Quora discussion; liberalism and Marxism

Had quite an interesting conversation with somebody on Quora a few days ago. I commented on an answer to ‘Why don’t proponents of social democracy ever use Southern or Eastern European countries as an example for the US?’ after which the writer answered, the subject changed quickly and as such our conversation became much more about the world economy as a whole than it was about the pro-Russia, anti-EU governments that prevail in Eastern Europe.

The writer first wrote the following (Note that is an excerpt of his answer):

Calling it “austerity” (for you, not for them), the G20 is not only the cause of the 2008 meltdown, but now it offers the solution. Goodbye healthcare, goodbye pensions, goodbye social services.

And so, when you see mass demonstrations in the streets of some of these southern European cities, you’ll know why.

ADDENDUM: 1 in 5 children living in the G20 now lives in poverty.

My reply:

For one, I’d like to stress that your assertion that the G20 was established in response to the economic crisis is simply a fallacy. It was founded in 1999, where its principles entailed the involvement of less developed countries – such as India and Brazil for example. It was then re-energized as a result of the horrid effects of the economic crisis when Bush called for a leader summit.

Second, your answer does not answer the question, nor do I agree with your second assumption that mass demonstrations in the Southern countries are a result of capitalist deprivation. These mass demonstrations are – as far as they could be considered ‘mass’ demonstrations – a reaction to a failing, corrupt government that can’t control its bank as well as ever-growing migrant inflow from Northern Africa.

And third, your last sentence makes absolutely zero sense considering my first point, namely that the Group was founded with developing countries in mind.

At the time of writing, I was under the assumption that the user meant recent demonstrations in Italy, however, the demonstrations that he referred to took place in 2012, a direct reaction to further cuts as the eurozone seemed destined to enter another recession, as the user kindly pointed out:

They were MASS demonstrations and regardless of the cause of their discontent, the solution was to punish THEM in the guise of “austerity”. They know their government is corrupt. They don’t need G20 to jump on them with a second pair of feet. As for 3rd point, consider the nature of the G20 and how it operates, not what its charter might have said 18 years ago. Any way you spin it, the pain is not being suffered by the world’s giant corporations now is it?

The discussion now quickly became one of great importance as we got onto the subject of globalism and its humanitarian consequences. I followed up:

I’d like to get back on you concerning those demonstrations. If you are referring to anti-austerity demonstrations in Italy, it would be mostly frivolous to blame capitalism, or the G20, for that matter. Southern European financial crises are mostly a result of political instability. With the level of behind-closed-doors state intervention in financial institutions, political instability leads to further economic turmoil.

Getting back on my third point; you note that we must consider how the G20 operates now. I’d agree with you that – whether you support that or not – the core of the G20 is the absolute epitome of neo-liberalism and free-trade. However, to argue that 1 in 5 of the members state children lives in poverty as a result of its current way of acting would imply that poverty rates have only worsened in its member nations, which definitely isn’t the case.

And finally, I agree with you on the last point. Multi-national conglomerates do not feel such pains and its important to note that neo-liberalism has not only had good effects on our lives, because for a large group it hasn’t. Blaming capitalism or the G20 seems – again – frivolous, mainly because globalism has brought such wealth as well as cooperation on climate change and defense, that a large majority has benefited. What I mean to say is that on a netto basis, neo-liberalism has been a win for most of us. It’s incredibly important, however, to acknowledge and try to solve – by means of regulation or less political influence – problems for people who haven’t been as well off.

He quickly responded:

I see your point but I find these “gains” are not to be regarded as substantive as they appear. If you consider that much of this alleged rise in GDP for member nations is actually based on DEBT, that’s somewhat startling to contemplate. In other words, the economy is driven by people spending all right—but spending money they don’t have. Using the U.S. as an example, “real” wages haven’t increased for decades. The average American might say: “But look, I have a house, two nice cars and my kids are in college”.

Yes, but the house is mortgaged for 30 years, the cars for 72 months, and the kids owe $150K apiece in student loans.

It’s not good right now. I am quite concerned that the biggest players within the G20 do not realize that if you take out all your winnings in a poker game, the game stops.

Regarding demonstrations, I think the bottom line, the base cause, is economic—however one wishes to frame it. I tend to be somewhat Marxist in my views (couldn’t you guess—LOL!) and I do see things as a class struggle in those cases.

Corruption in Greece is just awful. They are among the worst.

From his response, the discussion was not only about the faults of neo-liberalism and globalism, it took on the much broader subjects of capitalism and Marxism. However, as I note in my answer below, his proposition that a debt-based economy is only rich in the minds of GDP-figures is rather benighted.

First of all, yes, corruption in Greece is awful, just as corruption in many other Southern European countries is awful. This is part – if not the biggest part – of the problem. In a country where banks and governments go hand in hand – which is quit logical considering Europe’s long tradition of state-meddling in financial institutions – economical stability goes hand in hand with political stability. It adds up; think about Italy’s history of countless different governments and coalitions or Greece’s aforementioned levels of corruption.

Your second point is a very interesting one. Although I may not be as well-versed in the subject as you might be, we both look at this in different ways, I guess. Loans are easy and cheap, for people as well as corporations. Let me also note that if people are able to pay off their loans, no problems arise, the money is not somehow gone or ‘taken out’, as you assert. The essence is that debt is absolutely no problem, provided that the economy grows, which it not always does.

Possible solutions include changes to the tax code, although huge tax code changes are out of the question for most if not all developed countries.Safe to say, it seems that a Keynesian style monetary policy is a temporary solution to this growth-based economy problem, and sometimes a temporary solution is more than sufficient.

After all, it was agreed upon that the economy as it is now is unstable and not as future- and fool-proof as some bureaucrats might hope. However much our views differed or however little we actually agreed upon, it’s delightful to find someone who is open to opposing views, quite a rarity in between the dogmatic, pseudo-intellectual, keyboard-warrior crowd that I usually find on Quora.

G20 Aftermath: New Global Leadership

The tides have indeed turned; the US’s position has weakened as the Trump administration seems to have no interest in global leadership, while China’s domestic problems negate its interest in a similar leadership role. All the while Europe has shrugged off its recent wave of right-wing populism. Economic stability followed political stability as the Union self-handedly recovered from its lows, rewinding the economy to pre-crisis levels. From the start it would be clear that the EU would now set the tone.

G20

Before attending the G7 summit on his previous foreign trip, Trump took the time to increase tensions in the Middle East by sympathizing with Saudi-Arabia and affronting Iran, after which Trump seemed perfectly content with letting Palestine and Israel find a way of solving their increasingly complex conflict. Safe to say, Trump was more of a crowd-pleaser than he was a problem solver, visiting only the countries he knew welcomed his electoral college victory.

Similarly, preceding the G20 summit, Trump took to the stage in Poland, a country that shares with Hungary its illiberal, right-wing government. PiS, the Law and Justice party, strongly opposes immigration and espouses values of Euro-skepticism unseen elsewhere in the union. Its party leader, Jaroslaw Kaczynski, unsurprisingly hailed Trump’s visit as a “new success.” The underlying strategy seemingly entails first to do something that can’t possibly go wrong and can only be touted as a ‘success’ by his base, only after these successes come the summits. Besides cozying up to his supporters at home and in Poland, commentators swiftly described his visit as an attempt to deepen divisions within the European Union, hoping to spur the populists who only reached second place in many of Europe’s elections.

On the other side of the aisle, a new trade deal between the EU and Japan was ratified. This deal not only establishes an economic relationship between the two countries, it entails further cooperation with regard to defense and cyber-security. Less evident than these obvious benefits involved for the two power blocs, however, is the political statement that it symbolizes. Hastily finished before the gathering, it sounds a strong voice against protectionism and isolationist economic policy, showing that Japan and the EU hold hands whilst Trump is letting them go.

Trump and Putin might have been the center of attention during this summit, it was Angela Merkel, German chancellor, whose job it was to channel the summit and make sure that its result – a communique – was of any significance. With her reelection at stake, Merkel had presented herself as the front woman of the liberal west and free trade, with ‘difficult tasks’ ahead, she had to be careful not to give away too much of these values in negotiations with Trump, Putin and Erdogan: The Terrible Trio – as the Economist once named them

After all, however, it wasn’t Merkel, who assiduously persevered and dabbled between the G20 and fierce protests in her own country, who will be remembered. It isn’t for the meager fifteen page communique, full of boilerplate and cliche statements either, which will be largely forgotten by the time of the next summit. Quite frankly, it will be remembered for its stark contrast with previous international gatherings, when a respected US president helped lay the foundation for the Paris accord.

New roles

Let us return to the aforementioned terrible trio; Trump, Putin and Erdogan. The three will set the stage for global relationships in the upcoming decade.

For one, many leaders question Trump’s unpredictability. On the one hand, Trump’s disdain for international cooperation seems clear; on the other hand, this message seems to show only in general diplomatic incompetence, not in actions.

In the case of Putin and Erdogan, it’s not so much a case of questioning, it’s a case of fear. Putin leaves Russia with severe domestic problems, however, his presence on the world stage is prominent as ever. Leaders fear his ever growing sphere of influence in the Eastern parts of Europe, where Putin supports the pro-Russia, illiberal and isolationist countries, one of which is the aforementioned Poland. More worrying is his relationship with Erdogan, the self-made autocrat whose one-man control in Turkey abolished the once secular NATO member. With Turkey moving to Russia, the recent refugee treaties with the EU aren’t as sure a case as they seemed; furthermore Turkey is a key NATO-member as a result of its location and a possible EU-member – although accession talks have stalled – making further cooperation with Russia a frightening development.

It’s these factors combined that divide the world into a small number of huge power-blocs, competing in the arena that Trump’s economic- and national security adviser argue for. Many acclaim that this terrible trio casts a looming shadow over Europe, one that may break apart the Union. If anything, however, it seems to make the EU stronger, as a result of blocs such as Russia, China and the US isolating themselves, it has to take matters into her own hands, leading the way to closer cooperation within the Union and a possible pan-EU defense initiative.

Now, I’d not argue that the world will be at war within the foreseeable future, nor that the world will return to a competition of Western civilizations much akin to the world before the first World War. These dynamics do make for a worrying – albeit interesting – future that, however speculative, shouldn’t be ignored.