In a summer of uncertain weather, european leaders bickers and while the US was shaking hands with the Korean leader Kim Jong-un, Capethicalism met Michael Goodwin, our “American friend”, who was in Europe for some conferences: in the lovely setting of the University of Bologna, we talked about the current political and economic situation. Here’s what he said. chat

The interview

Hi Mike. It’s been less than two years since we’ve met last time in Rome, but a lot has changed in the meantime. What seemed impossible has now come true: in the US Trump defeated Clinton and became president. You didn’t take it well. Have you changed your mind today, a year and a half after the election? If so, have things changed for the better or for the worst?

Those days were sad, but today I think that there’s a positive aspect in Trump’s election: a lot of people have been so horrified that they’ve become politically active (a few days ago, a district where Trump won by 17 points went to the left.) People are waking up.

But it’s probably too late. At this point the Republicans are literally trying to take control over everything: media, vote-counting, courts, everything. Net neutrality is a perfect example: it’s completely possible that very soon, if you want to read the news on a left-wing site, it will take some extra time to load, or maybe it won’t load at all. And if search results take longer, people just stop looking...

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And the Democratic party is still trying to use the same old playbook. As an aside, it’s worth noting that in America, when we talk about politics, we sometimes use the wrong terms. Forty years ago, the Democrats were actually liberal (at least, they represented the center-left). But then the right started moving toward more and more extreme positions and so did the Democrats (to grab the votes that have been lost by their opponents). Now the Democratic party structure is conservative (and much farther to the right than the majority of their constituency) and is in more thrall to rich donors than the Republicans are. Republicans are not a threat to these rich donors; the real threat is the democratic base.

That’s quite an alarming picture… let’s turn to Italy: as the new government took office, the concern for the spread has come back, as well as the possibility that our country may leave the euro. What do you think about it? Do you believe in the euro model or do you think that if each country printed their own money, their population would be richer?

To understand the chief flaw of the Euro model, we need to look at how governments manage the economy to avoid the highs and lows of the business cycle. Basically, you want to make sure there’s enough money in the economy to keep everyone employed, but not so much that it causes inflation. The problem with many countries having the same currency is that each one has an incentive to print lots of money, because that country gets most of the stimulus while the inflation is spread out across all of them. So you need some safeguards. But the Euro was created at a time when economists thought there would never be a depression (when you need to create a lot of stimulus fast) again. So they made it basically impossible to respond to the depression we had from 2008 onward. The only economist I know of who pointed this weakness out beforehand is Steve Keen, a heterodox Australian economist.

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Plus, there’s always some tradeoff between unemployment and inflation, and focusing so hard on preventing inflation basically guarantees unemployment, even though unemployment is worse for pretty much everyone except rich people who want to sit on their money. The social consequences are worse, too. I’ve read lots of accounts that make it sound like the German hyperinflation led to the rise of Hitler, but the hyperinflation, as miserable as it was, was finished by the mid-1920s; Hitler came to power in 1933, when the currency was deflating but almost half of Germans were out of work. So the Euro was trying to solve the wrong problem from the get-go. People usually talk about the euro and the European project as they were inseparable, but I don’t think they are: if every country left the euro, it wouldn’t be that bad (and probably that would serve the Germans right), but if the EU itself broke down, that would be a gigantic mess.

A lot of people define the new Italian government “populist” because of its several promises of support to the population, and now Europe is concerned. What do you think of the new leadership? What do American newspapers write about it?

Americans hardly care about the other countries’ business: if something happens in Italy it’s unlikely to appear on American newspapers, and almost certainly won’t appear on TV, Twitter, or what have you. I like to think that I follow cosmopolitan, informed people on Twitter, but nobody I follow is talking about it. All we know is that your government is called “populist” by many.

And what’s your take on “populism”? 

What we call “populism” can be both bad and good. For one thing, ordinary people are sometimes more discerning than experts. I’ll give you an example. In America, during the Great Depression there was a guy named Townsend who had a plan: everybody should get a big pension. But it was so big that there wouldn’t have been enough wealth in the entire world to pay it. But so what? People started demanding it and organizing demonstrations, and eventually they obtained Social Security for everyone. It was obviously downsized, but today we would not have social security if that populist action – inspired by an extravagant, unrealistic, impossible plan – hadn’t taken place.

But when I said that Social Security provided a pension for everyone I was being sloppy: farm workers and domestic workers were excluded at first, and not coincidentally these were the two major fields of employment for black Americans. Which is an example of the bad side of populism. But I can’t imagine a true democracy that isn’t populist, for better or worse, and most “antipopulist” rhetoric I hear is “antidemocratic” rhetoric.

chatMatteo Salvini (Wikipedia)

Which brings up the difference between the Democratic base and the Democratic leadership again. The leaders are always scolding the base that what we want is unrealistic, like we’re children demanding a pony (in Hillary Clinton’s phrase), and that we have to compromise. But their idea of compromise isn’t to demand the whole loaf and accept half a loaf: it’s to figure they’ll only get half a loaf, only ask for half in the first place, and wind up getting only crumbs.

You know what guides our project: we want to encourage a reflection on the contradictions of our economic system, so that the planet could be managed more virtuously. And yet, almost two years after the foundation of Capethicalism, we haven’t seen many positive changes: the wealthy are richer and richer, the needy are poorer and poorer, the young – even in the most developed countries – have an uncertain future and finance disregards ethics. Not to mention those politicians who obtain votes by shutting doors in the face of people running away from wars and poverty. What are your impressions? Are we excessive? Are we on the right track?

The world avoids ethical issues because they’re inconvenient to those in power. Most directly, it’s simply unethical for rich people to have as much wealth and power as they do now. It’s unethical that one person owns ten private jets while another can’t afford bus fare to get to work. And the ethical thing is to take some of the private jetter’s money and give it to the bus rider. But of course, you’re in for a political fight if you try it, so we spend a lot of time pretending that obvious ethical issues aren’t issues, or that economic analysis is no place for ethics.

It also happens indirectly. For instance, we know for sure that the environment is headed towards disaster, and fast, or rather, it’s happening now (one of the causes of the war in Syria is a terrible drought that brought people to their knees.) The tragedy that we’re witnessing has been evident since the eighties, but nobody really wants to put things right: almost nothing has been done, because the actions that are needed interfere with the wealth and power of some very powerful people.

chatJimmy Carter (Wikipedia)

I sometimes imagine what would have happened if, in the 1980 elections, Jimmy Carter had said something like: “Let’s spend the next 40 years transforming our economy into a 100% sustainable one. It will mean decades of stagnant wages, the disruptions will cause constant middling-to-high unemployment, and we’ll be 6-7 trillion dollars in debt at the end, but we’ll be able to move forward on a healthy planet.” Okay, fine, maybe voters wouldn’t have taken that deal in those terms that would have seemed like a big cost. But I also don’t think that that would have been an unrealistic cost.

My point is that we got all of those problems anyway. Decades of stagnant wages, constant middling-to-high unemployment that’s persisted for so long that our very definition of low unemployment has changed, and 6-7 trillion dollars in debt (in 1980 dollars). And instead of us having anything to show for it, some very rich people have like ten private jets each. That’s been the cost of not fighting the rich, of not standing up for ethics.

So no, we don’t see great progress from an ethical point of view. But this doesn’t mean that Capethicalism (or, um, my projects) are pointless. In this regard, I’ll tell you a story. The Roman author Lucretius’s “De Rerum Natura” was rediscovered in an old manuscript in the 1400s, and gets some credit for sparking the Renaissance. I sometimes wonder about the monk who copied out that manuscript. It must have seemed pointless: De Rerum Natura was pagan and borderline blasphemous, almost everyone was illiterate anyway, and (depending on when he lived) the monk may have heard about several libraries going up in flames in the time it took him to copy out one book. But he finished it anyway. And then for hundreds of years, the monk probably looked down from heaven at this manuscript disappearing under the dust on a monastery shelf and thought, “yeah, that was a big honking waste of time.” And then someone found it, and the world has benefited from in in ways the monk couldn’t have imagined. So yes, now we’re losing, but that doesn’t mean we should give up. Our actions will have consequences far into the future, consequences we can’t imagine. We have to keep fighting.

chatDe Rerum Natura (Wikipedia)

Let’s talk about something lighter. We published in Italian a few of your works: first of all, thanks for this opportunity. We noticed that Economix was translated into several languages: it seems that there are some people who care about understanding the mechanisms of our reality, right? Do you have any new ideas for the future?

At the moment I’m working on two projects that may see the light: the first is the history of America’s right wing and the economic factors that have led to its rise (the more I study, the more I realize that a small group of people has done this to us), the second is . . . well, if I could explain it clearly I could write it. Still working on that. And I may put out a collection of various pieces that I sometimes publish on the Internet (such as “Net Neutrality” and “Obamacare”), some of which you guys have translated. But none of these projects are very far along. A new book may eventually be released, but not for a while!

Thank you, Mike. Next time we’ll set up a meeting with you and Stephanie in New York… as long as they’ll let us cross the border at the JFK!

JUPE & PENNY

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