The Stone City

Words Made to Last

Tuesday, September 18, 2007

France's Scargill

In October 1995, French public-sector workers responded to Alain Juppé's proposed reform of the welfare state with mass strikes; in December, the transportation workers joined them, paralyzing the French economy until Mr. Juppé's proposals were withdrawn.

The leader of the railway strike, Bernard Thibault, thus became something of a hero to French unions and communists. [The Communists are staunch supporters of generous pension packages, especially for state employees.] In 1999, Mr. Thibault became head of the CGT [Confederation Generale du Travail, roughly the French AFL], presumably on the strength of his earlier victory.

Now it is Mr. Thibault who is the most outspoken opponent of Nicolas Sarkozy's proposed pension reforms. The parallels with Arthur Scargill, British labour's hero after his National Union of Miners soundly defeated Edward Heath's government, seem clear.

Mr. Sarkozy's challenge is less intimidating than that faced by Margaret Thatcher in the government's 1979 rematch against NUM, but subtler. The wreckage of the British economy in the 1970's had destroyed Mr. Scargill's moral authority, but Mrs. Thatcher still had a difficult tactical problem to face. France today is comparatively healthy, and Mr. Sarkozy's task is to maintain popular support.

If the French people feel that Mr. Sarkozy's proposals are reasonable, they will blame the discomfort and inconvenience they are about to experience on the unions. But if the French government overplays its hand, it will lose credibility with every cancelled train until these reforms, like those of 1995, are discarded.

Monday, September 17, 2007


It is starting to appear that the liquidity failure at Northern Rock, which has caused a bank run in England despite intervention by the central bank, was caused by... the central bank:
Lloyds TSB was asked by Northern Rock to mount an eleventh-hour rescue takeover of the troubled Newcastle-based mortgage lender. The two banks held detailed talks, but the Lloyds deal was ultimately blocked by the Bank of England and the Financial Services Authority.
There were concerns among Bank officials that a takeover would cause greater consternation in financial markets. Once the decision to stop the rescue was made, Northern Rock had no choice but to ask the Bank for an injection of funds.
[Emphasis mine.] If this is true, then the Bank of England actively sowed the whirlwind which it is now reaping. With the benefit of even one trading day's hindsight, their rationale seems utterly risible.

Friday, September 07, 2007


Tim Lee has written a very perceptive summary of the political problem caused by increasing foreclosures of non-performing mortgages. He concludes:
I also don’t fully understand what’s so terrible about simply allowing foreclosures go forward. Obviously, it’s always tragic when people lose their homes, but what’s ordinarily tragic about a foreclosure is when someone loses equity they built up over years of hard work. But that’s not the situation here. Almost by definition, sub-prime borrowers are borrowers who put little money down and paid below-market rates for the first couple of years of the mortgage. It is, in short, not that different from renting. As a renter, I hardly consider it a crisis when I have to move every couple of years. So why is the foreclosure of a sub-prime borrower a crisis requiring government intervention?
The first comment is also worth thinking about:
Widespread foreclosures require intervention because they affect housing values, public safety and the tax base, and there's political pressure from the non-foreclosed households to do something about it.

Let's look more closely at these sources of political pressure.
Housing values: the government is under continual pressure from homeowners to inflate housing values, which does not enrich society as a whole and therefore must come at the expense of non-owners (renters and the young). This situation remains out of equilibrium because owners are more stable and more vocal than renters, and so wield more political power. But here the owners are calling for more overt intervention in their favor than previously: instead of distorted tax law, the government must actively shift cash to prevent houses being sold cheaply.
Public safety: this is a new one to me. Perhaps the commenter is afraid of a wave of newly homeless people wreaking havoc in the streets, or of properties sitting empty and gradually subsiding into the weeds. I can't tell.
Tax base: the property tax base is indeed threatened; thus local governments will try to get a bailout -- no matter how inefficient -- from state or federal level governments. But precisely when this threat is most serious, the state governments will themselves be most worried about loss of their own revenue; this pressure should be self-limiting.

In sum, the calls for a bailout are mostly an extension of the current systemic bias in favor of homeowners.

Thursday, September 06, 2007

The Big Sandbox

David Weigel claims that the conservative blogosphere is too hierarchical to create a popular movement like that embodied by Daily Kos:

Now, here's the organizational structure of the newer, smaller, ambitious Victory Caucus. Board of Governors....
An established radio host (who was an early adopter of blogs)/former Reaganite and Nixonite, another former Reaganite, a military author-cum-blogger, and three established bloggers, one of whom is wondering why the right has no Kos. Well, there's your reason. The "netroots" grew because a bunch of people with day jobs built sites with extremely democratic bulletin boards (not that much different from what did half a decade earlier) and left-liberals found them to be fun places to hang out. The "rightroots" are, so far, a bunch of top-down blogs with moderators and old-fashioned, FreeRepublic-style "threads."
Is it really so hard to grok why one of these models is popular and one isn't?

By saying "a bunch", Mr. Weigel gives the impression that there is some readily enumerable group of opinion leaders, hopelessly outnumbered by the free thinkers at Daily Kos. In so doing, he elides the fact that the problem is one of structure, not of participation; and in fact the change required is not cultural but technical.

First, we need to understand why the conservative self-congratulation (exemplified in the update here) about superior trackbacks was misplaced. In an environment dominated by aggregation sites, which themselves capture hundreds of individual viewpoints, there is no need for trackbacks to link to a conversation: the conversation is already right there.

The conservative blogosphere has similar conversations, but they are very widely distributed. In the absence of trackbacks, they would be impossible to piece together; and the technical difficulty at present is that the conversation is diffuse enough that trackbacks, having lost their novelty, are no longer commonly used; while the technical tools which would obviate the need for manual pinging (e.g., that used at Washington Monthly) are unreliable.

Once trackbacks are visible, the conversation is there. Most tracked posts will be small and fast-loading, since most bloggers have no incentive to include pictures and advertisements. Following a debate should be little more time-consuming than gleaning the rational arguments from the noisy background of a single-blog comment thread, and with the additional advantage that the participants must identify themselves and build credibility sufficient for readers to choose to see what they are saying.

In place of the Daily Kos, we can have the entire Internet.

[Via Stephen Green.]