforming FICA and Social Security taxes. Independent
Vermont Sen. Bernie Sanders recently released a proposal to expand the estate tax to a rate of
percent for those passing on assets in excess of $1 billion.
Bill Gates also called modern
monetary theory (MMT) – which asserts that because the government controls its own
currency, there is no need to worry about balancing the budget – "some crazy talk."
Ocasio-Cortez recently indicated she was open to supporting MMT.
Gates is one of the richest people in the world. He has said, despite the fact that he has
paid more in taxes than most, he should be
paying more .
Venezuela production should take a larger drop in February. Today Interim President
Guaidó announced Feb 23 would be the day a big push would be made to push humanitarian
aid columns into Venezuela. Collection points for food and medicine are now available in
Colombia and Brazil, and others are being prepared.
Maduro moved 700 special forces (FAES) which are usually kept serving as death squads in
large cities, to cover the bridges between Ureña in Venezuela and Cucuta in Colombia,
with orders to fire on the humanitarian relief trucks. Guaidó responded the border was
plenty long and Maduro lacked enough FAES and Cubans to stop the relief from crossing the
border. He also pointed out that if Maduro had to use death squads to patrol the border it
meant he didn't trust the Army, the National Guard or the National Police, so he asked for
volunteers inside Venezuela to help overcome Maduro's thugs with sheer numbers.
Today it became very common to see an individual scream "Maduro!" and the crowd respond "f
k you!". It's the way people pass the time at metro stations and while waiting in line. And
the police seem to have abandoned the usurper, because they seldom do anything about it.
Trigger warning: This post contains the discussion of depression and other mental
health issues, and suicide. If you or anyone you know needs help or support for a mental
health concern, please don't suffer in silence. Many countries have confidential phone
helplines (in Australia you can call Lifeline on 13 11 14, for example);this organisationprovides
worldwide support, whilethis websitecompiles a
number of helpline sites from around the world.
I am writing today from a place of anger; from a rage that sits, simmering on the surface of
a deep well of sadness. I didn't know Dr. Malcolm Anderson, the senior accountancy lecturer
from Cardiff University whose death, after falling from the roof of his university building,
was last week ruled
a suicide . I obviously have no way to know the complexity of his feelings or what sequence
of events led up to his decision to end his own life. However, according to the results of an
inquest, we can know what Dr. Anderson wanted his university to understand about his death
– that it was, at least in part, because of the pressures of his academic work.
The media reports that Dr. Anderson had recently been appointed to Deputy Head of his
department, significantly increasing his administrative load. Nonetheless, he was still
teaching 418 students and needed to mark their work within a 20-day turnaround. To meet that
deadline, he would have needed to work approximately 9 hours a day without food or toilet
breaks, for 20 days straight, and not do ANY other kind of work during that time (such as the
admin that comes with being a Deputy Head). Practically impossible, given he was also a human
being, with a home life, and physical needs like food, in addition to work
His wife, Diane, has been quoted saying that Dr. Anderson worked very long hours and often
took marking to family events. She has said that although he was a passionate educator who won
teaching awards every year, he had been showing signs of stress and had spoken to his managers
about his difficulty meeting deadlines. A colleague told the inquest that he was given the same
response each time he asked for help, and staffing cuts had continued.
... ... ...
And look, I get it. To someone outside the academy, I'm sure the perception
remains that academics sit in leather armchairs, gazing out the gilded windows of our ivory
towers, thinking all day.
That has not been my experience, nor that of anyone I know.
Obviously, marking load is only one issue amongst many faced in universities the world over.
But it's not bad as an illustration, partly because it's quantifiable . It's somewhat
ironic that the neoliberal metrics that we rail against, the audit culture that causes these
kinds of examples to happen, could also help us describe to others why they are a problem for
us. So quantifiability brings us to neoliberalism. How did neoliberalism become so pervasive
that it's almost impossible to imagine how the world could look different?
then and now
These last two weeks I've been working out of the Stockholm Centre for Organisational Research in Sweden,
which, by coincidence, is where Professor Cris Shore , anthropologist of
policy and the guest on our next podcast episode is
currently based. I was chatting to him the other day about the interview we recorded last
December, which centres around many of the ideas I'm discussing in this blog post. I had to
admit, I hadn't realised until we did that interview how angry many people still feel towards
Thatcher government for introducing neoliberal ideologies and practices into the public
sector. Despite doing a Ph.D. about modern university life, it hadn't fully registered for me
that events of the past , specifically the histories of politics and economics in 'the
West', were such active players in the theatre of higher education's present .
To understand today's neoliberal universities, let's explore a little history in the UK and
the US, two of the biggest influencers in the global higher education sector today. In 1979,
Margaret Thatcher rose to power on a platform of reviving the stagnant British economy by
introducing market-style competition into the public sector. This way, she claimed, she was
ensuring, that "the state's power [was] reduced and the power of the people, enhanced"
2017) . For universities, this meant increased "accountability" and quality assurance
measures that would
drag universities out of their complacency .
Meanwhile, in the US, Ronald Reagan was also arriving at neoliberalism via a different path.
Americans historically don't trust central government (Roberts,
2007) , so in 1981, Reagan introduced tax cuts (especially for the rich) for the first time
in American history, therefore "protecting" the American people from the rapacious spending
habits of the state (Prasad,
2012) . In American universities, this manifested over the next 30 years in reduced public
spending on higher education, transferring the costs for tuition to student-consumers, and
encouraging partnerships with industry and endorsements from philanthropists (often with
agendas) to cover research costs (Shumway, 2017) .
The official rationale for [neoliberal ideologies and actions] appears benign and
incontestable: to improve efficiency and transparency and to make these institutions more
accountable to the taxpayer and public (and no reasonable person could seriously challenge
such commonsensical and progressive objectives). The problem, however, is that audit confuses
'accountability' with 'accountancy' so that 'being answerable to the public' is recast in
terms of measures of productivity, 'economic efficiency' and delivering 'value for money'
What has "improved" in universities because of neoliberal practices is efficiency,
often through measures like restructures and reviews. Again, taking steps to save money and
time sounds like a positive. However, the problem with 'efficiency' is that, unlike its
counterpart 'effectiveness' (the ability to bring about a specific effect), 'efficiency' has no
end point – it is a goal unto itself. As Lorenz phrases it, "efficient, therefore, is
never efficient enough," (2012, p. 607).
Bringing this back, then, to issues of mental health and increasing workloads on campus. Liz
Morrish of Academic
Irregularities pointed out last week that when tragedies such as the death of Malcolm
Anderson occur in universities, the most common response is for said university to announce a
review. As anticipated, two days after the results of Dr. Anderson's inquest were first
reported in the media, Cardiff University
announced that they would be reviewing the 'support, information, advice and specialist
counselling' available to all staff, but also urged any academic "who has any concerns
regarding workload, to raise them with their line manager, in the first instance, so all
available advice and support can be offered."
This platitude has been taken by many online as exactly that – a platitude. Several commenters
on Twitter have pointed out that providing more mental health support doesn't actually
reduce workload, while others have noted that there has been no discussion by Cardiff U of
attempting to fix the underlying cause. I agree with them, and it's part of the reason I'm so
angry. Malcolm Anderson could easily be any one of us.
Yet, I have to admit, I'd also hate to be part of the executive team at Cardiff University
right now. Can you imagine the anguish of knowing that someone had taken their life, and held
you directly responsible? You'd have to feel so helpless, so powerless in the shadow of
neoliberal forces that permeate every last aspect of the global higher education sector. I
don't know, I haven't been a Vice Chancellor, maybe you wouldn't have to feel that way. But
it's easy to imagine how one could.
The path to neoliberal hell is paved with good
So, what's the answer? I wish I knew. What I do know is that anthropological thinking has a
lot to offer in the exploration of big immutable mobiles
2 like neoliberalism. As Sherry Ortner asks in her 2016 article " Dark anthropology and
its others: Theory since the eighties ", who better to question the power structures
inherent in 'dark' topics such as neoliberalisation or colonialism than anthropologists? Yet,
she urges an approach that also acknowledges the possibility of goodness in the world,
quoting from the opening to Michael Lambek's Ordinary Ethics as rationale:
Ethnographers commonly find that the people they encounter are trying to do what they
consider right or good, are being evaluated according to criteria of what is right and good,
or are in some debate about what constitutes the human good. Yet anthropological theory tends
to overlook all this in favor of analyses that emphasize structure, power, and interest.
(Lambeck, 2010, p. 1)
And this is where I have to deviate from the majority of the neoliberal university critiques
I've read. In these pieces, it's all too common to read criticisms of academic managers, or
administrators, or university 'service providers' as if they are The Reason that neoliberal
ideologies get enacted in university contexts. But usually, they're just human beings too, also
subject to KPIs and managerial demands and neoliberal ideologies.
Having worked at different times as an educator, a researcher, and a communications manager
in various universities for more than 10 years, and now having conducted fieldwork at a
university for my PhD, I have had the chance to observe and conduct research on at least nine
different university campuses, in at least five countries. Based on those experiences, I am in
complete agreement with Lambek: the majority
3 of non-academics that I have encountered, in every type of department, and at every
level of universities from Level 1 administrative officers to Presidents and Vice Chancellors,
"are trying to do what they consider right or good" (2010, p. 1).
They demonstrate, both through words and their actions, their beliefs that education is
valuable, and that students are important as human beings, not just as cash cows. They are
often working long hours themselves, trying to keep up with the demands that neoliberal
university life is placing on them. I just can't get on board with the idea that they are,
universally, the villains of the neoliberal horror story.
It seems much more likely, to me, that neoliberal ideologies continue to get enacted and
reinforced by academic managers because these practices have become the norm. Throughout and
because of the historical growth pattern neoliberalism has experienced, these ideologies have
put down roots, and these roots have become so entangled with other aspects of university life
as to be inseparable. For many working-aged people, neoliberalism is the water we were born
swimming in. Even presented with its inadequacies, it's difficult to imagine an
What I can agree with the critics about, however, is that non-academics often don't
understand or appreciate – or perhaps remember (if they had worked in that capacity in
the past) – the demands of being an academic, just like academics don't tend to
understand or appreciate the demands that non-academics within the university are facing.
In their recently published book
Death of the Public University (2017), Susan Wright and Cris Shore refer to the idea of
'Faculty Land' – a place synonymous with 'La La Land', where non-academic employees of
universities think academics live. This really resonates with what I saw on fieldwork at
an international university in Vietnam, but not only from administrators – academics
The thing is though, blaming others almost never works . It doesn't make things
better, it just creates a greater divide between groups, encourages isolationism and othering,
and decreases the likelihood that either side will ever want to work together to fix the
Dr Anderson's tragic death, and the similarly tragic statistics that tell us that the
collective mental health of our academics is in crisis, should be a wake up call to all
of us who work or study in universities, in any capacity. Whether it will be remains to be
Again: If you or anyone you know needs help or support for a mental health concern,
please don't suffer in silence . Sometimes talking about things with an objective
outsider can help.
If you work in a university with a counselling service, consider seeking them out.
Many have emergency sessions set aside each day.
Many countries have confidential phone helplines (in Australia you can call
Lifeline on 13 11 14, for example).
If you (or your department) have the financial means, psychologists who
specialise in working with HDR students and academics, such asDr Shari Walsh of Growth
Psychologysometimes offer Skype appointments. (I have had Skype sessions with
Shari myself; she's lovely. PS. I don't get anything out of plugging her services, I
just think what she offers is valuable.)
Yes, I know, this is a structural problem and we shouldn't have to take care of it as
individuals (see Grace Krause's moving
poem about this here ). But in the meantime, while we work on that, please seek help
if you need it .
"... 1. State Disinvestment in Universities – or Risk-free Profits for Private Providers? ..."
"... 2. New Regimes for Promoting Competitiveness ..."
"... 3. Rise of Audit Culture: Performance and Output Measures ..."
"... When a measurement becomes a target, institutional environments are restructured so that they focus their resources and activities primarily on what 'counts' to funders and governors rather than on their wider professional ethics and societal goals (see Kohn and Shore, this volume). ..."
"... One of the weaknesses in these statistics is that they fail to distinguish between administrative staff who support the teaching and research and those who do not. ..."
"... From the perspective of many university managers and human resources (HR) departments, academics are increasingly portrayed as a reluctant, unruly and undisciplined workforce that needs to be incentivized or cajoled to meet management's targeted outputs and performance indicators. ..."
"... 5. Institutional Capture: the Power of the 'Administeriat' ..."
"... Whereas in the past the main cleavage in universities was between the arts and the sciences, or what C.P. Snow (1956) famously termed 'the two cultures', today the main division is between academics and managers. ..."
"... Professor of Critical Management Studies Rebecca Boden compares the way that university managers expand their increasingly onerous regulations to the way that 'cuckoos lay their eggs in the nests of other birds, and how the young cuckoos then evict the nest-builders' offspring' (cited in Havergal 2015). This cuckoo-in-the-nest metaphor might seem somewhat overblown, but it highlights the important fact that managers and administrators have usurped power in what were formerly more collegial, self-governing institutions ..."
"... Today, rather than being treated as core members of a professional community, academics are constantly being told by managers and senior administrators what 'the university' expects of them, as if they were somehow peripheral or subordinate to 'the university'. ..."
"... 6. New Income Streams and the Rise of the 'Entrepreneurial University' ..."
"... Equally important has been the raising of student tuition fees and the relentless drive to recruit more high-fee-paying international students ..."
"... The relentless pursuit of these new income streams has had a transformative effect on universities. Almost two decades ago Marginson and Considine (2000) coined the term the 'enterprise university' to describe the model in which: the economic and academic dimensions are both subordinated to something else. Money is a key objective, but it is also the means to a more fundamental mission: to advance the prestige and competitiveness of the university as an end in itself (ibid. 2000: 5). ..."
"... Times Higher Education ..."
"... 7. Higher Education as Private Investment Versus Public Good ..."
"... most students and their families can only afford to pay for the costs of their higher education through the kinds of debt-financing that governments across the world now condemn as reckless and inappropriate for themselves. ..."
"... Yet students and parents are encouraged to take out what is effectively a 'subprime loan', in the gamble that it will eventually pay off by enhancing their future job prospects and earning power: it is a 'hedge against their future security' (Vernon 2008). In other words, higher education is now being modelled on the same types of financial speculation that produced the 2010 global financial crisis. ..."
"... The Postmodern Condition: A Report on Knowledge ..."
"... The University in Ruins ..."
"... But on the other hand, universities and their staff have been subjected to an almost continuous process of reforms and restructurings designed both to recast higher education institutions as transnational business corporations and to open up the sector to more private-sector involvement. ..."
"... One of the greatest threats to the university today lies in the 'unbundling' of its various research, teaching and degree-awarding functions into separate, profit-making activities that can then be outsourced and privatized. ..."
"... Universities no longer hold a monopoly over knowledge production and distribution and face growing competition from the emergence of new universities and from 'entirely new models of university' that Pearson itself has been spearheading to exploit the new environment of globalization and the digital revolution (ibid. 2013: 9–21). ..."
"... London Metropolitan's near-bankruptcy opened the possibility of a second method of privatization; a 'fire sale' of a university and its prized degree-awarding powers, to one of the many U.S. for profit education providers that had been seeking entry into the market ..."
Higher Education in Critical Perspective: Practices and Policies
Series editors: Susan Wright, Aarhus University; Penny Welch, Wolverhampton University
INTRODUCTIONPrivatizing the Public University: Key Trends, Countertrends and Alternatives
CRIS SHORE AND SUSAN WRIGHT
Since the 1980s, public universities have undergone a seemingly unending series of reforms
designed to make them more responsive both to markets and to government priorities. Initially,
the aim behind these reforms was to render universities more economic, efficient and effective.
However, by the 1990s, prompted by the Organization for Economic Cooperation and Development
(OECD 1998) and other international agencies, many national governments adopted the idea that
the future lay in a 'global knowledge economy'. To these ends, they implemented policies to
repurpose higher education as the engine for producing the knowledge, skills and graduates to
generate the intellectual property and innovative products that would make their countries more
These reforms were premised on neoliberal ideas about turning universities into autonomous
and entrepreneurial 'knowledge organizations' by promoting competition, opening them up to
private investors, making educational services contribute to economic competitiveness, and
enabling individuals to maximize their skills in global labour markets.
These policy narratives position universities as static entities within an all-encompassing
market economy, but alternatively, the university can be seen as a dynamic and fluid set of
relations within a wider 'ecology' of diverse interests and organizations (Hansen this volume;
Wright 2016). The boundaries of the university are constantly being renegotiated as its core
values and distinctive purpose rub up against those predatory market forces, or what Slaughter
and Leslie (1997) term 'academic capitalism'. Under pressure to produce 'excellence', quality
research and innovative teaching, improve world rankings, forge business links and attract
elite, fee-paying students, many universities struggle to maintain their traditional mandate to
be 'inclusive', foster social cohesion, improve social mobility and challenge received wisdom – let alone improve the poor records on gender, diversity
This book examines how public universities engage with these dilemmas and the implications
for the future of the public university as an ideal and set of institutional practices. The
book has arisen from a four-year programme of knowledge exchange between three research groups
in Europe and the Asia Pacific, which focused on the future of public universities in contexts
of globalization and regionalization. 1 The groups were based in the U.K.
and Denmark, chosen as European countries whose public universities have quite different
histories and current reform policies, and New Zealand, as a country at the forefront of
developing 'entrepreneurial' public universities, and with networks to other university
researchers in Australia and Asia. Through a series of six workshops, four conferences and over
thirty individual exchange visits, the project developed an extended discussion between the
three groups of researchers. This enabled us to generate a new approach and methodology for
analysing the challenges facing public universities. As a result, this book asks:
How are higher education institutions being reconfigured as 'entrepreneurial' and as
'knowledge' organizations, and with what effects?
In what ways are new management systems and governance regimes transforming the culture
How are universities responding to these often contradictory policy agendas?
How are national and international reforms impacting on the social purposes of the
university and its relationship to society?
What possibilities are there for challenging current trends and developing alternative
Mapping the Major Trends
Nowhere are the above trends more evident than in the English-speaking universities,
particularly in the U.K., Australia and New Zealand. These countries have been a laboratory for
testing out a new model of the neoliberal entrepreneurial university. At least seven key
features characterize these reforms.
1. State Disinvestment in
Universities – or Risk-free Profits for Private Providers?
The first feature is a progressive withdrawal of government support for higher education. In
the U.K., for example, the Dearing Report (1997) showed that during the previous twenty years,
a period of massive university expansion, state funding per student had declined by 40 percent.
While Tony Blair's New Labour government of 1997 proclaimed 'education, education, education'
as its key priority, it did so by introducing cost-sharing, in the form of student tuition
fees, as a way to reduce the annual deficit in the funding of university teaching.
In 2010, the British Conservative–Liberal government under David Cameron went even
further by removing all state funding for teaching except in the STEM subjects (science,
technology, engineering and mathematics).
Instead, students were now to pay fees of £9,000 per annum (a three-fold increase) for
which state-funded loans were made available. From the government's perspective, the genius of
this shifting of state funding from teaching to loans was that private for-profit education
providers could now access taxpayers' money – and this transfer of funds was further
justified ideologically as providing competition and creating a 'level playing field' between
public and private education providers.
Other countries have also decided to withdraw state funding for higher education. For
example, in September 2015, Japan's education minister Hakobyan Shimomura wrote to all of the
country's eighty-six national universities calling on them to 'take active steps to abolish
[social science and humanities] organizations or to convert them to serve areas that better
meet society's needs' (Grove 2015b).
These measures echo the wider global trend set by advocates of Milton Friedman and the
Chicago School's brand of neoliberal economics. In the 1980s, the 'Chicago boys' carried out
their most radical experiments in Chile, removing the state's direct grants to universities,
funding teaching only through students' tuition fees, and making government loans available to
students so that they could pay those fees (Bekhradnia 2015).
In the United States, the same policies have been adopted. For example, in California
between 1984 and 2004, state spending per capita on higher education declined by 12
Significantly, in the same period per capita spending on prisons increased by 126 percent
(Newfield 2008: 266). Between the 1970s and 1990s there was a 400 percent increase in charges
in tuition, room and board in U.S. universities and tuition costs have grown at about ten times
the rate of family income (ibid.). What these instances highlight is not just the state's
retreat from direct
funding of higher education but also a calculated initiative to enable private companies to
capture and profit from tax-funded student loans.
2. New Regimes for
A second major trend that has reshaped higher education has been the creation of funding and
assessment regimes designed to increase productivity and competition between universities, both
nationally and globally. What began in the 1980s as an exercise to assure the 'quality' of
research in British universities had morphed, by the end of the 1990s, into ever-more invasive
systems for ranking institutions, disciplines, departments, and even individuals.
The results were used to allocate funds to those institutions that performed best in what
has become a fetishistic quest for ever-higher ratings and 'world class' status, or what
Hazelkorn (2008: 209) has termed the 'rankings arms-race'.
Where some rankings are focused on research performance (such as the U.K.'s Research
Excellence Framework, the Excellence in Research for Australia, and New Zealand's Performance
Based Research Framework), others rank whole institutions (the Shanghai Jiao Tong Index, the QS
and THE World University Rankings). Significantly, these ranking systems have especially
negative impacts on minority groups and women (see Blackmore, Curtis, Grant and Lucas, this
volume). This obsession with auditing and measuring performance also includes systems for
evaluating teaching quality, surveying student satisfaction and measuring student engagement.
Even though vice chancellors and university managers ridicule ranking methodologies, they
have learned to their cost to take them extremely seriously, as the financial viability of a
university increasingly hinges on the reputational effects of these measures of performance
(Sauder and Espeland 2009; Wright 2012).
3. Rise of Audit Culture:
Performance and Output Measures
Third, running alongside the growth of these ranking systems has been the proliferation of
performance and output measurements and indicators designed to foster transparency, efficiency
and 'value for money'. This is part of a wider phenomenon called 'audit culture' and its
growing presence throughout the public and private sectors, including higher education (Shore
and Wright 2015; Strathern 2000). Driven by financial imperatives and the rhetoric of 'value
for money' – and justified by a political discourse about the virtues of transparency and
accountability – these technologies have been particularly instrumental
in promoting the logics of risk management, financialization and managerialism (see Dale,
and Lewis and Shore, this volume). In Denmark, time has become a key metric and instrument for
the efficient throughput of students and the accountability of institutions, but as Nielsen and
Sarauw (this volume) show, these measures affect the very nature of education. Audits do not
simply or passively measure performance; they actively reshape the institutions into which they
are introduced (Power 1997; Shore and Wright 2015). When a measurement becomes a target,
institutional environments are restructured so that they focus their resources and activities
primarily on what 'counts' to funders and governors rather than on their wider professional
ethics and societal goals (see Kohn and Shore, this volume).
Administrative Bloat, Academic Decline
The fourth key development during this period has been the extraordinary growth in the
number and status of university managers and administrators. For the first time in history, as
figures from the U.K.'s Higher Education Statistics Agency (HESA) show, support staff now
outnumber academic staff at 71 percent of higher education institutions (Jump 2015). In
Denmark, there has been an equally large increase in the number of administrators and the
increased percentage of annual expenditure on administrators in just five years alone was
equivalent to 746 new lectureships (Wright and Boden 2010). The figures from the U.S. are even
more dramatic. Federal figures for the period 1987 to 2011/2012 show that the number of college
and university administrators and professional employees has more than doubled in the last
twenty-five years; an increase of 517,636 people – or an average of eight-seven new
administrators every working day (Marcus 2014). The recruitment of administrators has far
outpaced the growth in the number of faculty – or even students. Meanwhile, universities
claim to be struggling with budget crises that force them to reduce permanent academic posts,
and the temporarily employed teaching assistants – the 'precariat' – have undergone
a massive increase in numbers.
This astonishing increase in management and administration is partly due to the pressures
universities now face to produce data and statistics for harvesting by the ranking industries.
Universities themselves often attribute the growth of their administrative and technical units
to the enormous rise in government regulations. As the President of the American Association of
University Administrators recently explained, 'there are "thousands" of regulations governing
the distribution of
financial aid alone' and every university that is accredited probably has at least one
person dedicated to that. However, the proliferation of administrators and managers has also
been fuelled by the universities themselves, as they have taken on new functions and pursued
new income streams. This is particularly evident in the U.S.:
Since 1987, universities have also started or expanded departments devoted to marketing,
diversity, disability, sustainability, security, environmental health, recruiting, technology
and fundraising, and added new majors and graduate and athletics programs, satellite campuses,
and conference centers (Marcus 2014).
These trends are captured with exceptional clarity in Benjamin Ginsberg's book,
The Fall of the Faculty (2011a). Ginsberg's thesis is that the new
professional managers 'make administration their life's work', to the detriment of the
universities' core functions. They have little or no faculty experience and promoting teaching
and research is less important than expanding their own administrative domains: 'under their
supervision, the means have become the end' (ibid.: 2). Every year, writes Ginsberg: hosts of
administrators and staffers are added to college and university payrolls, even as schools claim
to be battling budget crises that are forcing them to reduce the size of their full-time
faculties. As a result, universities are filled with armies of functionaries -- vice
presidents, associate vice presidents, assistant vice presidents, provosts, associate provosts,
vice provosts, assistant provosts, deans, deanlets, deanlings, each commanding staffers and
assistants -- who, more and more, direct the operations of every school. Backed by their
administrative legions, university presidents and other senior administrators have been able,
at most schools, to dispense with faculty involvement in campus management and, thereby to
reduce the faculty's influence in university affairs (Ginsberg 2011a: 2).
One of the weaknesses in these statistics is that they fail to distinguish between
administrative staff who support the teaching and research and those who do not. Support
staff are crucial to enabling academics to carry out effective research, teaching and
scholarship – the traditional mission of the university. Likewise, universities need
managers who support academics in fulfilling these key functions of the university, but the
statistics are rarely sufficiently refined to make these distinctions. Interestingly, many
universities have dropped the term 'support staff' in favour of terms like 'senior
'professional staff'. This move reflects the way that many university managers now see their
role – which is no longer to provide support for academics but, rather, to manage them as
'human capital' and a resource. From the perspective of many university managers and human
resources (HR) departments, academics are increasingly portrayed as a reluctant, unruly and
undisciplined workforce that needs to be incentivized or cajoled to meet management's targeted
outputs and performance indicators.
5. Institutional Capture:
the Power of the 'Administeriat'
The budgetary reallocation from academic to administrative salaries is linked to a fifth
major trend: the rise of the 'administeriat' as a new governing class and the corresponding
shift in power relations within the university. Whereas in the past the main cleavage in
universities was between the arts and the sciences, or what C.P. Snow (1956) famously termed
'the two cultures', today the main division is between academics and managers.
Collini (2013) attributes this shift in power to the way all university activities are now
reduced to a common managerial metric. As he puts it, the 'terms that suit [managers']
activities are the terms that have triumphed'. Scholars now spend increasing amounts of their
working day accounting for their activities in the 'misleading' and 'alienating' language and
categories of managers. This 'squeezing out' of the true use-value of scholarly labour accounts
for the 'pervasive sense of malaise, stress and disenchantment within British universities'
Professor of Critical Management Studies Rebecca Boden compares the way that university
managers expand their increasingly onerous regulations to the way that 'cuckoos lay their eggs
in the nests of other birds, and how the young cuckoos then evict the nest-builders' offspring'
(cited in Havergal 2015). This cuckoo-in-the-nest metaphor might seem somewhat overblown, but
it highlights the important fact that managers and administrators have usurped power in what
were formerly more collegial, self-governing institutions . Yet many of these managers
would not succeed as professionals in industry. Levin and Greenwood (2016) argue that, if
universities were indeed business corporations, they would soon collapse, as their work
organization currently violates nearly every one of the practices that characterize successful
and dynamic high-tech areas and service industries. It is a short step from here to managers'
appropriation of the identity of the university, with managers increasingly claiming not only
to speak for the
university but to be the university (Ørberg 2007; Readings 1996; Shore and Taitz
2010). Today, rather than being treated as core members of a professional community,
academics are constantly being told by managers and senior administrators what 'the university'
expects of them, as if they were somehow peripheral or subordinate to 'the
6. New Income Streams and the Rise of the
Faced with diminishing state funding and year-on-year cuts to national budgets for higher
education, universities have been compelled to seek alternative income streams. This has
entailed fostering more lucrative and entrepreneurial partnerships with industry; conducting
commissioned research for businesses and government; partnering up with venture capitalists;
commercializing the university's intellectual property through patents and licences; developing
campus spin-out (and spin-in) companies; engaging proactively in city development programmes;
and maximizing university assets including real estate, halls of residence, conference
facilities and industrial parks. Equally important has been the raising of student tuition
fees and the relentless drive to recruit more high-fee-paying international students .
This project has given rise to the moniker 'export education', a sector of the economy and
foreign-currency earner of growing importance to many countries. For example, in Canada,
expenditures of international education students (tuition, accommodation, living costs and so
on) infused $6.5 billion into the Canadian economy, surpassing exports of coniferous lumber
(CAN$5.1 billion) and coal (CAN$6.1 billion) and gave employment to 83,00 Canadians (Roslyn
Kunin and Associates, Inc 2009). Similarly, 'educational services' has become one of
Australia's leading export industries such that, by 2008, it had become Australia's
third-largest generator of export earnings with over AU$12.6 billion (Olds 2008). Along with
Australia and Canada, the U.S.A., U.K. and New Zealand dominate the trade in international
students (OECD 2011; chart 3.3) and the global demand for international student places is
estimated to rise to 5.8 million by 2020 (Bohm et al. 2004).
The relentless pursuit of these new income streams has had a transformative effect on
universities. Almost two decades ago Marginson and Considine (2000) coined the term the
'enterprise university' to describe the model in which: the economic and academic dimensions
are both subordinated to something else. Money is a key objective, but it is also the means to
a more fundamental mission: to advance the prestige and competitiveness of the university
as an end in itself (ibid. 2000: 5).
However, it would be misleading to suggest that all these changes are simply a consequence
of the pressures that governments have placed on universities to refashion themselves as
pseudo-business corporations. Some of the more entrepreneurially hawkish university rectors,
vice chancellors and presidents have enthusiastically welcomed these changes. Many have
benefitted from the enormous executive salaries that have become the norm for university
'CEOs', and they undoubtedly enjoy their vaulted status and the opportunities this provides to
mingle with world leaders at prestigious summits and receptions, airport VIP lounges and gala
fundraising events. For example, the Times Higher Education annual
review of vice chancellors' pay shows that average salary and benefits for university vice
chancellors in the U.K. rose by between £8,397 and £240,794 in 2013–2014.
This constituted a 3.6 percent rise, whereas in the same period, other university staff
received an increase of only 1 per cent (Grove 2015a).
A study by economists Bachan and Reilly (2015), from Brighton Business School, found that in
the past two decades, vice chancellors have seen their salaries soar by an eye-watering 59
percent (Henry 2015), but concluded that these increases could not be justified in terms of
their university's performance criteria, such as widening participation or bringing in income
such as grants for teaching and research and capital funding. Rather, the study found that the
presence of other high-paid administrative staff was pushing up vice chancellors' pay. Both the
U.K.'s House of Commons' Public Accounts Committee and the former Minister for Business and
Employment, Vince Cable, have condemned this 'substantial upward drift' of salaries among vice
chancellors. However, this annual ritual of chastisement has little perceivable
7. Higher Education as Private Investment Versus Public
The seventh major trend is recasting university education as a private and positional
investment rather than a public good. The idea that gained prominence in the post-war era was
that higher education was a public investment that benefits the economy and society as well as
contributing to personal growth and social mobility (Morgan this volume). In the 1990s, this
idea – and the Keynesian model that sustained it – was displaced by the Chicago
School's economic doctrine and the notion that individuals, not the state, should take
for repeatedly investing in their education and skills in order to sustain and improve their
position in a fast-changing competitive and global labour market. This is what the OECD termed
'new human capital theory' (Henry et al. 2001), an idea that came to dominate government
thinking about growth and investment. However, several recent studies challenge the premises
upon which this model is based (Ashton, Lauder and Brown 2011; Wright and Ørberg this
Arising from this new way of conceptualizing higher education as a private individual good
and the reduction of government funding for the sector, has been the replacement of student
grants with loans. This has been coupled with a massive hike in student fees – or what is
euphemistically called 'cost-sharing' by ministers and World Bank experts. There are several
bizarre paradoxes in this way of financing higher education. First, as McGettigan (2013) shows,
government funding of student loans to pay fees is likely to cost the taxpayer more than the
previous system of funding universities directly for their teaching. Second, as Vernon (2010)
points out, most students and their families can only afford to pay for the costs of their
higher education through the kinds of debt-financing that governments across the world now
condemn as reckless and inappropriate for themselves. Third, whereas the scale of national
debt in many countries has become so severe that it has required emergency austerity measures
to combat, the level of household debt is even more perilously high, peaking to 110 percent of
GDP in 2009 in the U.K. (Jones 2013).
This was before the government transferred even more of the costs of higher education to
families and tripled university fees. These policies are justified on the grounds that
degree-holders gain a lifetime premium in earning: hence the catchphrase 'learn to earn'. In
New Zealand, however, which has the seventh-highest university fees among developed countries,
the OECD survey found that the value of a university degree in terms of earning power is the
lowest in the world. The net value of a New Zealand tertiary education for a man is just
$63,000 over his working life (compared with $395,000 in the U.S.). For a woman, it is even
lower: $38,000 over her working life (Edmunds 2012). As Brown and Hesketh (2004) also show for
the U.S., graduates' imagined future incomes are largely illusory. Yet students and parents
are encouraged to take out what is effectively a 'subprime loan', in the gamble that it will
eventually pay off by enhancing their future job prospects and earning power: it is a 'hedge
against their future security' (Vernon 2008). In other words, higher education is now being
modelled on the same types of financial speculation that produced the 2010 global financial
The Death of the Public University?
Do the seven trends outlined above spell the end of the public university? From the earliest
beginnings of these developments, there has been an extensive literature foretelling the demise
of the university. According to historians Sheldon Rothblatt and Bjorn Wittrock (1993: 1), the
university is the second-longest unbroken institution in Western civilization, after the
Catholic Church. Today, however, the university – or what John Henry Newman termed the
'idea of a university' – does indeed look broken. Or is this an unduly pessimistic
conclusion? Jean-Francoise Lyotard set the agenda with his provocative book The Postmodern Condition: A Report on Knowledge . Noting the collapse of the
university's traditional authority in producing legitimate knowledge, he wrote:
The question (overt or implied) now asked by the professionalist student, the State, or
institutions of higher education is no long 'Is it true?' but 'What use is it?' In the context
of the mercantilization of knowledge, more often than not this question is equivalent to: 'Is
it saleable?' And in the context of power-growth: 'Is it efficient?' (Lyotard 1994: 51).
Following this line of reasoning, Bill Readings' book The University in
Ruins (1996), noted both the decline of the university as the cultural arm of nation
building and the administrators' eclipse of the scholar-teacher as the central figure in the
university story. As he gloomily argued, the grand narrative of the university 'centred on the
production of a liberal reasoning subject is no longer readily available to us (1996: 9). If,
for Readings, the university was in a state of 'ruin', for David Mills, writing in 2003, it is
locked in a state of permanent 'scaffolding'; an ongoing and ambiguous project of both
maintenance and repair, construction and demolition. Thus 'crumbling bastions of social and
intellectual elitism' are combined 'with shiny new campuses espousing lifelong access to 24/7
education for all' (Mills 2003). These contradictory trends have both positive and negative
dimensions for universities and the project of higher education. On the one hand, access to
universities has been massively increased and technological innovations, including Mass Open
Online Courses (MOOCs), have allowed more distance learning. But on the other hand,
universities and their staff have been subjected to an almost continuous process of reforms and
restructurings designed both to recast higher education institutions as transnational business corporations and to open up the sector to more private-sector
The complaint often voiced by academics is that universities – like hospitals,
libraries and other local community services – are undergoing a process of 'death by a
thousand cuts'. But chronic underfunding of public institutions also reflects a wider and
arguably more purposeful political agenda that aims to fundamentally transform the public
sector. One of the greatest threats to the university today lies in the 'unbundling' of its
various research, teaching and degree-awarding functions into separate, profit-making
activities that can then be outsourced and privatized.
This agenda is articulated clearly in the recent report entitled 'An Avalanche is Coming:
Higher Education and the Revolution Ahead' (Barber et al. 2013), published by the London-based
think tank, the Institute for Public Policy Research. Its principal authors are Sir Michael
Barber, Chief Education Advisor for Pearson PLC (a British-owned multinational education
provider and publisher) and two of Pearson's executive directors. The report's central
argument, captured in its 'avalanche' metaphor, is that the current system of higher education
is untenable and will be swept away unless bold and radical steps are taken:
The next 50 years could see a golden age for higher education, but only if all the players
in the system, from students to governments, seize the initiative and act ambitiously. If
not, an avalanche of change will sweep the system away. Deep, radical and urgent
transformation is required in higher education. The biggest risk is that as a result of
complacency, caution or anxiety the pace of change is too slow and the nature of change is
too incremental. The models of higher education that marched triumphantly across the globe in
the second half of the 20th century are broken (Barber, Donnelly and Rizvi 2013: 5).
A series of forces that lie 'under the surface' threatens to transform the landscape of
higher education. These include: a changing world economy in which the centre of gravity is
shifting towards the Asia-Pacific region; a global economy still struggling to recover from the
trauma of the global financial crash of 2007–2008; and the escalating costs of higher
education, which are vastly outstripping inflation and household income. These are coupled with
the declining value of a degree and a technological shift that makes information ubiquitous.
Universities no longer hold a monopoly over knowledge production and distribution and face
growing competition from the emergence of new universities and from 'entirely new models of
university' that Pearson itself has been spearheading to exploit the new environment of globalization and the digital
revolution (ibid. 2013: 9–21).
The Barber report is part of a growing literature which seeks to 'remake the university' as
an altogether different kind of institution (see Bokor 2012). Epochal and prophetic in tone and
often claiming to be diagnostic and neutral, this literature proposes solutions that are
anything but impartial or disinterested. Pearson, for example, makes no secret of its ambition
to acquire a larger share of the higher education market and the rents that can be captured
from its various activities. In 2015, Pearson sold off its major publishing interests to
restructure the company around for-profit educational provision both in England and worldwide.
Pearson also has a primary listing on the London Stock Exchange and a secondary listing on the
New York Stock Exchange. Writing in the preface to the Barber reports, former president of
Harvard University Lawrence Summers underscores its central ambition when he writes that in
this new 'phase of competitive intensity', all of the university's core functions can be
'unbundled and increasingly supplied, perhaps better, by providers that are not universities at
all' (Barber 2013: 1). As John Morgan (this volume) shows, higher education has long been
– and continues to be – a site of ideological struggle between competing interests
and their vision of society.
Towards the Privatization of English Universities
In England, these processes have been taken to an extreme. Events since the
Conservative–Liberal coalition took office in 2010 suggest a tipping point may have been
reached in the transformation of the public university. Research by the legal firm Eversheds
(2009) revealed that no legislation was needed for public universities to be transferred to the
private for-profit sector, either by a management buyout or by outside interests buying-in
(Wright 2015). London Metropolitan University was an early contender. It advertised a tender
worth £74 million over five years for a partner who would create a for-profit 'special
services vehicle' to deliver all the university's functions and services – everything
except academic teaching and the Vice Chancellor's powers. Such 'special services vehicles' are
a way for private investors to buy into the university's activities. This plan was only stymied
because civil servants found major administrative failings, and the resulting fines and
repayments pushed the university close to bankruptcy. But this 'special services vehicle'
model has been implemented by other universities, including Falmouth and Exeter, where a private
company runs not only catering, estate maintenance and services on the two campuses, but also
its entire academic support services (libraries, IT, academic skills and disability support
services) (University and College Union 2013).
London Metropolitan's near-bankruptcy opened the possibility of a second method of
privatization; a 'fire sale' of a university and its prized degree-awarding powers, to one of
the many U.S. for profit education providers that had been seeking entry into the market
(Wright 2015). Privatization was only avoided thanks to the successful actions of its new Vice
Chancellor. However, one university with a charter and degree-awarding powers has been
transferred to the for-profit sector. In 2006, the Department of Business, Innovation and
Science rushed through approval to give the College of Law in London degree-awarding powers and
university status. This was just in time for its sale to finance company Montagu Private
Equity. To maintain that university's charitable (tax-favourable) status and provide bursaries
for students, the institution divided itself into a for-profit company with all the education
and training activities, and an educational foundation. Montagu Private Equity made a leveraged
buyout of the university: £177 million of the £200 million purchase price was
borrowed and then put on the university's balance sheet, making it responsible for paying the
debt and interest from its cash flow. A few years later, Montagu announced it was selling the
university's buildings, in what was a clear case of asset stripping. The legal firm Eversheds
recommended that other public universities follow this model and either sell stakes in their
institution or be sold outright to financiers. As the University of Law example shows, such
investors' prime interest is the short-term extraction of profit and liquidization of assets,
rather the long-term future of higher education. Indeed, in June 2015, Montagu sold the
University of Law to Aaron Etingen, founder and chief executive officer of Global University
Systems (GUS), which owns a network of for-profit colleges worldwide (Morgan 2015).
IMHO there is no economics, only "political economy" and mathiness and "cult of measurement" especially with all those some
fuzzy metrics currently in use, are just a part of the ideological smokescreen over "naked neoliberalism." Like shaman dances
around the fire. Impressive and useless simultaneously.
In other words, many current practitioners of neoliberal economic theories (including but not limited to neoclassical
economics) are practicing pseudoscience and are, directly or indirectly, bought and paid by financial oligarchy. That does not
exclude possibility of some, occasional, useful insight.
"... The counterargument that I will elaborate here, is that neoliberalism and social democracy should be treated as two distinct and internally consistent thought and value systems. The integrity of the two ideologies must neither be reduced to practices/policies, which occasionally may overlap, nor to individual representatives, who, over the course of a lifetime, can move from one pole to the other. ..."
"... Robbins Report ..."
"... Underpinning this analysis is a bleak diagnosis of what purpose the university system and its employees serve. It is a diagnosis that Fuller, by his own admission, has gleaned from the Virginia-style neoliberal Gordon Tullock. ..."
"... The task assigned to the university, i.e. to certify bodies of trustworthy knowledge, is not called for by any intrinsic property of that knowledge (it being true, safe etc.), but is rather a form of rent-seeking. The rent is extracted from the university's state-induced monopoly over the access rights to future employment opportunities. Rent-seeking is the raison-d'être of the university's claim to be the royal road to knowledge. ..."
"... Granted, the cynical reading of the university system as a rent-seeking diploma-mill has a ring of truth to it when we, for instance, think of how students are asked to pay higher and higher tuition fees, while the curriculum is successively being hollowed-out. ..."
"... this is the result of the consecutive waves of university reforms since the 1990s to ground knowledge production on market principles. If university employees behave like self-interested rent-seekers, it is because they are forced to do so by the incentive structures that have been imposed on them. ..."
"... Thirty years of neoliberal politics have created the conditions under which categories such as "human capital" and "rent-seeking" start to make good sense... ..."
The counterargument that I will elaborate here, is that neoliberalism and social democracy
should be treated as two distinct and internally consistent thought and value systems. The
integrity of the two ideologies must neither be reduced to practices/policies, which
occasionally may overlap, nor to individual representatives, who, over the course of a
lifetime, can move from one pole to the other.
Neoliberalism and the university system
Fuller's argument pivots on the mixed legacy of Lionel Robbins. On the one hand, Robbins'
credentials as a neoliberal are firmly established by his decision to recruit Friedrich Hayek
to the LSE. On the other hand, Robbins authored the government report whereby many regional
universities in the UK were founded, in keeping with a classic social democratic agenda of
enrolling more students from the working class. This encourages Fuller to draw an arc from the
Report to university reforms of a more recent date (and with a more distinct,
The common denominator of all the reforms, Fuller says, is the ambition to enhance human
capital. Alas, the enhancement of human capital is blocked on all sides by incumbent traditions
and rent-seeking monopolies. From this problem description – which Fuller attributes to
the neoliberals, but which is also his own – follows the solution: to increase the
competition between knowledge providers. Just as the monopoly that Oxbridge held over higher
education was offset by the creation of regional universities in the 1960s, so is the current
university system's monopoly over knowledge acquisition sidelined by reforms to multiply and
diversify the paths to learning.
Underpinning this analysis is a bleak diagnosis of what purpose the university system and
its employees serve. It is a diagnosis that Fuller, by his own admission, has gleaned from the
Virginia-style neoliberal Gordon Tullock.
The task assigned to the university, i.e. to certify
bodies of trustworthy knowledge, is not called for by any intrinsic property of that knowledge
(it being true, safe etc.), but is rather a form of rent-seeking. The rent is extracted from
the university's state-induced monopoly over the access rights to future employment
opportunities. Rent-seeking is the raison-d'être of the university's claim to be the
royal road to knowledge.
In this acid bath of cynicism, the notions of truth and falsehood are dissolved into the
basic element that Tullock's world is made up of – self-interest. This reasoning lines up
with a 19 th century, free market epistemology, according to which the evolutionary
process will sift out the propositions that swim from those that sink. With a theory of
knowledge like that, university-certified experts have no rationale for being. Their knowledge
claims are just so many excuses for lifting a salary on the taxpayers' expense. It bears to
stress that this argument can easily be given a leftist spin, by emphasising the pluralism of
this epistemology. This resonates with statements that Steve Fuller has made elsewhere , concerning the
claimants of alternative facts.
Granted, the cynical reading of the university system as a rent-seeking diploma-mill has a
ring of truth to it when we, for instance, think of how students are asked to pay higher and
higher tuition fees, while the curriculum is successively being hollowed-out. However, as was
pointed out to Fuller by many in the audience in Lancaster, this is the result of the consecutive waves of university
reforms since the 1990s to ground knowledge production on market principles. If university employees behave like self-interested
rent-seekers, it is because they are forced to do so by the incentive structures that have been imposed on them.
Thirty years of neoliberal politics have created the conditions under which categories such
as "human capital" and "rent-seeking" start to make good sense...
... ... ...
The author would like to thank Adam Netzén, Karolina Enquist Källgren and
Eric Deibel for feedback given on early drafts of this blog post, and especially Steve Fuller,
for having invited a response to his argument.
"... Higher education was being made to conform to the norms of efficiency, value for money, customer service, audit and performance targets. One of the consequences of this was the substitution of the authority of the academic, which is based on his or her professional knowledge of the discipline, for the authority of the line manager. ..."
"... I don't think that there has been a more sinister assault on academic freedom than this colonisation of higher education by neoliberalism. It justifies itself by calling for "transparency" and "accountability" to the taxpayer and the public. But it operates with a perverted sense of these words (since what it really means is "discipline and surveillance" and "value for money"). ..."
"... Let me explain. One of the central aspects of neoliberalism is the disappearance of the distinction between the worker and the capitalist. In the neoliberal setting, the worker is not a partner of exchange with the capitalist. She does not sell her labour-power for a wage. ..."
"... The labourer's ability to work, her skill, is an income stream. It is an investment on which she receives a return in the form of wages. The worker is capital for herself. She is a source of future earnings. In the neoliberal market, as Michel Foucault remarks, everyone is a capitalist. ..."
"... Neoliberalism has converted education from a public good to a personal investment in the future, a future conceived in terms of earning capacity. ..."
of the students I have taught in Britain and South Africa see higher education as a place where
they "invest" in themselves in the financial sense of the word. "Going to university," one
student said, was a way of "increasing" his "value" or employability in the labour market.
This perception of the university has not arisen by chance.
Capitalism entered a new phase with the Thatcher and Reagan governments in Britain and the
United States during the 1980s. The managerial practices used to run businesses were applied to
the public sector, in particular to education and healthcare.
This reform of the public sector (called "new public management")
introduced a new way of thinking about the university.
Higher education was being made to conform to the norms of efficiency, value for money,
customer service, audit and performance targets. One of the consequences of this was the
substitution of the authority of the academic, which is based on his or her professional
knowledge of the discipline, for the authority of the line manager.
Since then, everything has come to depend on audits and metric standards of so-called
quality assessment (student satisfaction, pass rates, league tables, et cetera). Academics have
little, if any, say on whether departments should continue to exist, what degrees and courses
should be on offer and even what kind of assessment methods should be used.
I don't think that there has been a more sinister assault on academic freedom than this
colonisation of higher education by neoliberalism. It justifies itself by calling for
"transparency" and "accountability" to the taxpayer and the public. But it operates with a
perverted sense of these words (since what it really means is "discipline and surveillance" and
"value for money").
Its effect, if not its aim, has been to commodify higher education and produce a new kind of
social identity. This is the identity of the self as entrepreneur.
Let me explain. One of the central aspects of neoliberalism is the disappearance of the
distinction between the worker and the capitalist. In the neoliberal setting, the worker is not
a partner of exchange with the capitalist. She does not sell her labour-power for a wage.
The labourer's ability to work, her skill, is an income stream. It is an investment on which
she receives a return in the form of wages. The worker is capital for herself. She is a source
of future earnings. In the neoliberal market, as Michel Foucault remarks, everyone is a
Neoliberalism has converted education from a public good to a personal investment in the
future, a future conceived in terms of earning capacity.
How did we get to this situation?
The modern university came into existence at the start of the 19th century as an extension
of the state. The aim of the state during the colonial and imperial age was to constitute the
identity of the national subject. As a public institution, the university was designed to teach students to see their life in
a specific way. They would learn to see that it is only as members of a national community and
culture that their individual life has a meaning and worth. This was the aim of the educational programme that German philosophers such as Wilhelm von
Humboldt and Johann Gottlieb Fichte envisaged for the University of Berlin. For them, science
was in the service of the moral and intellectual education of the nation.
Established in 1810, the University of Berlin was the first modern university. It was
founded on the principles of academic freedom, the unity of research and teaching, and the
primacy of research over vocational training. It functioned as the prototype for universities in both the United States and Europe during
the second half of the 19th century.
Once transnational corporations started to control more capital than nation-states in the
1980s, the university ceased to be one of its principal organs. It lost its ideological mission
and entered the market as a corporation. It started to encourage students to think of
themselves as customers rather than as members of a nation. This history shows that the university is today the site of two competing social
On the one hand, because of globalisation, the student who enters university sees herself as
someone who is there to increase her human capital, as an enterprise to invest in.
It must be remarked that, for the entrepreneur (taken as a social figure) who invests in
herself, differences of class, religion, ethnicity or race are phantasms of a bygone age. The
differences in the name of which wars were waged and social movements organised in the past
have no more meaning in her eyes than cheap advertising.
There is, for her, something improper or inauthentic about them, as Giorgio Agamben says of
the new petty bourgeoisie in The Coming Community. Like Britain's former prime minister, David
Cameron, she is sceptical of multiculturalism.
On the other hand, the university has not ceased to draw on its modern role as a producer,
protector and inculcator of national identity and culture. Much of what is going on today in
South African universities under the name of decolonisation and Africanisation draws on this
heritage and understanding of the modern university, even if tacitly. That is why students will
politicise themselves by identifying with an ethnicity or nationality.
Nationalism was an emancipatory political project during the anti-colonial struggles of the
second half of the 20th century. It was not tribalist or communalist.
According to Eric Hobsbawm in Nations and Nationalism since 1780, its aim was to extend the
size of the social, cultural and political group. It was not to restrict it or to separate it
from others. Nationalism was a political programme divorced from ethnicity.
Is this political nationalism a viable way of resisting neoliberalism today? Can it gainsay
the primacy of economic rationality and the culture of narcissist consumerism, and restore
meaning to the political question concerning the common good? Or has nationalism irreversibly become an ethnic, separatist project? It is not easy to say. So far, we have witnessed one kind of response to the social
insecurities generated by the global spread of neoliberalism. This is a return to ethnicity and
religion as havens of safety and security.
When society fails us owing to job insecurity, and, concomitantly, with regard to housing
and healthcare, one tends to fall back on one's ethnicity or religious identity as an ultimate
Moreover, nationalism as a political programme depends on the idea of the state. It holds
that a group defined as a "nation" has the right to form a territorial state and exercise
sovereign power over it. But given the decline of the state, there are reasons to think that
political nationalism has withdrawn as a real possibility.
By the "decline of the state" I do not mean that it no longer exists. The state has never
been more present in the private life of individuals. It regulates the relations between men
and women. It regulates their birth and death, the rearing of children, the health of
individuals and so forth. The state is, today, ubiquitous.
What some people mean by the "decline of the state" is that, with the existence of
transnational corporations, it is no longer the most important site of the reproduction of
capital. The state has become managerial. Its function is to manage obstacles to liberalisation
and free trade.
Perhaps that is one of the challenges of the 21st century. How is a "nation" possible, a
"national community" that is not defined by ethnicity, on the one hand, and, on the other, that
forsakes the desire to exercise sovereign power in general and, in particular, over a
The university is perhaps the place where such a community can begin to be thought.
Rafael Winkler is an associate professor in the philosophy department at the University
While U.S. politicians from both parties have given standing ovations for the
U.S. oil and gas industry , investors appear to be losing their enthusiasm. The so-called
shale revolution, the fracking miracle, may have resulted in record oil and gas production in
North America, but the real miracle -- in which shale companies make money fracking that oil
and gas -- has yet to occur.
It looks like economics is decelerating, but unpredictable future events such as the possibility of a jump in oil prices due to
Venezuela are much more important than the view on the road from the back mirror. Also, Trump is a pretty unpredictable fellow ;-) will
he use US strategic petroleum reserve to compensate for shortages or not. Or will he allow the oil price to spike depressing the economic
activity... Another interesting question is whether the levitation of shale oil companies continue despite a mountain of junk bonds
debt handing over them (shale oil production produces two streams: one stream is shale oil and gas, and another is junk bonds)
Yet another "known unknown" is how strong the backlash against neoliberalism is mounting, which might suppress the most parasitic
part of the US financial industry (which means 80% of it). Italy is about to return to Glass Steagall type of regulations of financial
industry , so the USA might be next ;-)
In this sense it is very interesting to see what level of popular support Warren candidacy might attract. I would call it a new
forward looking indicator :-)
All this makes current data point prediction more of an exercise in astrology with past economic indicators playing the role of
starts. Of course, this is less blatant astrology the Wall street analysts predicting S&P500 for the of the year, but still. Who would
predict that after 2008 we will have 10 years expansion that might continue further?
Also, for chartists, the key assumption is that "trend is your friend." And if the pendulum for financial regulation starting to
swing back, the US GDP will suffer.
"... Clearly something is causing employment "quality" to fall apart. Even a downward revision won't likely help the quality. ..."
"... Corporate consumption IMO has been the big bubble this cycle. I know people have been wondering where the bubble has been well, there you go. It also connects more to the service sector decline initially rather than a broad base industrial decline. So the U-6 says the labor market has weakened some, yet industrial indicators on average only began to weaken lately and don't indicate recession. ..."
"... With a January population increase of 151,000 partially offsetting that, that meant the number of employment aged individuals who were not in the labor force was down by 639,000 from previously published figures to 95,010,000, the labor force participation rate increased from 63.1% to 63.2%, and the employment to population ratio, which we could think of as an employment rate, increased from 60.6% in December to 60.7% in January, all despite fewer workers being employed. ..."
"... U-6, which includes those "employed part time for economic reasons", from 7.6% of the labor force in December to 8.1% in January however, we can expect most of that to be reversed in February ..."
U6 underemployment rate rose 0.5% from 7.6% to 8.1%
Here are the headlines on wages and the broader measures of underemployment:
Wages and participation rates
Not in Labor Force, but Want a Job Now: declined -73,000 from 5.327 million to 5.254 million
Part time for economic reasons: rose +490,000 from 4.657 million to 5.147 million
Employment/population ratio ages 25-54: rose +0.2% from 79.7% to 79.9%
Average Hourly Earnings for Production and Nonsupervisory Personnel: rose $.03 from $23.09 to $23.12, up +3.4% YoY. (Note:
you may be reading different information about wages elsewhere. They are citing average wages for all private workers. I use wages
for nonsupervisory personnel, to come closer to the situation for ordinary workers.)
Is a recession close? The more leading numbers in the report tell us about where the economy is likely to be a few months
from now. These were mixed, with at very least a decelerating bias.
the average manufacturing workweek fell -0.1 hours from 40.9 hours to 40.8 hours. This is one of the 10 components of the
Manufacturing jobs rose by +13,000. YoY manufacturing is up +261,000.
construction jobs rose by +52,000. YoY construction jobs are up +338,000.
temporary jobs rose by +1000. YoY these are up +146,000.
the number of people unemployed for 5 weeks or less rose by +199,000 from 2,126,000 to 2,325,000. The post-recession low was
set eight months ago at 2,034,000.
Holding Trump accountable on manufacturing and mining jobs. Trump specifically campaigned on bringing back manufacturing and mining
jobs. Is he keeping this promise?
Manufacturing jobs rose an average of +22,000/month in the past year vs. the last seven years of Obama's presidency in which
an average of +10,300 manufacturing jobs were added each month.
Coal mining jobs fell -100 for an average of +150/month vs. the last seven years of Obama's presidency in which an average
of -300 jobs were lost each month
November was revised upward by +20,000, but December was revised downward by -90,000, for a net change of -70,000. Other important
coincident indicators help us paint a more complete picture of the present:
Overtime declined -0.1 hour from 3.6 hours to 3.5 hours.
Professional and business employment (generally higher-paying jobs) rose by 30,000 and is up +546,000 YoY.
the index of aggregate hours worked for non-managerial workers rose by 0.2%.
the index of aggregate payrolls for non-managerial workers rose by 0.3%.
Other news included:
the alternate jobs number contained in the more volatile household survey decreased by -438,000 jobs. This represents an increase
of only 981,000 jobs YoY vs. 2,817,000 in the establishment survey.
Government jobs rose by +8,000.
the overall employment to population ratio for all ages 16 and up fell -0.1% to 60.7% m/m and is up 0.3% YoY.
The labor force participation rate rose was unchanged at 63.2% and is up +0.4% YoY.
The establishment and household surveys told very different stories this month, encapsulated by the 304,000 monthly gain in the
former vs. a -438,000 decline in the latter. While the former is up almost 3 million in the last 12 months, the latter fell below
a 1 million gain over the same period. To some extent this is due to the government shutdown affecting the household report, but
not the establishment report (per the BLS). But it doesn't explain everything.
Most importantly, of the four leading components in the establishment survey, one fell (the manufacturing work week), and two
of the other three (manufacturing, and temporary jobs), while positive, showed sharply decelerating growth. On the other hand, the
very lagging measure of wage growth did continue to rise at a 3.4% clip, and the prime age participation ratio also rose to an expansion
high. Since the December report was excellent in virtually all respects, to some extent January is probably just a giveback. But
all the same, there are plenty of cautionary signals in this report going forward.
likbez , February 5, 2019 2:31 pm
A single datapoint without at least 12 months graphs tells us nothing. Please provide them too.
Bert Schlitz , February 5, 2019 3:15 pm
Clearly something is causing employment "quality" to fall apart. Even a downward revision won't likely help the quality.
If I had to guess, corporate consumption via capital income is collapsing which outside 1973 (and a lessor extent 1969) is
usually a laggard. 1973 has similar vibes with NFP with the slower than expected decline in single persons consumption and its
relation to industrial production. NFP had some big tops as well then. Looks like single person consumption is more related to
industrial production's decline that corporate consumption.
Corporate consumption IMO has been the big bubble this cycle. I know people have been wondering where the bubble has been
well, there you go. It also connects more to the service sector decline initially rather than a broad base industrial decline.
So the U-6 says the labor market has weakened some, yet industrial indicators on average only began to weaken lately and don't
Also remember that the peak of the millies is structurally starting to hit the LFPR. I wondered last month if the Boomer connection
with retirements to future hiring wasn't goosing NFP, it was and the collapse in corporate consumption is making employers leery,
which is causing part time hiring to boom, workers you can easily get rid of in a few months.
as i noted on an earlier thread, the seasonally adjusted job count in the establishment survey was boosted by warm weather
right up to the survey date that delayed normal wintertime layoffs in construction, leisure and hospitality and other seasonal
work meanwhile, there was so much screwy with the household survey i would just about dismiss it completely here's what i had
(NB the household survey was impacted by the effects of the government shutdown during the survey week, wherein those on temporary
layoff were supposed to be counted as unemployed )
Reflecting the effects of the government shutdown, the January household survey indicated that the seasonally adjusted extrapolation
of those who reported being employed fell by an estimated 251,000 to 156,694,000, while the estimated number of those unemployed
rose by 241,000 to 6,535,000; which led to a rounded 11,000 decrease in the total labor force however, those numbers were skewed
from what they should have been because a number of federal workers were classified as employed but absent from work, who also
should have been classified as unemployed on temporary layoff about those "employed" workers, the BLS says "they are accepted
as recorded" & that "no ad hoc actions are taken to reassign survey responses" further complicating the January results, the benchmark
revision to 2018's civilian noninstitutional population indicated that December's population had been overstated by 800,000, which
meant that all the population dependent metrics had to be adjusted for that revision.
With a January population increase of 151,000 partially offsetting that, that meant the number of employment aged individuals
who were not in the labor force was down by 639,000 from previously published figures to 95,010,000, the labor force participation
rate increased from 63.1% to 63.2%, and the employment to population ratio, which we could think of as an employment rate, increased
from 60.6% in December to 60.7% in January, all despite fewer workers being employed.
At the same time, the increase in the number unemployed was large enough to increase the unemployment rate, as it rose from
3.9% to 4.0%, and it would have even been higher had the aforementioned furloughed federal employees been properly classified
meanwhile, the number of those who reported they were forced to accept just part time work, which includes many of those federal
employees, rose by 490,000, from 4,657,000 in December to 5,147,000 in January, which was enough to increase the alternative measure
of unemployment, U-6, which includes those "employed part time for economic reasons", from 7.6% of the labor force in December
to 8.1% in January however, we can expect most of that to be reversed in February
"... But otherwise, quite correct. Raise payments on deposits and get more deposits. Raise charges on loans and get fewer loans. I might note that the Fed has supposedly paused rate hikes, but deposits are still exiting the system faster than loans. This result can be had via Fred. Thus the curve is getting more3 inverted. ..."
Large Excess Reserves and the Relationship between Money and Prices - FRB Richmond
At the same time that it has been normalizing its balance sheet, the Fed also has been
raising its target for interest rates. The ability to pay interest on reserves has been
crucial to allowing the Fed to raise its target rate while there are still significant excess
reserves in the banking system. Despite these rate increases, due to various secular reasons,
interest rates are expected to remain historically low for a long time.
I sample the current expectation, and it is a bit more detailed. The expectation is that
the curve will remain inverted, generally with a zero near the five yer mark, if I judge from
the Treasury curve where the curve has been inverted with a zero near the five yer mark.
The ten year rate will remain historically higher than the five year rate for some time,
evidently. If we measure interest rate as the per annum percent of Real GDP devoted to
nominal federal interest charges, then the interest rate was higher than it has ever been
going back to 1972, briefly (four months ago) , and now occupies the second highest level
since just before the 92 recession, at about 3.5% of GDP. These result can be had in Fred by
dividing nominal interest payments by real GDP.
But otherwise, quite correct. Raise payments on deposits and get more deposits. Raise
charges on loans and get fewer loans. I might note that the Fed has supposedly paused rate
hikes, but deposits are still exiting the system faster than loans. This result can be had
via Fred. Thus the curve is getting more3 inverted.
Why do we know the curve will invert? It is the law, when the Fed loses deposits, loan
charges drop, not rise as would be normal. That is why we all expect the curve to remain
inverted, the law. The law is specifically designed so the Fed holds the current low rate as
long as possible, then does the sudden regime change. The law, written into the law, a rule
requires that we spend time with an inverted yield curve before price adjustment. I emphasis
the law because it is actually typed out, signed and enforced publicly.
The law requires the Fed hold the curve as long as possible, mainly so the pres and
Congress have time to react to changes in term of trade. So, like under Obama, we hold the
line on rates until Obama and the Repubs agree on a tax and spending plan going forward, then
the treasury curve gains traction again. Te law, it is not under debate unless you want to be
This 20 year old satire looks like it was written yesterday...
"... In the past, the underworld was ill-equipped to handle the new breed of sinners flooding our gates -- downsizing CEOs, focus-group coordinators, telemarketing sales representatives, and vast hordes of pony-tailed entertainment-industry executives ..."
"... Among the tortures the Corpadverticus Circle of Total Bastards boasts: the Never-Ending Drive-Thru Bank, the Bottomless Pit of Promotional Tie-In Keychains, and the dreaded Chamber of Emotionally Manipulative Home Shopping Network Products. ..."
"... condemned TV-exercise-show personalities, clad in skin-tight Spandex outfits soaked in flesh-dissolving acid, are forced to exercise for centuries on end ..."
"... In a nearby area, corporate raiders are forced to carry the golf clubs of uneducated Hispanic migrant workers from hole to hole for eternity, withering under a constant barrage of verbal abuse ..."
"... "In life, I was a Salomon Brothers investment banker," one flame-blackened shade told reporters. "When I arrived here, they didn't know what to do with me. They put me in with those condemned to walk backwards with their heads turned all the way around on their necks, for the crime of attempting to see the future. But then I sent a couple of fruit baskets to the right people, and in no time flat, I secured a cushy spot for myself in the first circle of the Virtuous Unbaptized. Now that was a sweet deal. But before long, they caught on to my game and transferred me here to the realm of Total Bastards. I've been shrieking for mercy like a goddamn woman ever since." ..."
After nearly four years of construction at an estimated cost of 750 million souls,
Corpadverticus, the new 10th circle of Hell, finally opened its doors Monday.
Tenth Circle Added To Rapidly Growing Hell
The Blockbuster Video-sponsored circle, located in Nether Hell between the former eighth and
ninth levels of Malebolge and Cocytus, is expected to greatly alleviate the overcrowding
problems that have plagued the infernal underworld in recent years. The circle is the first
added to Hell in its countless-millennia history.
"A nightmarishly large glut of condemned spirits in recent years necessitated the expansion
of Hell," inferno spokesperson Antedeus said. "The traditional nine-tiered system had grown
insufficient to accommodate the exponentially rising numbers of Hellbound."
Adding to the need for expansion, Antedeus said, was the fact that a majority of the new
arrivals possessed souls far more evil than the original nine circles were equipped to handle.
"Demographers, advertising executives, tobacco lobbyists, monopoly-law experts retained by
major corporations, and creators of office-based sitcoms–these new arrivals represent a
wave of spiritual decay and horror the likes of which Hell has never before seen," Antedeus
Despite the need for expansion, the plan faced considerable resistance, largely due to the
considerable costs of insuring construction projects within the Kingdom Of Lies. Opposition
also came from Hell purists concerned about the detrimental effect a tenth level would have on
the intricate numerology of Hell's meticulously arranged allegorical structure. In 1994,
however, funding was finally secured in a deal brokered between Blockbuster CEO Wayne Huizenga
and Satan himself.
Prior to the construction of the tenth circle, many among the new wave of sinners had been
placed in such circles as Hoarders and Squanderers, Sowers of Discord, Flatterers and Seducers,
Violent Against Art, and Hypocrites. Hell authorities, however, say that the new level, the
Circle of Total Bastards, located at the site of the former Well of Giants just above the
Frozen Lake at Hell's center, better suits their insidious brand of evil.
Frigax The Vile, a leading demonic presence, is one of the most vocal supporters of the new
" In the past, the underworld was ill-equipped to handle the new breed of sinners
flooding our gates -- downsizing CEOs, focus-group coordinators, telemarketing sales
representatives, and vast hordes of pony-tailed entertainment-industry executives
rollerblading and talking on miniaturized cell-phones at the same time. But now, we've finally
got the sort of top-notch Pits of Doom necessary to give such repellent abominations the
quality boilings they deserve."
Pausing to tear off the limbs of an Access Hollywood host, Frigax added, "We're all
tremendously excited about the many brand-new forms of torture and eternal pain this new
level's state-of-the-art facilities will make possible."
Among the tortures the Corpadverticus Circle of Total Bastards boasts: the Never-Ending
Drive-Thru Bank, the Bottomless Pit of Promotional Tie-In Keychains, and the dreaded Chamber of
Emotionally Manipulative Home Shopping Network Products.
The Circle also features a Hall of Aerobics, where condemned TV-exercise-show
personalities, clad in skin-tight Spandex outfits soaked in flesh-dissolving acid, are forced
to exercise for centuries on end , covered in vomit and prodded with the distended ribs of
skeletal, anorexic demons, accompanied by an unending, ear-splittingly loud dance-remix version
of the 1988 Rick Astley hit "Together Forever."
In a nearby area, corporate raiders are forced to carry the golf clubs of uneducated
Hispanic migrant workers from hole to hole for eternity, withering under a constant barrage of
verbal abuse from their former subservients as crows descend from trees to peck at their
eyes. In one of the deepest and most profane portions of the circle, unspeakable acts are said
to be committed with a mail-order Roly-Kit.
"In life, I was a Salomon Brothers investment banker," one flame-blackened shade told
reporters. "When I arrived here, they didn't know what to do with me. They put me in with those
condemned to walk backwards with their heads turned all the way around on their necks, for the
crime of attempting to see the future. But then I sent a couple of fruit baskets to the right
people, and in no time flat, I secured a cushy spot for myself in the first circle of the
Virtuous Unbaptized. Now that was a sweet deal. But before long, they caught on to my game and
transferred me here to the realm of Total Bastards. I've been shrieking for mercy like a
goddamn woman ever since."
His face contorted in the Misery of the Damned, a Disney lawyer said: "It's hell
here–there are no executive lounges, I can't get any decent risotto, and the suit I have
to wear is a cheap Brooks Brothers knock-off. I'm beeped every 30 seconds, and there's no way
to return the calls. Plus, I'm being boiled upside down in lard while jackals gnaw at the soles
of my feet. If I could just reach the fax machine on that nearby rock, I could contact some
well-placed associates and work something out, but it's just out of my grasp, and it's out of
ink and constantly blinking the message, 'Replace Toner Cartridge, Replace Toner Cartridge,
Replace Toner Cartridge.'"
He then resumed screaming in agony.
Grogar The Malefic, a Captain in Hell's elite Demon Corps and supervisor in charge of
admissions for the new circle, said Hell's future looks bright, thanks to the new circle.
"Things are definitely looking up," Grogar said. "We're now far better equipped, and we're
ready to take on the most Unholy Atrocities humanity has to offer."
"We're really on the grow down here," Grogar added. "This is an exciting time to be in
"... Unfettered individual creativity may have fostered some great – if fetishised – art, as well as rapid mechanical and technological developments. But it has also encouraged unbridled competition in every sphere of life, whether beneficial to humankind or not, and however wasteful of resources. ..."
"... At its worst, it has unleashed quite literally an arms race, one that – because of a mix of our unconstrained creativity, our godlessness and the economic logic of the military-industrial complex – culminated in the development of nuclear weapons. We have now devised the most complete and horrific ways imaginable to kill each other. We can commit genocide on a global scale ..."
"... Those among the elites who understand that neoliberalism has had its day are exploiting the old ideology of grab-it-for-yourself capitalism while deflecting attention from their greed and the maintenance of their privilege by sowing discord and insinuating dark threats. ..."
"... The criticisms of the neoliberal elite made by the ethnic nationalists sound persuasive because they are rooted in truths about neoliberalism's failure. But as critics, they are disingenuous. They have no solutions apart from their own personal advancement in the existing, failed, self-sabotaging system. ..."
"... This trend – what I have previously ascribed to a group I call the "dissenters" – understands that radical new thinking is required. But given that this group is being actively crushed by the old neoliberal elite and the new authoritarians, it has little public and political space to explore its ideas, to experiment, to collaborate, as it urgently needs to. ..."
Ok neoliberalism is bad and is collapsing. We all understadn that. The different in opinions
here is only in timeframe of the collapse and the main reason (end of cheap oil, WWIII, etc).
But so far no plausible alternative exists. Canwe return to the New Deal, if top management
betrayed the working class and allied with capital owners in a hope later to became such
capital owners themselves (and many did).
The experience of the USSR tells as that each Nomenklatura (technocratic elite with the goal
of "betterment" of people) degrade very quickly (two generations were enough for Bolshevik's
elite for complete degradation) and often is ready switch sides for the place in neoliberal
So while after 2008 neoliberalism exist in zombie states (which is more bloodthirsty then
previous) they issue of successor to neoliberalism is widely open.
In one sense, their diagnosis is correct: Europe and the [neo]neoliberal tradition are
coming apart at the seams. But not because, as they strongly imply, European politicians are
pandering to the basest instincts of a mindless rabble – the ordinary people they have so
little faith in.
Rather, it is because a long experiment in Neoliberalism has finally run its course.
Neoliberalism has patently failed – and failed catastrophically.
... ... ...
Neoliberalism, like most ideologies, has an upside. Its respect for the individual and his
freedoms, its interest in nurturing human creativity, and its promotion of "universal values"
over tribal attachment have had some positive consequences.
But neoliberal ideology has been very effective at hiding its dark side – or more
accurately, at persuading us that this dark side is the consequence of neoliberalism's
abandonment rather than inherent to the neoliberal's political project.
The loss of traditional social bonds – tribal, sectarian, geographic – has left
people today more lonely, more isolated than was true of any previous human society. We may pay
lip service to universal values, but in our atomised communities, we feel adrift, abandoned and
Humanitarian resource grabs
The neoliberal's professed concern for others' welfare and their rights has, in reality,
provided cynical cover for a series of ever-more transparent resource grabs. The parading of
neoliberalism's humanitarian credentials has entitled our elites to leave a trail of carnage
and wreckage in their wake in Afghanistan, Iraq, Libya, Syria and soon, it seems, in Venezuela.
We have killed with our kindness and then stolen our victims' inheritance.
Unfettered individual creativity may have fostered some great – if fetishised
– art, as well as rapid mechanical and technological developments. But it has also
encouraged unbridled competition in every sphere of life, whether beneficial to humankind or
not, and however wasteful of resources.
At its worst, it has unleashed quite literally an arms race, one that – because of
a mix of our unconstrained creativity, our godlessness and the economic logic of the
military-industrial complex – culminated in the development of nuclear weapons. We have
now devised the most complete and horrific ways imaginable to kill each other. We can commit
genocide on a global scale .
Meanwhile, the absolute prioritising of the individual has sanctioned a pathological
self-absorption, a selfishness that has provided fertile ground not only for capitalism,
materialism and consumerism but for the fusing of all of them into a turbo-charged
neoliberalism. That has entitled a tiny elite to amass and squirrel away most of the planet's
wealth out of reach of the rest of humanity.
Worst of all, our rampant creativity, our self-regard and our competitiveness have blinded
us to all things bigger and smaller than ourselves. We lack an emotional and spiritual
connection to our planet, to other animals, to future generations, to the chaotic harmony of
our universe. What we cannot understand or control, we ignore or mock.
And so the neoliberal impulse has driven us to the brink of extinguishing our species and
possibly all life on our planet. Our drive to asset-strip, to hoard resources for personal
gain, to plunder nature's riches without respect to the consequences is so overwhelming, so
compulsive that the planet will have to find a way to rebalance itself. And if we carry on,
that new balance – what we limply term "climate change" – will necessitate that we
are stripped from the planet.
Nadir of a dangerous arrogance
One can plausibly argue that humans have been on this suicidal path for some time.
Competition, creativity, selfishness predate neoliberalism, after all. But neoliberalism
removed the last restraints, it crushed any opposing sentiment as irrational, as uncivilised,
Neoliberalism isn't the cause of our predicament. It is the nadir of a dangerous arrogance
we as a species have been indulging for too long, where the individual's good trumps any
collective good, defined in the widest possible sense.
The neoliberal reveres his small, partial field of knowledge and expertise, eclipsing
ancient and future wisdoms, those rooted in natural cycles, the seasons and a wonder at the
ineffable and unknowable. The neoliberal's relentless and exclusive focus is on "progress",
What is needed to save us is radical change. Not tinkering, not reform, but an entirely new
vision that removes the individual and his personal gratification from the centre of our social
This is impossible to contemplate for the elites who think more neoliberalism, not less, is
the solution. Anyone departing from their prescriptions, anyone who aspires to be more than a
technocrat correcting minor defects in the status quo, is presented as a menace. Despite the
modesty of their proposals, Jeremy Corbyn in the UK and Bernie Sanders in the US have been
reviled by a media, political and intellectual elite heavily invested in blindly pursuing the
path to self-destruction.
As a result, we now have three clear political trends.
The first is the status-quo cheerleaders like the European writers of neoliberalism's latest
– last? –
manifesto . With every utterance they prove how irrelevant they have become, how incapable
they are of supplying answers to the question of where we must head next. They adamantly refuse
both to look inwards to see where neoliberalism went wrong and to look outwards to consider how
we might extricate ourselves.
Irresponsibly, these guardians of the status quo lump together the second and third trends
in the futile hope of preserving their grip on power. Both trends are derided indiscriminately
as "populism", as the politics of envy, the politics of the mob. These two fundamentally
opposed, alternative trends are treated as indistinguishable.
This will not save neoliberalism, but it will assist in promoting the much worse of the two
Those among the elites who understand that neoliberalism has had its day are exploiting
the old ideology of grab-it-for-yourself capitalism while deflecting attention from their greed
and the maintenance of their privilege by sowing discord and insinuating dark threats.
The criticisms of the neoliberal elite made by the ethnic nationalists sound persuasive
because they are rooted in truths about neoliberalism's failure. But as critics, they are
disingenuous. They have no solutions apart from their own personal advancement in the existing,
failed, self-sabotaging system.
The new authoritarians are reverting to old, trusted models of xenophobic nationalism,
scapegoating others to shore up their own power. They are ditching the ostentatious,
conscience-salving sensitivities of the neoliberal so that they can continue plundering with
heady abandon. If the ship is going down, then they will be gorging on the buffet till the
waters reach the dining-hall ceiling.
Where hope can reside
The third trend is the only place where hope can reside. This trend – what I have
previously ascribed to a group I call the "dissenters" – understands that radical new
thinking is required. But given that this group is being actively crushed by the old neoliberal
elite and the new authoritarians, it has little public and political space to explore its
ideas, to experiment, to collaborate, as it urgently needs to.
Social media provides a potentially vital platform to begin critiquing the old, failed
system, to raise awareness of what has gone wrong, to contemplate and share radical new ideas,
and to mobilise. But the neoliberals and authoritarians understand this as a threat to their
own privilege. Under a confected hysteria about "fake news", they are rapidly working to snuff
out even this small space.
We have so little time, but still the old guard wants to block any possible path to
salvation – even as seas filled with plastic start to rise, as insect populations
disappear across the globe, and as the planet prepares to cough us out like a lump of infected
We must not be hoodwinked by these posturing, manifesto-spouting liberals: the philosophers,
historians and writers – the public relations wing – of our suicidal status quo.
They did not warn us of the beast lying cradled in our midst. They failed to see the danger
looming, and their narcissism blinds them still.
We should have no use for the guardians of the old, those who held our hands, who shone a
light along a path that has led to the brink of our own extinction. We need to discard them, to
close our ears to their siren song.
There are small voices struggling to be heard above the roar of the dying neoliberal elites
and the trumpeting of the new authoritarians. They need to be listened to, to be helped to
share and collaborate, to offer us their visions of a different world. One where the individual
is no longer king. Where we learn some modesty and humility – and how to love in our
infinitely small corner of the universe.
Jonathan Cook won the Martha Gellhorn Special Prize for Journalism. His books include
"Israel and the Clash of Civilisations: Iraq, Iran and the Plan to Remake the Middle East"
(Pluto Press) and "Disappearing Palestine: Israel's Experiments in Human Despair" (Zed Books).
His website is www.jonathan-cook.net .
With the growing movement towards nuclear war, we have indeed reached the nadir. It is
important to see how humanity got here, for the signs are ominous.
The pattern of history is clear. Power (manifested as interest) has been present in every
conflict of the past – no exception. It is the underlying motivation for war.
cultural factors might change, but not power. Interest cuts across all apparently unifying
principles: family, kin, nation, religion, ideology, politics – everything. We unite
with the enemies of our principles, because that is what serves our interest. It is power,
not any of the above concepts, that is the cause of war.
Maybe it is just me but I didn't see any actual solution or much of anything in his third
group. You know, the one with all the "correct" answers. All I saw was that it was a glorious
vision without all the failings of the other two while rejecting all the badthink.
Every major tragedy in human history starts out with people thinking they have a system
better than all the previous that ever occurred. It too soon becomes a religion that needs to
defend itself by executing all the blasphemers.
Maybe it is just me but I didn't see any actual solution or much of anything in his
third group. You know, the one with all the "correct" answers. All I saw was that it was a
glorious vision without all the failings of the other two while rejecting all the
I've been waiting for the author, or some from his "group", to post here at least a LINK
to that solution, even a suggestion, of theirs. Hell, even the proper analysis of what's not
right. A foundation of sort.
So far, as you said, nothing.
Anon, February 3, 2019 at 5:29 am GMT
Levy another Jewish "intellectual" shilling for globalization and open borders - for Western nations only, to hasten their
demise. What else is new?
"... Living standards are more than a house with indoor plumbing automatic heat, and lights at the flip of a switch. Its being able to talk with interested people about interesting topics. About being able to see interesting things when looking at the window, or walking, or riding. ..."
Have you ever been to
Kansas? Might as well move to Mexico, or Puerto Rico.
Kansas has gotten worse because of cost cutting. Cost cutting means living costs are less
because the standard of living is less.
Living standards are more than a house with indoor plumbing automatic heat, and lights at
the flip of a switch. Its being able to talk with interested people about interesting topics. About being able to see interesting things when looking at the window, or walking, or
It tried to be connected to the world. If the politics were say 1870, they would want 600kph
high speed train service so a day trip to a city like St Louis or Chicago was
Nations should explore better system to break US hegemony
"The US dollar is used for the international oil and gas trade and a wide part of global
trade. This gives the US an exorbitant privilege to sanction countries it opposes.
The latest sanctions on Venezuela's state-owned oil company aim to cut off source of foreign
currency of Venezuelan strongman Nicolas Maduro's government and eventually force him to step
A new mechanism should be devised to thwart such a vicious circle"
My question is really about those at the top of the power pyramid (those few hundred
families who own the controling share of the wealth of the world) -- those who position
idiots like Bolton to do their work, do they comprehend 'exergy' decline ?
If we can, then can they not? I agree with Parenti that they are not
'somnambulists'. They are strategists looking out for their own interests, and that means
scrutinising trends in political movements, culture, technology and, well, just about
everything. I find it hard, the idea that all these people -- people who have seen their
businesses shaped by resource discovery, exploitation and then depletion, have no firm grasp
on the realities of dwindling returns on energy.
The models were drawn up 47 years ago. I think that some of them at least, do
understand that economic growth is coming to a halt, and have understood for decades. If true
then they are planning that transition in their favour.
These hard to swallow facts about oil are still on the far fringes of any political
conversation. The neoliberal cultists are deaf to them for obvious reasons; the socialist
idealists believe that a 'New Deal' can lead us off the death train, but mostly ignore the
intractable relationship between energy decline and financial problems; even the anarchists
want their work free utopia run by robots and AI but stop short of asking whether solar
panels and wind turbines can actually provide the power for all that tech. It's the news that
nobody wants to think about, but which they will be forced to thinking about in the very near
The Twitter feed 'Limits to Growth' has less than 800 followers (excellent though it
I do not want to get into the mind of the Walrus of Death Bolton! I do not want to know
what he does, as he does. But at lower levels of government, and corporatism, there is an
awareness of surplus energy economics. And as Nafeez has also pointed out, the military (the
Pentagon) are taking an interest. And though it could rapidly change, who really appreciates
the nuances of EROEI? I'm guessing at less than a single percent of all populations? And how
many include its effects in a integrated political sense?
Its appreciation is sporadic: ranging from tech-utopia hopium to a defeated fatalism of
the inevitability of collapse. Unless and until people want to face the harshness of the
reality that capitalism has created: we are going to be involved in a marginal analysis.
There are very few people who have realised that capitalism is long dead.
Dr Tim Morgan estimates that world capitalism has conservatively had $140tn in stimulus
since 2008 -- without stimulating anything or reviving it at all. In fact, that amounts to
the greatest robbery in history -- the theft of the future. Inasmuch as they can, those
unrepayable debts -- transferred to inflate the parasitic assets of capitalists -- will be
socialised. Except they cannot be. Not without surplus energy.
Brexit, gilets jaunes, Venezuela, unending crises in MENA, China's economic slowdown, etc
-- all linked by EROEI.
It is a common socio-politico-economic energy nexus -- but linked together by whom? And
the emergent surplus energy-mind-environmental ecology nexus? All the information is
available. The formation of a new political manifesto started in the 1960s with the New Left
but it seems to have been in stasis since. Perhaps this might stimulate the conversation.
According to Nate Hagens: there is 4.5 years of human muscle power leveraged by each
barrel of oil. We are all going to be working for a very long time to pay back the debts
the possessing classes have built up for us -- with absolutely no marginal utility for
We are subsidising our own voluntary slavery unless we develop an emergent ecosocialist
and ecosophical alternative to carbon capitalism. We cannot expect paleoconservative carbon
relics like Bolton -- or anyone else -- to do it for us. The current political landscape is
dominated by a hierarchical, vested interest, carbon aristocracy. We can't expect that to
change for our benefit any time ever. Expect the opposite.
Graeber has a point, though. We could already have a post-scarcity, post-production society
but for the egregious maldistribution of resources and employment. Andre Gorz said as much 50
years ago (Critique of Economic Reason). Why do we organise around production: it makes no
sense but for the relations of production are, and remain, the relations of hierarchical
rule. So long as we assign value to a human life on the basis of meritocratic productivity --
we will have dehumanisation, marginalisation, and subjugation (haves and have nots). So why
not organisation around care, freedom and play?
Such a solution would require the transversalistion of society and not-full-employment: so
that no part of the system is subordinate, and no part is privileged. All systems and
sub-ordinate (care) systems would be co-equal, of corresponding value and worth. So, without
invoking EROEI, that would go a long way to solve our exergy, waste, pollution, and
inequality problems. It is the profligate, unproductive superstructure: supporting rentier,
surplus energy accumulating, profit-seeking suprasocieties -- that squanders our excess
energy and puts expansive spatio-temporal pressures on already stretched biophysical
ecological systems that engenders potential collapse. It is their -- the possessing classes
-- assets that are being inflated, at our environmental expense. When it comes to
survivability, we cannot afford a parasitic globalised superstructure draining the host --
the ecologically productive base. Without the over-accumulation, overconsumption, and wastage
(the accursed share) associated with the superstructure of the advanced economies -- and
their cultural, credit, military imperialisms I expect we could live quite well. Without the
pressures of globalised transportation networks, and unnecessary military budgets -- the
pressure on oil is minimised. It could be used for the 1001 other uses it has, rather than
fuelling Saudi Eurofighters bombing Yemeni schoolchildren, for instance. The surplus energy
could be used to educate, clothe and feed them instead. That would be a better use of
resources, for sure.
If we took stock of what we really have, and what we really are -- a form of spiritual
neo-self-sufficiency, augmented and extended into co-mutual care and freedom valorising
ecologies we wouldn't need to chase the perceived loss all over the globe, killing everything
that moves. The solutions are not hard, they are normative, once we are shocked out of this
awful near-life trance state of separationism. Thanks for the link.
It seems to me that there are two parallel arguments going on.
One is about social organisation, attitudes towards and policies determining work, money,
paid employment, technological development and the distribution of weath.
The other is fundamentally based on the laws of thermodynamics and concerns resource limits,
energy surpluses, the role of 'stored sunlight' in producing things and doing work for each
other, pollution and projections about these into the future.
I am surprised that Graeber (just as an example) seems to basically ignore the second of
these even though he clearly is an incisive thinker and makes good points about the first. It
is taken as a given that, theoretically at least, human civilisation could re-organise around
a new ethic, transform the economy into a 'caring economy', re-structure money, government
and do away with militarism. In terms of what to do now, as an individual, what choices to
make, it is disconcerting to me when talk of these ideals seems to ignore those latter
questions about overshoot.
I wonder if the egalitarian nature of much of indiginous North American society was
inescapably bound with the realities of a low population density, low technology,
intimate relationship with the natural world and a culture completely steeped in reverence
for Mother Earth.
The talk I hear from Bastani or Graeber along the lines of 'we could be flying around in jet
packs on the moon, if only society was organised sensibly' rings hollow to me.
Welcome to my world! Apart from as a managerial tool, systems thinking has yet to catch on
in the wider population. According to reductive materialism: there are two unlinked
arguments. According to Dynamic Systems Theory (DST) there is only one integrated argument --
with two inter-connected correlative aspects. We can only organise around what we can
energetically afford. Consequently, we cannot organise around what we cannot afford -- that
is, global industrialised production with a supervenient elitist superstructure.
Let's face it : ethical arguments carry little weight against organisation around
hierarchical rule. The current talk of an ethical capitalism -- in mixed economies with
'commons' elements -- is an appeasement. and distractional to the gathering and ineluctable
The current (2012) EROI for the UK is 6.2:1 -- barely above the 'energy cliff' of 5:1. The
GDP 'growth' and bullshit jobs are funded by monetised debt (we borrow around £5 to
make every £1 -- from Tim Morgan's SEEDS). From the Earth Overshoot Day website: the UK
is in economic overshoot from May 8th onward.
These are indicators that we will not be "flying jetpacks on the moon": even if we
reorganise. Everyone, and I mean everyone, will have to make do with less. A lot less.
Everything would have to be localised and sustainable. Production would be minimised, and not
at all full. Two major systems of production -- food (agroecology) and energy -- would have
to be sustainable and self-sovereign. And financialisation and the rentier, service economy?
Now you can see why no one, not even Dave the crypto-anarchist, is talking about reality.
Elitism, establishment and entitlement do not figure in an equitable future. We can't afford
it, energetically or ethically.
So when will the debate move on? Not any time the populace is bought into ideational
deferred prosperity. All the time that EROEI is ignored as the fundamental concept governing
dwindling prosperity -- no one, and I mean no one, will be talking about a minimal surplus
energy future. The magic realism is that the economic affordances of cheap oil (unsustainably
mimicked by debt-funding) will return sometime, somehow (the technocratic superfix). The
aporia is that the longer the delay, the less surplus energy we will have available to
utilise. Something like the Green New Deal -- that has been proposed for around two decades
now -- may give us some quality of life to sustain. Pseudo-talk of a Customs Union, 'clean'
coal, and nuclear power, will not.
An integrated reality -- along the model of Guattari's 'Three Ecologies' -- of mind,
economy, and environment is well, we are not alone, but we are ahead of the curve. The other
cultural aporia is that we need to implement such vision now. Actually, about thirty years
ago but let's not get depressive!
We are going to need that cooperative organisation around care and freedom just to get
through the coming century.
As mentioned elsewhere here, Venezualan oil deposits are not all that the hype cracks them up
to be. They are mostly oil sands that produce little in the way of net energy gain after the
lengthy process of extraction.The Venezuala drama is about the empire crushing democracy
(i.e. socialism), not oil. [not that this detracts from Kit's essential point in the
The Left (as well as the Right), by and large have not come to terms with the realities of
the decline in net surplus energy that is unfolding around the world and driving the
political changes that we see. So they still view geopolitics in terms of the oil economy of
The productive economies of Europe are falling apart (check Steve Keen's latest on Max and
Stacy -- although even i he doesn't delve into the energy decline aspect).
The carbon density of the global economy has not changed in the 27 years since the founding
of the UNFCCC.
The Peak Oil phenomenon was oversimplified, misrepresented and misunderstood as a simple
turning point in overall oil production. In truth it was a turning point in energy
I predict that by the end of this or next year, everyone will be talking about ERoEI.
Everyone will realise that there is no way out of this predicament. Maybe there are ways to
lessen the catastrophe, but no way to avert it. This will change the conversation, and even
change what 'politics' means (i.e. you cannot campaign on a 'new start' or a 'better,
brighter future' if everyone knows that that physically cannot happen).
Everyone will understand that their civilisation is collapsing.
Does Bolton understand this?
If you were referring to my earlier comments about Venezuelan extra heavy crude: it's
still massively about the oil. The current carbon capitalist world system does not understand
surplus energy or EROEI, as it is so fixated on maximal short term returns for shareholders.
It can't comprehend that their entire business model is unsustainable and self cannibalising.
Which is bad for us: because carbon net-energy (exergy) economics it is foundational to all
civilisation. The ignorance of it and subsequent environmental and social convergence crises
threatens the systemic failure of our entire civilisation. The Venezuelan crisis affects us
all: and is symptomatic of a decline in cheap oil due to rapidly falling EROEI.
I can't find the EROEI specifically for Venezuelan heavy oil: but it is only slightly more
viscous than bitumen -- which has an EROEI of 3:1. Let's call it 4:1: the same as other tight
oils and shale. Anything less than 5:1 is more or less an energy sink: with virtually no net
energy left for society. The minimum EROEI for societal needs is 11:1. Does Bolton understand
this? Francis hit the nail on the head there.
Do any of our leaders? No. If they did, a transition to decentralisation would be well
under way. Globalised supply chains are systemically threatened and fragile. A globalised
economy is spectacularly vulnerable. Especially a debt-ridden one. Which way are our leaders
trying to take us? At what point will humanity realise we are following clueless Pied Pipers
off the Seneca Cliff -- into globalised energy oblivion?
The rapid investment -- not in a post-carbon transition -- but in increased
militarisation, and resource and market driven aggressive foreign intervention policies
reveal the mindset of insanity. As people come to understand the energy basis of the world
crisis: the fact of permanent austerity and increased pauperisation looms large. What will
the outcome be when an armed nuclear madhouse becomes increasingly protectionsist of their
dwindling share? Too alarmist, perhaps? Let's play pretend that we can plant a few trees and
captive breed a few rhinos and it will all be fine. BAU?
The world runs on cheap oil: our socio-politico-economic expectations of progress depend
on it. Which means that the modern human mind is, in effect, a thought-process predicated on
cheap oil. Oleum ergo sum? Apart from the Middle East: we are already past the point where
oil is a liability, not a viability. Debt funding its extraction, selling below the cost of
production -- both assume the continual expansion of global GDP. Oil is a highly subsidised
-- with our surplus socialisation capital -- negative asset. We foot the bill. A bill that
EROEI predicts will keep on rising. At what point do we realise this? Or do we live in hopium
of a return to historical prosperity? Or hang on the every word of the populist magic realism
demagogue who promises a future social utopia?
EROEI = Energy Returned on Energy Invested (also known as EROI = Energy Return on Investment)
EROEI refers to the amount of usable energy that can be extracted from a resource compared
to the amount of energy (usually considered to come from the same resource) used to extract
it. It's calculated by dividing the amount of energy obtained from a source by the amount of
energy needed to get it out.
An EROEI of 1:1 means that the amount of usable energy that a resource generates is the
same as the amount of energy that went into getting it out. A resource with an EROEI of 1:1
or anything less isn't considered a viable resource if it delivers the same or less energy
than what was invested in it. A viable resource is one with an EROEI of at least 3:1.
The concept of EROEI assumes that the energy needed to get more energy out of a resource
is the same as the extracted energy ie you need oil to extract oil or you need electricity to
extract electricity. In real life, you often need another source of energy to extract energy
eg in some countries, to extract electricity, you need to burn coal, and in other countries,
to extract electricity you need to build dams on rivers. So comparing the EROEI of
electricity extraction across different countries will be difficult because you have to
consider how and where they're generating electricity and factor in the opportunity costs
involved (that is, what the coal or the water or other energy source -- like solar or wind
energy -- could have been used for instead of electricity generation).
That is probably why EROEI is used mainly in the context of oil or natural gas
The US military-industrial complex is rejoicing at the prospect of money
rained down as a result of this withdrawal from the INF treaty. But in Europe (with the
exception of Romania and Poland), nobody is too keen to welcome US missiles that have no
defense against Russian hypersonic weapons. NATO's trans-Atlantic arms lobby will try to push
as many European countries as possible towards a new Cold War, with US weapons deployed and
aimed at Moscow. It will be fun to see the reactions of European citizens facing the prospect
of being annihilated by Russian missiles simply to please the CEOs and shareholders of Lockheed
Martin and Raytheon. No doubt there will be some European politicians in countries like Poland
keen to scream about the "Russian threat", ready to throw tens of billions worth of Polish
taxpayers' money into useless and ineffective projects for the purposes of pleasing their
Are US generals even aware of how idiotic it is for the US to withdraw from the INF for
Washington? Moscow is already ahead in the development of such systems, both land-based but
above all sea- and air-launched, without forgetting the hypersonic variants of its conventional
or nuclear missiles. Washington has a huge gap to close, exacerbated by the fact that in spite
of heavy spending over many years, there is little to show for it as a result of massive
corruption in the research-and-development process. This is not to mention the fact that there
are few European countries willing to host offensive missile systems aimed at Russia. In
reality, there is little real advantage for Washington in withdrawing from the INF treaty,
other than to enrich arms manufacturers. It diminishes US military options strategically while
expanding those of Beijing and Moscow, even as the latter oppose Washington's unilateral
withdrawal from the treaty.
The hope of expanding the INF treaty to include the US, Russia, China and the EU appears
slim due to Washington's intransigence. Washington only aims to increase expenditure for the
development of weapons prohibited by the treaty, and in strategic terms, improbably hopes to
find some Asian and European countries willing to host these systems aimed against China and
The world is certainly more dangerous following Washington's decision, heading in a
direction where there are less and less rules while there are more nuclear powers. For decades,
the United States has been trying to achieve nuclear supremacy by overcoming the limitations of
MAD, whereby Washington would be able to carry out a decapitating nuclear first strike without
worrying about an opponent's ability to launch a retaliatory second strike. It is precisely
this type of thinking that is bringing humanity closer to the brink of destruction from a
nuclear accident or miscalculation. The miniaturization of nuclear warheads and the apparently
limited nature of "tactical nukes" further encourages the justification for using such
Moscow's decision in 2007 to develop state-of-the-art weapons and focus on new technologies
like hypersonic missiles guarantees that Russia and her allies have an effective deterrent
against the attempts of the US to alter the nuclear balance of power, which otherwise threatens
the future of humanity.
The withdrawal from the INF treaty is another worrying sign of the willingness of the US to
push the world to the brink of catastrophe, simply for the purposes of enriching the CEOs and
shareholders of it arms manufacturers through a nuclear arms race.
Along with the USA there is a group La countries (and Canada) with the specific goal of "regime change" in Venezuela. Much
like multinational forces in Iraq. From Wikipedia: ... established following the Lima Declaration on 8 August 2017 in the Peruvian
capital of Lima, where representatives of 12 countries met in order to establish a peaceful exit to the crisis in Venezuela.
Among other issues, the now 14-country group demands the release of political prisoners, calls for free elections, offers
humanitarian aid and criticizes the breakdown of democratic order in Venezuela under the Bolivarian Government of Venezuela.
"... Not everyone agreed that Guaido and his Popular Will party should be the one to be pushed forward as "Interim President" but the moment it happened, this forced the opposition to immediately unify behind him, based on the no turning back momentum created : ..."
"... The results of that fateful decision are still being played out in the streets, and on the international stage as countries line up for and against Maduro (China, Russia and Turkey among Maduro supporters, with the US and European countries backing Guaido as legitimate leader). ..."
"... However, the WSJ report closes with crucial bombshell information regarding what it took for the opposition to cross that line, and for Guaido to step out in confidence. What was the key factor in the final push? First, Canada and US allies in Latin America initiated something dramatic... ..."
"... But most importantly, Washington came calling at a key moment the opposition was fractured and still indecisive and divided , in what is a central revelation concerning the anti-Maduro movement's calculations : ..."
"... And there it is -- a stunning mainstream media admission that the political drama and crisis now unfolding in Venezuela, now quickly turning into a global geopolitical pressure spot and conflagration -- was pushed forward and given assistance directly from the White House from the very beginning . ..."
A new WSJ report asks what the Hell is going on? in Venezuela and provides new information
How a Small Group Seized Control of Venezuela's Opposition to make the extremely risky move
of pushing forward 35-year old opposition leader and National Assembly head Juan Guaido to
declare himself "Interim President" -- precipitating the crisis that's seen the noose tighten
around President Nicolas Maduro's rule as over a dozen countries led by the US have declared
For starters, the report paints current events as having started with a "big gamble" that
was largely unplanned and unexpected within even the political opposition itself, and which
further had the hidden hand of the White House and State Department behind it from the very
beginning, pushing the opposition forward at the most critical juncture . Outlining the past
difficulties of Venezuela's "notoriously fractious opposition" and the deep divide over the
question of whether to enter direct negotiations or take more aggressive action to undermine
the WSJ describes :
When Juan Guaidó declared himself Venezuela's interim president on Jan. 23 in front
of a crowd of 100,000 people under a broiling sun, some leading opposition figures had no
idea he would do so, say people who work with Mr. Guaidó and other top leaders . That
included a few standing alongside him. A stern look of shock crossed their faces. Some
quietly left the stage.
"What the hell is going on?" one member of a group of politicians wrote to the others in a
WhatsApp group chat. "How come we didn't know about this."
The plan was so risky -- especially to Guaido personally as he had been arrested and
briefly detained after his vehicle was rushed by secret police only less than two weeks
prior -- that the final decision of public confrontation with the Maduro regime was left
entirely up to him in the hours leading up to the Jan.23 rally.
Not everyone agreed that Guaido and his Popular Will party should be the one to be pushed
forward as "Interim President" but the moment it happened, this forced the opposition to
immediately unify behind him, based on the no turning back
momentum created :
Mr. Guaidó himself only agreed to act the day before he declared himself interim
president, his aides said. Some politicians -- including those in the traditional Democratic
Action Party, the largest opposition party -- weren't told of the plan .
"We didn't want them to mess it up," said one opposition leader who knew of the
The results of that fateful decision are still being played out in the streets, and on the
international stage as countries line up for and against Maduro (China, Russia and Turkey among
Maduro supporters, with the US and European countries backing Guaido as legitimate leader).
The high stakes maneuver "was largely devised by a group of four opposition leaders -- two
in exile, one under house arrest and one barred from leaving the country" and was predictably
immediately denounced by Maduro "as part of a U.S.-backed coup to overthrow his government."
But as the WSJ concludes, "The act of political skulduggery paid off. The crowd reacted
ecstatically to Mr. Guaidó, and one nation after another recognized him within hours."
Among the "plotters" included Guaido's political mentor Leopoldo López, now under house
arrest in Caracas, and Edgar Zambrano, vice president of the National Assembly of power allied
opposition party Democratic Action.
Zambrano related to the WSJ that the risk was so high that
in the end the "final decision" to pull the trigger laid with Guaido:
Mr. Zambrano, one of the opposition leaders who appeared surprised on stage on Jan. 23,
said the possibility of Mr. Guaidó assuming the presidency had been discussed in the
weeks before, but that the final decision was in the hands of the young leader because of the
risks it entailed .
However, the WSJ report closes with crucial bombshell information regarding what it took for
the opposition to cross that line, and for Guaido to step out in confidence. What was the key factor in the final push? First, Canada and US allies in Latin America
initiated something dramatic...
A breakthrough came on Jan. 4, when the Lima Group of 14 Latin American countries and
Canada issued a letter calling on Mr. Maduro to hand over power to the National Assembly. The
near-bellicose nature of the letter surprised opposition leaders, reinforcing the idea they
should take action .
But most importantly, Washington came calling at a key moment the opposition was fractured
and still indecisive and divided , in what is a central revelation concerning
the anti-Maduro movement's calculations :
When Mr. Guaidó should try to assume the interim presidency was up for debate. Some
argued that it should happen before Mr. Maduro took the oath. Others proposed creating a
commission to challenge Mr. Maduro's claim to office.
As late as Jan. 22, the day before it happened, Mr. Guaidó wasn't fully convinced .
He came around after Vice President Mike Pence called to assure that, if he were to invoke
the Venezuelan constitution in being sworn in as the country's rightful leader, the U.S.
would back the opposition.
And there it is -- a stunning mainstream media admission that the political drama and crisis
now unfolding in Venezuela, now quickly turning into a global geopolitical pressure spot and
conflagration -- was pushed forward and given assistance directly from the White House from the
very beginning .
Guaido: "Gee I can't wait for all that Western oil money to fill up meh pockets.
EhhhrrMMMmm I can't wait to sell out the Venezuelan people to the FED, BoE and ECB. D'oh-
where'd my CIA handler go?"
Also, lol at the Journal for this gem " The act of political skulduggery paid off. The
crowd reacted ecstatically to Mr. Guaidó, and one nation after another recognized him
within hours. " Translation: "Wow- we're SO surprised that the Western vassal states all
followed their master's lead by kowtowing in quick succession! Gee whiz- mind BLOWN!"
The WSJ has provided the "House" plausible deniability, will the "House" take it, or will
the minions sabotage? Stay tuned folks, as we discover who's honorable, who's courageous, and
Further proof this guy is a treasonous little bitch that needs to be arrested and
prosecuted by the Supreme Tribunal Court of Venezuela. He's a traitor to ALL Venezuelans by
colluding with foreign powers to overthrow his elected president.
Oh please. Maduro the elected president? He won his election after blocking the opposition
parties to take part. Please read the Venezuelan Constitution before commenting. Not any
election is valid or democratic. Maduro should be in jail. Guaido is asking for new and fair
elections. ... OOOOH how undemocratic!!! I am against foreign intervention, but in this case
the 3 million Venezuelan real refugees (10% of the Venezuelan population and not organised
political caravans trying to reach the USA) in neighbour countries tips my view. Therefore I
support the constitutional president Guaido and any help the international community can give
Idiot . The opposition boycotted the election as they couldn't win. International
observers (usa wouldn't come) say it was fairer than usa elections lol. Sure maduro isn't a
saint. He also gave out prizes to collect after voting . But that's not bribing people could
vote for anyone and still collect a few foods in a bag
That a boy Trumpy! You got the right FukWits on the job. Bibi and Sheldon are jumping for
joy with the addition of Abrams. Now you got your Zio dream team. BoltON, PompAss, and
Abram's. Just think what a murderous war mongering team for IsraHell you could have if ya
rolled **** Chenney in the mix. Now there's someone who won't **** around getting a Zio war
Cheney , the virtue less, honor less, 2 time OUI conviction,electricians apprentice , went
as far as helping to murder 3,000 Americans . All so he could impress his societal status
ambitious wife . A Rumsfeld ass kissing loser . Spineless goy are 50% of the problem .
A historic interfaith covenant was signed in the Middle East on Monday, and the mainstream
media in the United States has been almost entirely silent about it.
Sheikh Ahmed al-Tayeb is considered to be the most important imam in Sunni Islam, and he
arrived at the signing ceremony in Abu Dhabi with Pope Francis
"hand-in-hand in a symbol of interfaith brotherhood" . But this wasn't just a ceremony for
Catholics and Muslims. According to
a British news source , the signing of this covenant was done "in front of a global
audience of religious leaders from Christianity, Islam, Judaism and other faiths"...
The pope and the grand imam of al-Azhar have signed a historic declaration of fraternity,
calling for peace between nations, religions and races, in front of a global audience of
religious leaders from Christianity, Islam , Judaism and other faiths.
, the leader of the world's Catholics, and Sheikh Ahmed al-Tayeb, the head of Sunni Islam's
most prestigious seat of learning, arrived at the ceremony in Abu Dhabi hand-in-hand in a
symbol of interfaith brotherhood.
In other words, there was a concerted effort to make sure that all of the religions of the
world were represented at this gathering.
the official Vatican website , a tremendous amount of preparation went in to the drafting
of this document, and it encourages believers from all religions "to shake hands, embrace one
another, kiss one another, and even pray" with one another
The document, signed by Pope Francis and the Grand Imam of al-Azhar, Ahmed el-Tayeb, was
prepared "with much reflection and prayer", the Pope said. The one great danger at this
moment, he continued, is "destruction, war, hatred between us." "If we believers are not able
to shake hands, embrace one another, kiss one another, and even pray, our faith will be
defeated", he said. The Pope explained that the document "is born of faith in God who is the
Father of all and the Father of peace; it condemns all destruction, all terrorism, from the
first terrorism in history, that of Cain."
There is a lot of language about peace in this document, but it goes way beyond just
advocating for peace.
Over and over again, the word "God" is used to simultaneously identify Allah and the God of
Christianity. Here is just one example
We, who believe in God and in the final meeting with Him and His judgment, on the basis of
our religious and moral responsibility, and through this Document, call upon ourselves, upon
the leaders of the world as well as the architects of international policy and world economy,
to work strenuously to spread the culture of tolerance and of living together in peace; to
intervene at the earliest opportunity to stop the shedding of innocent blood and bring an end
to wars, conflicts, environmental decay and the moral and cultural decline that the world is
On top of that, the document also boldly declares that "the diversity of religions" that we
see in the world was "willed by God"
Freedom is a right of every person: each individual enjoys the freedom of belief, thought,
expression and action. The pluralism and the diversity of religions, colour, sex, race and
language are willed by God in His wisdom, through which He created human beings. This divine
wisdom is the source from which the right to freedom of belief and the freedom to be
different derives. Therefore, the fact that people are forced to adhere to a certain religion
or culture must be rejected, as too the imposition of a cultural way of life that others do
In essence, this is saying that it is the will of God that there are hundreds of different
religions in the world and that they are all acceptable in His sight.
Faith leads a believer to see in the other a brother or sister to be supported and loved.
Through faith in God, who has created the universe, creatures and all human beings (equal on
account of his mercy), believers are called to express this human fraternity by safeguarding
creation and the entire universe and supporting all persons, especially the poorest and those
most in need.
This transcendental value served as the starting point for several meetings characterized by
a friendly and fraternal atmosphere where we shared the joys, sorrows and problems of our
contemporary world. We did this by considering scientific and technical progress, therapeutic
achievements, the digital era, the mass media and communications. We reflected also on the
level of poverty, conflict and suffering of so many brothers and sisters in different parts of
the world as a consequence of the arms race, social injustice, corruption, inequality, moral
decline, terrorism, discrimination, extremism and many other causes.
From our fraternal and open discussions, and from the meeting that expressed profound hope
in a bright future for all human beings, the idea of this Document on Human Fraternity was
conceived. It is a text that has been given honest and serious thought so as to be a joint
declaration of good and heartfelt aspirations. It is a document that invites all persons who
have faith in God and faith in human fraternity to unite and work together so that it may serve
as a guide for future generations to advance a culture of mutual respect in the awareness of
the great divine grace that makes all human beings brothers and sisters.
In the name of God who has created all human beings equal in rights, duties and dignity, and
who has called them to live together as brothers and sisters, to fill the earth and make known
the values of goodness, love and peace;
In the name of innocent human life that God has forbidden to kill, affirming that whoever
kills a person is like one who kills the whole of humanity, and that whoever saves a person is
like one who saves the whole of humanity;
In the name of the poor, the destitute, the marginalized and those most in need whom God has
commanded us to help as a duty required of all persons, especially the wealthy and of
In the name of orphans, widows, refugees and those exiled from their homes and their
countries; in the name of all victims of wars, persecution and injustice; in the name of the
weak, those who live in fear, prisoners of war and those tortured in any part of the world,
In the name of peoples who have lost their security, peace, and the possibility of living
together, becoming victims of destruction, calamity and war;
In the name of human fraternity that embraces all human beings, unites them and renders them
In the name of this fraternity torn apart by policies of extremism and division, by systems
of unrestrained profit or by hateful ideological tendencies that manipulate the actions and the
future of men and women;
In the name of freedom, that God has given to all human beings creating them free and
distinguishing them by this gift;
In the name of justice and mercy, the foundations of prosperity and the cornerstone of
In the name of all persons of good will present in every part of the world;
In the name of God and of everything stated thus far; Al-Azhar al-Sharif and the Muslims of
the East and West, together with the Catholic Church and the Catholics of the East and West,
declare the adoption of a culture of dialogue as the path; mutual cooperation as the code of
conduct; reciprocal understanding as the method and standard.
We, who believe in God and in the final meeting with Him and His judgment, on the basis of
our religious and moral responsibility, and through this Document, call upon ourselves, upon
the leaders of the world as well as the architects of international policy and world economy,
to work strenuously to spread the culture of tolerance and of living together in peace; to
intervene at the earliest opportunity to stop the shedding of innocent blood and bring an end
to wars, conflicts, environmental decay and the moral and cultural decline that the world is
We call upon intellectuals, philosophers, religious figures, artists, media professionals
and men and women of culture in every part of the world, to rediscover the values of peace,
justice, goodness, beauty, human fraternity and coexistence in order to confirm the importance
of these values as anchors of salvation for all, and to promote them everywhere.
This Declaration, setting out from a profound consideration of our contemporary reality,
valuing its successes and in solidarity with its suffering, disasters and calamities, believes
firmly that among the most important causes of the crises of the modern world are a
desensitized human conscience, a distancing from religious values and a prevailing
individualism accompanied by materialistic philosophies that deify the human person and
introduce worldly and material values in place of supreme and transcendental principles.
While recognizing the positive steps taken by our modern civilization in the fields of
science, technology, medicine, industry and welfare, especially in developed countries, we wish
to emphasize that, associated with such historic advancements, great and valued as they are,
there exists both a moral deterioration that influences international action and a weakening of
spiritual values and responsibility. All this contributes to a general feeling of frustration,
isolation and desperation leading many to fall either into a vortex of atheistic, agnostic or
religious extremism, or into blind and fanatic extremism, which ultimately encourage forms of
dependency and individual or collective self-destruction.
History shows that religious extremism, national extremism and also intolerance have
produced in the world, be it in the East or West, what might be referred to as signs of a
"third world war being fought piecemeal". In several parts of the world and in many tragic
circumstances these signs have begun to be painfully apparent, as in those situations where the
precise number of victims, widows and orphans is unknown. We see, in addition, other regions
preparing to become theatres of new conflicts, with outbreaks of tension and a build-up of arms
and ammunition, and all this in a global context overshadowed by uncertainty, disillusionment,
fear of the future, and controlled by narrow-minded economic interests.
We likewise affirm that major political crises, situations of injustice and lack of
equitable distribution of natural resources – which only a rich minority benefit from, to
the detriment of the majority of the peoples of the earth – have generated, and continue
to generate, vast numbers of poor, infirm and deceased persons. This leads to catastrophic
crises that various countries have fallen victim to despite their natural resources and the
resourcefulness of young people which characterize these nations. In the face of such crises
that result in the deaths of millions of children – wasted away from poverty and hunger
– there is an unacceptable silence on the international level.
It is clear in this context how the family as the fundamental nucleus of society and
humanity is essential in bringing children into the world, raising them, educating them, and
providing them with solid moral formation and domestic security. To attack the institution of
the family, to regard it with contempt or to doubt its important role, is one of the most
threatening evils of our era.
We affirm also the importance of awakening religious awareness and the need to revive this
awareness in the hearts of new generations through sound education and an adherence to moral
values and upright religious teachings. In this way we can confront tendencies that are
individualistic, selfish, conflicting, and also address radicalism and blind extremism in all
its forms and expressions.
The first and most important aim of religions is to believe in God, to honour Him and to
invite all men and women to believe that this universe depends on a God who governs it. He is
the Creator who has formed us with His divine wisdom and has granted us the gift of life to
protect it. It is a gift that no one has the right to take away, threaten or manipulate to suit
oneself. Indeed, everyone must safeguard this gift of life from its beginning up to its natural
end. We therefore condemn all those practices that are a threat to life such as genocide, acts
of terrorism, forced displacement, human trafficking, abortion and euthanasia. We likewise
condemn the policies that promote these practices.
Moreover, we resolutely declare that religions must never incite war, hateful attitudes,
hostility and extremism, nor must they incite violence or the shedding of blood. These tragic
realities are the consequence of a deviation from religious teachings. They result from a
political manipulation of religions and from interpretations made by religious groups who, in
the course of history, have taken advantage of the power of religious sentiment in the hearts
of men and women in order to make them act in a way that has nothing to do with the truth of
religion. This is done for the purpose of achieving objectives that are political, economic,
worldly and short-sighted. We thus call upon all concerned to stop using religions to incite
hatred, violence, extremism and blind fanaticism, and to refrain from using the name of God to
justify acts of murder, exile, terrorism and oppression. We ask this on the basis of our common
belief in God who did not create men and women to be killed or to fight one another, nor to be
tortured or humiliated in their lives and circumstances. God, the Almighty, has no need to be
defended by anyone and does not want His name to be used to terrorize people.
This Document, in accordance with previous International Documents that have emphasized the
importance of the role of religions in the construction of world peace, upholds the
– The firm conviction that authentic teachings of religions invite us to remain
rooted in the values of peace; to defend the values of mutual understanding, human fraternity
and harmonious coexistence; to re-establish wisdom, justice and love; and to reawaken
religious awareness among young people so that future generations may be protected from the
realm of materialistic thinking and from dangerous policies of unbridled greed and
indifference that are based on the law of force and not on the force of law;
– Freedom is a right of every person: each individual enjoys the freedom of belief,
thought, expression and action. The pluralism and the diversity of religions, colour, sex,
race and language are willed by God in His wisdom, through which He created human beings.
This divine wisdom is the source from which the right to freedom of belief and the freedom to
be different derives. Therefore, the fact that people are forced to adhere to a certain
religion or culture must be rejected, as too the imposition of a cultural way of life that
others do not accept;
– Justice based on mercy is the path to follow in order to achieve a dignified life
to which every human being has a right;
– Dialogue, understanding and the widespread promotion of a culture of tolerance,
acceptance of others and of living together peacefully would contribute significantly to
reducing many economic, social, political and environmental problems that weigh so heavily on
a large part of humanity;
– Dialogue among believers means coming together in the vast space of spiritual,
human and shared social values and, from here, transmitting the highest moral virtues that
religions aim for. It also means avoiding unproductive discussions;
– The protection of places of worship – synagogues, churches and mosques
– is a duty guaranteed by religions, human values, laws and international agreements.
Every attempt to attack places of worship or threaten them by violent assaults, bombings or
destruction, is a deviation from the teachings of religions as well as a clear violation of
– Terrorism is deplorable and threatens the security of people, be they in the East
or the West, the North or the South, and disseminates panic, terror and pessimism, but this
is not due to religion, even when terrorists instrumentalize it. It is due, rather, to an
accumulation of incorrect interpretations of religious texts and to policies linked to
hunger, poverty, injustice, oppression and pride. This is why it is so necessary to stop
supporting terrorist movements fuelled by financing, the provision of weapons and strategy,
and by attempts to justify these movements even using the media. All these must be regarded
as international crimes that threaten security and world peace. Such terrorism must be
condemned in all its forms and expressions;
– The concept of citizenship is based on the equality of rights and duties, under
which all enjoy justice. It is therefore crucial to establish in our societies the concept of
full citizenship and reject the discriminatory use of the term minorities which engenders
feelings of isolation and inferiority. Its misuse paves the way for hostility and discord; it
undoes any successes and takes away the religious and civil rights of some citizens who are
thus discriminated against;
– Good relations between East and West are indisputably necessary for both. They
must not be neglected, so that each can be enriched by the other's culture through fruitful
exchange and dialogue. The West can discover in the East remedies for those spiritual and
religious maladies that are caused by a prevailing materialism. And the East can find in the
West many elements that can help free it from weakness, division, conflict and scientific,
technical and cultural decline. It is important to pay attention to religious, cultural and
historical differences that are a vital component in shaping the character, culture and
civilization of the East. It is likewise important to reinforce the bond of fundamental human
rights in order to help ensure a dignified life for all the men and women of East and West,
avoiding the politics of double standards;
– It is an essential requirement to recognize the right of women to education and
employment, and to recognize their freedom to exercise their own political rights. Moreover,
efforts must be made to free women from historical and social conditioning that runs contrary
to the principles of their faith and dignity. It is also necessary to protect women from
sexual exploitation and from being treated as merchandise or objects of pleasure or financial
gain. Accordingly, an end must be brought to all those inhuman and vulgar practices that
denigrate the dignity of women. Efforts must be made to modify those laws that prevent women
from fully enjoying their rights;
– The protection of the fundamental rights of children to grow up in a family
environment, to receive nutrition, education and support, are duties of the family and
society. Such duties must be guaranteed and protected so that they are not overlooked or
denied to any child in any part of the world. All those practices that violate the dignity
and rights of children must be denounced. It is equally important to be vigilant against the
dangers that they are exposed to, particularly in the digital world, and to consider as a
crime the trafficking of their innocence and all violations of their youth;
– The protection of the rights of the elderly, the weak, the disabled, and the
oppressed is a religious and social obligation that must be guaranteed and defended through
strict legislation and the implementation of the relevant international agreements.
To this end, by mutual cooperation, the Catholic Church and Al-Azhar announce and pledge to
convey this Document to authorities, influential leaders, persons of religion all over the
world, appropriate regional and international organizations, organizations within civil
society, religious institutions and leading thinkers. They further pledge to make known the
principles contained in this Declaration at all regional and international levels, while
requesting that these principles be translated into policies, decisions, legislative texts,
courses of study and materials to be circulated.
Al-Azhar and the Catholic Church ask that this Document become the object of research and
reflection in all schools, universities and institutes of formation, thus helping to educate
new generations to bring goodness and peace to others, and to be defenders everywhere of the
rights of the oppressed and of the least of our brothers and sisters.
In conclusion, our aspiration is that:
this Declaration may constitute an invitation to reconciliation and fraternity among all
believers, indeed among believers and non-believers, and among all people of good will;
this Declaration may be an appeal to every upright conscience that rejects deplorable
violence and blind extremism; an appeal to those who cherish the values of tolerance and
fraternity that are promoted and encouraged by religions;
this Declaration may be a witness to the greatness of faith in God that unites divided
hearts and elevates the human soul;
this Declaration may be a sign of the closeness between East and West, between North and
South, and between all who believe that God has created us to understand one another,
cooperate with one another and live as brothers and sisters who love one another.
This is what we hope and seek to achieve with the aim of finding a universal peace that all
can enjoy in this life.
It's not One World Religion, for crying out loud. It's actually a great statement. The
Pope is trying to protect Christians living in Muslim or Jewish lands and the Iman Muslims
living in Christian or Jewish lands. If there were a Rabbi signing it, he would have wanted
to protect Jews living in Christian lands (and possibly Muslim lands but frankly I think Jews
are happy to have all Mideast Jews driven to Israel so I don't think they currently care much
One World Religion requires the same religion for everyone. Secular humanism is the One
World Religion. It is sold as actually not being a religion, the better to fool the masses.
But it is entirely a religion. And the Beast will rise from Secular Humanism, as will the
Mark of the Beast.
Christianity will definitely not be part of the One World Religion.
"... Last night, President Trump reserved a few minutes of his State of the Union address to praise his tax reform law, which turned a year old last month. To promote its passage, Mr. Trump and his congressional allies promised Americans that drastically lowered corporate tax rates would bring home large sums of capital that had been stashed overseas and finance a surge of domestic investment. ..."
"... Why would any multinational corporation pay America's 21 percent tax rate when it could pay the new "global minimum" rate of 10.5 percent on profits shifted to tax havens, particularly when there are few restrictions on how money can be moved around a company and its foreign subsidiaries? ..."
"... For starters, the law's repatriation deal did prompt a brief surge in offshore profits returning to the United States. But the total sum returned so far is well below the trillions many proponents predicted, and a large chunk of the returned funds have been used for record-breaking stock buybacks, which don't help workers and generate little real economic activity. ..."
"... Bottom line: the Trump tax cut is a giveaway to corporations that doesn't promote investment here ..."
The Global Con Hidden in Trump's Tax Reform Law, Revealed
Why would any multinational corporation pay the new 21 percent rate when it could use the new
"global minimum" loophole to pay half of that?
By Brad Setser
Last night, President Trump reserved a few minutes of his State of the Union address
to praise his tax reform law, which turned a year old last month. To promote its passage, Mr.
Trump and his congressional allies promised Americans that drastically lowered corporate tax
rates would bring home large sums of capital that had been stashed overseas and finance a
surge of domestic investment.
"For too long, our tax code has incentivized companies to leave our country in search of
lower tax rates," he said, pitching voters in the fall of 2017. "My administration rejects
the offshoring model, and we have embraced a brand-new model. It's called the American
The White House argued they wanted a system that "encourages companies to stay in America,
grow in America, spend in America, and hire in America." Yet the bill he signed into law
includes a sweetheart deal that allows companies that shift their profits abroad to pay tax
at a rate well below the already-reduced corporate income tax -- an incentive shift that
completely contradicts his stated goal.
Why would any multinational corporation pay America's 21 percent tax rate when it
could pay the new "global minimum" rate of 10.5 percent on profits shifted to tax havens,
particularly when there are few restrictions on how money can be moved around a company and
its foreign subsidiaries?
These wonky concerns were largely brushed aside amid the political brawl. But now that a
full year has passed since the tax bill became law, we have hard numbers we can evaluate.
For starters, the law's repatriation deal did prompt a brief surge in offshore profits
returning to the United States. But the total sum returned so far is well below the trillions
many proponents predicted, and a large chunk of the returned funds have been used for
record-breaking stock buybacks, which don't help workers and generate little real economic
And despite Mr. Trump's proud rhetoric regarding tax reform during his State of the Union
address, there is no wide pattern of companies bringing back jobs or profits from abroad. The
global distribution of corporations' offshore profits -- our best measure of their tax
avoidance gymnastics -- hasn't budged from the prevailing trend.
Well over half the profits that American companies report earning abroad are still booked
in only a few low-tax nations -- places that, of course, are not actually home to the
customers, workers and taxpayers facilitating most of their business. A multinational
corporation can route its global sales through Ireland, pay royalties to its Dutch subsidiary
and then funnel income to its Bermudian subsidiary -- taking advantage of Bermuda's corporate
tax rate of zero.
Where American Profits Hide
No major technology company has jettisoned the finely tuned tax structures that allow a
large share of its global profits to be booked offshore. Nor have major pharmaceutical
companies stopped producing many of their most profitable drugs in Ireland. And Pepsi, to
name just one major manufacturer, still makes the concentrate for its soda in Singapore, also
Eliminating the complex series of loopholes that encourage offshoring was a major talking
point in the run-up to the 2017 tax bill, but most of them are still in place. The craftiest
and largest corporations can still legally whittle down their effective tax rate into the
single digits. (In fact, the new law encourages firms to move "tangible assets" -- like
factories -- offshore).
Overall, the Tax Cuts and Jobs Act amounted to a technocratic sleight of hand -- a scheme
set to shift an even greater share of the federal tax burden onto the shoulders of American
families. According to the Treasury Department's tally for fiscal year 2018, corporate income
tax receipts fell by 31 percent, an unprecedented year-over-year drop in a time of economic
growth (presumably a time when profits and government revenue should rise in tandem).
These damning results, to be sure, don't make for a good defense of what came before the
new law. In theory under the old system, American-based firms still owed the government a cut
of their global profits. In practice, large firms could indefinitely defer paying this tax
until the funds could be repatriated -- usually when granted a tax holiday by a friendly
Over a generation, this political dance was paired with rules that made it relatively easy
for firms to transfer their most prized intellectual property -- say, the rights to popular
software or the particular mix of ingredients for a hot new drug -- to their offshore
subsidiaries. Taken together, they created a tax nirvana of sorts for multinational
corporations, particularly in intellectual-property-intensive industries like tech and
pharmaceuticals. But it wasn't enough.
For their next trick, the companies worked with their political allies to favorably frame
the 2017 tax debate. When he was the House speaker, Paul Ryan was fond of talking about $3
trillion in "trapped" profits abroad. But those profits weren't actually, physically, sitting
in a few tax havens.
Dwarf Economies, Giant American Profits
They were largely invested in United States bank accounts, securities and bonds issued by
the Treasury or other companies headquartered in the States. As Adam Looney -- a Brookings
Institution fellow and former Treasury Department official -- has explained, companies that
needed to finance a new domestic investment could simply issue a bond effectively backed by
its offshore cash. (For instance, Apple could bring its "trapped" funds onshore by selling a
bond to Pfizer's offshore account, or vice versa.)
Put plainly, they got the best of both worlds: Uncle Sam could tax only a small slice of
their books while they traded with one another based on the size of the entire pie.
The scale of the tax shifting has become so immense that some economists believe curbing
it could raise reported G.D.P. by well over a percentage point -- something Mr. Trump, who's
been absorbed by opportunities to brag about the economy, should notionally welcome.
President Trump's economic advisers and the key architects of the bill on Capitol Hill
must have known their reform wasn't going to end business incentives that hurt American
workers. Honest reform would have meant closing corporate loopholes -- a move they originally
promised to make.
Should the opportunity present itself, perhaps to the next president, there are a couple
of viable options for a fundamental tax overhaul that wouldn't require reinstating the 35
percent corporate tax rate.
One of several possibilities is to return to a system of global taxation without the
deferrals that enabled empty repatriations. That would mean profits sneakily booked tax-free
in Bermuda would be taxed every year at 21 percent. Profits booked in Ireland -- or other
low-tax nations -- would be taxed at the difference between Ireland's rate and America's
It's an approach that would protect small and midsize American companies while cracking
down on bad corporate actors with enough fancy accountants and lawyers to rig the game to
their advantage. And it would be far better than the fake tax reform passed a year ago.
This is very good from the essential Brad Setser, our leading expert on international
trade and money flows. Bottom line: the Trump tax cut is a giveaway to corporations that
doesn't promote investment here 1/
The Global Con Hidden in Trump's Tax Reform Law, Revealed
Why would any multinational corporation pay the new 21 percent rate when it could use the
new "global minimum" loophole to pay half of that?
2:14 PM - 6 Feb 2019
@Brad_Setser also gets at something I've been trying to explain: corporate cash "overseas"
isn't really a stash of money that can be brought home, it's an accounting fiction that lets
them avoid taxes, with no real consequences for investment 2/
And this chart, showing the predominance of tax avoidance in overseas "investment", is a