Category Archives: English

Spričevalo demokratične in pravne kulture EPP (European Peoples parties)


Testimony of the democratic culture of EPP

The below resolution on Slovenia, issued by EPP (European Peoples parties)  is clearly bellow  the standards of of The League of Yugoslav Communists that did not issue any statements supporting  the Yugoslav Peoples Army  case against Janez Janša in 1989. This resolution casts a devastating blow  on the  democratic credibility of the EPP.  Many a Slovene is shocked today: Is this the EU, we where once  looking to for protection of our democratic rights!? Political organisations on the EU level should do everything to enhance democracy, rule of law and human rights instead of doing  the opposite, that is the case here. We know there are many members of EPP with great democratic integrity. We expect them to speak up. Not for or against Janez Janša, but for democratic legal standards and decant behaviour of a European organisation towards a sovereign  state. There is still a possibility for the reporter, in this case Mr. Buzek, to apologise to the Slovene state authorities. It is clear, that he was misled by the one side, that  he allowed to abuse him.  He probably made some superficial comparing between his own Poland and Slovenia.  Those interested in details on the Slovene-Finnish-Austrian affair on corruption in international arms trade can go Austrian and Finnish press on the issue, as well as to some messages sent home by the US embassy in Ljubljana, published by Wikileaks. And EPP should direct their attention to the scandalous actions by EU states in the cases of president Morales and Edward Snowden. They should be firm about the abuses of democratic and human rights in Hungary as well as against blows against public media and universities in Greece.


EPP Resolution on the Situation in Slovenia (Eurpean Peoples Parties)

1. Slovenia is in a difficult economic situation and needs a broad support in the Slovenian population to tackle the consequences of the financial crisis and to pursue the economic and other necessary reforms to overcame the crisis and conclude the transition. In May 2013, the European Commission stressed that the state of the Slovenian judicial system is unsatisfactory. It imposed a series of corrective measures to the Slovenian government.

2. Expresses its concerns regarding the condemnation of the President of the Slovenian Democratic Party (SDS), Janez Janša in first instance. Takes note of Janez Janša ́s appeal to second instance which will hopefully take place within prescribed term of 3 months. Reminds that the guarantee of a fair trial and presumption of innocence as fundamental rights. Expects that the on-­‐going procedure will not lead to the exclusion of Janez Janša from political competition.

3. Invites independent organisations, such as the Council of Europe and the OSCE, to follow closely the compatibility of the on-­‐going procedure with the rule of law and international standards.

4. The EPP fully supports its member party, Slovenian Democratic Party (SDS), which is a major player in Slovenian politics, as well as New Slovenia – Christian Democrats (N.Si) and Slovenian People ́s Party (SLS).

5. The EPP underlines the need of an impartial and independent judiciary in all Member States. In this context calls for the swift adoption of rigid lustration laws in all Member States which have not yet done so, as well as their thorough implementation, and for a transparent and public scrutiny of this process.

6. Calls on the Commission to ensure that public procurement procedures in all Member States are following the requirements laid down in EU law, thus ensuring transparency and efficiency.

Occupy kupuje poceni dolgove in osvobaja dolžnike

Occupy Wall Street activists buy $15m of Americans’ personal debt

Rolling Jubilee spent $400,000 to purchase debt cheaply from banks before ‘abolishing’ it, freeing individuals from their bills
Occupy Wall Street
‘Our primary purpose was to spread information about the workings of this secondary debt market,’ said Andrew Ross. Photograph: Spencer Platt/Getty Images

A group of Occupy Wall Street activists has bought almost $15m of Americans’ personal debt over the last year as part of the Rolling Jubilee project to help people pay off their outstanding credit.

Rolling Jubilee, set up by Occupy’s Strike Debt group following the street protests that swept the world in 2011, launched on 15 November 2012. The group purchases personal debt cheaply from banks before “abolishing” it, freeing individuals from their bills.

By purchasing the debt at knockdown prices the group has managed to free $14,734,569.87 of personal debt, mainly medical debt, spending only $400,000.

“We thought that the ratio would be about 20 to 1,” said Andrew Ross, a member of Strike Debt and professor of social and cultural analysis at New York University. He said the team initially envisaged raising $50,000, which would have enabled it to buy $1m in debt.

“In fact we’ve been able to buy debt a lot more cheaply than that.”

The group is able to buy debt so cheaply due to the nature of the “secondary debt market”. If individuals consistently fail to pay bills from credit cards, loans, or medical insurance the bank or lender that issued the funds will eventually cut its losses by selling that debt to a third party. These sales occur for a fraction of the debt’s true values – typically for five cents on the dollar – and debt-buying companies then attempt to recoup the debt from the individual debtor and thus make a profit.

The Rolling Jubilee project was mostly conceived as a “public education project”, Ross said.

“We’re under no illusions that $15m is just a tiny drop in the secondary debt market. It doesn’t make a dent in the amount of debt.

“Our purpose in doing this, aside from helping some people along the way – there’s certainly many, many people who are very thankful that their debts are abolished – our primary purpose was to spread information about the workings of this secondary debt market.”

The group has focussed on buying medical debt, and has acquired the $14.7m in three separate purchases, most recently spending $13.5m on medical debt owed by 2,693 people across 45 states and Puerto Rico, Rolling Jubilee said in a press release.

“No one should have to go into debt or bankruptcy because they get sick,” said Laura Hanna, an organiser with the group. Hanna said 62% of all personal bankruptcies have medical debt as a contributing factor.

Due to the nature of the debt market, the group is unable to specify whose debt it purchases, taking on the amounts before it discovers individuals’ identities. When Rolling Jubilee has bought the debt they send notes to their debtors “telling them they’re off the hook”, Ross said.

Ross, whose book, Creditocracy and the case for debt refusal, outlines the problems of the debt industry and calls for a “debtors’ movement” to resist credit, said the group had received letters from people whose debt they had lifted thanking them for the service. But the real victory was in spreading knowledge of the nature of the debt industry, he said.

“Very few people know how cheaply their debts have been bought by collectors. It changes the psychology of the debtor, knowing this.

“So when you get called up by the debt collector, and you’re being asked to pay the full amount of your debt, you now know that the debt collector has bought your debt very, very cheaply. As cheaply as we bought it. And that gives you moral ammunition to have a different conversation with the debt collector.”

Krugman: Zarota proti Franciji

The Plot Against France


On Friday Standard & Poor’s, the bond-rating agency, downgraded France. The move made headlines, with many reports suggesting that France is in crisis. But markets yawned: French borrowing costs, which are near historic lowsbarely budged.

So what’s going on here? The answer is that S.& P.’s action needs to be seen in the context of the broader politics of fiscal austerity. And I do mean politics, not economics. For the plot against France — I’m being a bit tongue in cheek here, but there really are a lot of people trying to bad-mouth the place — is one clear demonstration that in Europe, as in America, fiscal scolds don’t really care about deficits. Instead, they’re using debt fears to advance an ideological agenda. And France, which refuses to play along, has become the target of incessant negative propaganda.

Let me give you an idea of what we’re talking about. A year ago the magazine The Economist declared France “the time bomb at the heart of Europe,” with problems that could dwarf those of Greece, Spain, Portugal and Italy. In January 2013, CNN Money’s senior editor-at-large declared France in “free fall,” a nation “heading toward an economic Bastille.” Similar sentiments can be found all over economic newsletters.

Given such rhetoric, one comes to French data expecting to see the worst. What you find instead is a country experiencing economic difficulties — who isn’t? — but in general performing as well as or better than most of its neighbors, with the admittedly big exception of Germany. Recent French growth has been sluggish, but much better than that of, say, the Netherlands, which is still rated AAA. According to standard estimates, French workers were actually a bit more productive than their German counterparts a dozen years ago — and guess what, they still are.

Meanwhile, French fiscal prospects look distinctly nonalarming. The budget deficit has fallen sharply since 2010, and the International Monetary Fund expects the ratio of debt to G.D.P. to be roughly stable over the next five years.

What about the longer-run burden of an aging population? This is a problem in France, as it is in all wealthy nations. But France has a higher birthrate than most of Europe — in part because of government programs that encourage births and ease the lives of working mothers — so that its demographic projections are much better than those of its neighbors, Germany included. Meanwhile, France’s remarkable health care system, which delivers high quality at low cost, is going to be a big fiscal advantage looking forward.

By the numbers, then, it’s hard to see why France deserves any particular opprobrium. So again, what’s going on?

Here’s a clue: Two months ago Olli Rehn, Europe’s commissioner for economic and monetary affairs — and one of the prime movers behind harsh austerity policies — dismissed France’s seemingly exemplary fiscal policy. Why? Because it was based on tax increases rather than spending cuts — and tax hikes, he declared, would “destroy growth and handicap the creation of jobs.”

In other words, never mind what I said about fiscal discipline, you’re supposed to be dismantling the safety net.

S.& P.’s explanation of its downgrade, though less clearly stated, amounted to the same thing: France was being downgraded because “the French government’s current approach to budgetary and structural reforms to taxation, as well as to product, services and labor markets, is unlikely to substantially raise France’s medium-term growth prospects.” Again, never mind the budget numbers, where are the tax cuts and deregulation?

You might think that Mr. Rehn and S.& P. were basing their demands on solid evidence that spending cuts are in fact better for the economy than tax increases. But they weren’t. In fact, research at the I.M.F. suggests that when you’re trying to reduce deficits in a recession, the opposite is true: temporary tax hikes do much less damage than spending cuts.

Oh, and when people start talking about the wonders of “structural reform,” take it with a large heaping of salt. It’s mainly a code phrase for deregulation — and the evidence on the virtues of deregulation is decidedly mixed. Remember, Ireland received high praise for its structural reforms in the 1990s and 2000s; in 2006 George Osborne, now Britain’s chancellor of the Exchequer, called it a “shining example.” How did that turn out?

If all this sounds familiar to American readers, it should. U.S. fiscal scolds turn out, almost invariably, to be much more interested in slashing Medicare and Social Security than they are in actually cutting deficits. Europe’s austerians are now revealing themselves to be pretty much the same. France has committed the unforgivable sin of being fiscally responsible without inflicting pain on the poor and unlucky. And it must be punished

Depressing news from Paul Krugman

Those Depressing Germans


Če malo premislimo, je sporočilo, ki sledi iz Krugmanovega komentarja srhljivo. Nič ne kaže, da bi komurkoli od odgovrnih strokovnjako, politikov in finančnikov po šestih letih prišlo vsaj približnop na pamet, v čem je  problem. Ob vsej neizmerni množici strokovnjakov in mega zmogljivih računalnikov se z opozorili oglaša zanemarljiva in drobcena manjšinica, nekaj preslišanih posameznikov.  Mi ostali plovemo katastrofi nasproti, ponosni, da je človeštvo v znanosti in tehnologiji tako zelo napredovalo. Tako si verjetno mislimo: Bo že kako. Saj je dovolj pametnih ljudi na svetu. Pametni so morda že, Vendar so kljub temu večinoma žrtve iracionalnih verovanj in ideologij, ki so dadomestile starodvane obrede, s katerimo se je človek zbogal z večnostjo. Če bi se nam ljubilo pogledati, kdo vse je tiho in pokorno podpiral nacistični, fašistični, komunistične in druge totalitarne režime in kulte, bi se morali globoko zamisliti. Še zdaleč ni šlo  samo banalnega zlo(bneža) Eichmanna.  Med potrpežljivimi in zvestimi so bili tudi nešteti ugledni profesorji tega in onega.  Tu pa tam tudi kakšen umetnik. KLjub vsemu so ti slednji redki med fanatiki in apologeti.  Samo pamet očitno ne pomaga nič.


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Published: November 3, 2013 847 Comments

German officials are furious at America, and not just because of the business about Angela Merkel’s cellphone. What has them enraged now is one (long) paragraph in a U.S. Treasury report on foreign economic and currency policies. In that paragraph Treasury argues that Germany’s huge surplus on current account — a broad measure of the trade balance — is harmful, creating “a deflationary bias for the euro area, as well as for the world economy.”

The Germans angrily pronounced this argument “incomprehensible.” “There are no imbalances in Germany which require a correction of our growth-friendly economic and fiscal policy,” declared a spokesman for the nation’s finance ministry.

But Treasury was right, and the German reaction was disturbing. For one thing, it was an indicator of the continuing refusal of policy makers in Germany, in Europe more broadly and for that matter around the world to face up to the nature of our economic problems. For another, it demonstrated Germany’s unfortunate tendency to respond to any criticism of its economic policies with cries of victimization.

First, the facts. Remember the China syndrome, in which Asia’s largest economy kept running enormous trade surpluses thanks to an undervalued currency? Well, China is still running surpluses, but they have declined. Meanwhile, Germany has taken China’s place: Last year Germany, not China, ran the world’s biggest current account surplus. And measured as a share of G.D.P., Germany’s surplus was more than twice as large as China’s.

Now, it’s true that Germany has been running big surpluses for almost a decade. At first, however, these surpluses were matched by large deficits in southern Europe, financed by large inflows of German capital. Europe as a whole continued to have roughly balanced trade.

Then came the crisis, and flows of capital to Europe’s periphery collapsed. The debtor nations were forced — in part at Germany’s insistence — into harsh austerity, which eliminated their trade deficits. But something went wrong. The narrowing of trade imbalances should have been symmetric, with Germany’s surpluses shrinking along with the debtors’ deficits. Instead, however, Germany failed to make any adjustment at all; deficits in Spain, Greece and elsewhere shrank, but Germany’s surplus didn’t.

This was a very bad thing for Europe, because Germany’s failure to adjust magnified the cost of austerity. Take Spain, the biggest deficit country before the crisis. It was inevitable that Spain would face lean years as it learned to live within its means. It was not, however, inevitable that Spanish unemployment would be almost 27 percent, and youth unemployment almost 57 percent. And Germany’s immovability was an important contributor to Spain’s pain.

It has also been a bad thing for the rest of the world. It’s simply arithmetic: Since southern Europe has been forced to end its deficits while Germany hasn’t reduced its surplus, Europe as a whole is running large trade surpluses, helping to keep the world economy depressed.

German officials, as we’ve seen, respond to all of this with angry declarations that German policy has been impeccable. Sorry, but this (a) doesn’t matter and (b) isn’t true.

Why it doesn’t matter: Five years after the fall of Lehman, the world economy is still depressed, suffering from a persistent shortage of demand. In this environment, a country that runs a trade surplus is, to use the old phrase, beggaring its neighbors. It’s diverting spending away from their goods and services to its own, and thereby taking away jobs. It doesn’t matter whether it’s doing this maliciously or with the best of intentions, it’s doing it all the same.

Furthermore, as it happens, Germany isn’t blameless. It shares a currency with its neighbors, greatly benefiting German exporters, who get to price their goods in a weak euro instead of what would surely have been a soaring Deutsche mark. Yet Germany has failed to deliver on its side of the bargain: To avoid a European depression, it needed to spend more as its neighbors were forced to spend less, and it hasn’t done that.

German officials won’t, of course, accept any of this. They consider their country a shining role model, to be emulated by all, and the awkward fact that we can’t all run gigantic trade surpluses simply doesn’t register.

And the thing is, it’s not just the Germans. Germany’s trade surplus is damaging for the same reason cutting food stamps and unemployment benefits in America destroys jobs — and Republican politicians are about as receptive as German officials to anyone who tries to point out their error. In the sixth year of a global economic crisis whose essence is that there isn’t enough spending, many policy makers still don’t get it. And it looks as if they never will.

Desnica pretresa evropski establišment

Right wing rattles the European establishment

Kot v tridesetih letih prejšnjega stoletja je vse nastavljeno za katastrofo. Stanje je še mnogo slabše: Thatcher – Reagan (Hoover, laisser faire ali neoliberalizem) poskrbita za krizo. V tridesetih se je vsaj vsaka država lahko reševala po svoje. V EU, še zlasti Evroconi so države talci in morajo izpolnejvati “domače naloge”, za katere se vnaprej ve, da bodo neučikovite. Enosmerna, parcialna poliotika se izvaja zato, ker je Nemčija prevelika in premočna in ima zapleteno psihologijo in ima morda nehote koristi od takega razvoja.  Boji se inflacije, gospodinjska mentaliteta jo zavezuje k varčevanju. Levica ne more sestaviti vlade, ker socilademokrati ne marajo sodelovati z LInke. (Stara tradicija iz tridesetih.) Vse je lepo povezano z imperialnimi interesi globalnega, pretežno ameriškega kapitala. Vsaka izmed ogroženih držav je prepruščena sama sebi. EU sadi rožice, rine glavo v pesek, ponavlja mantro o domačih nalogah  in o približajoči se katastrofi niti ne govori. Gre za iracionalno, magično, infantilno in prastaro prepričanje, da bo grožnja tako morda izginila. Razumljivo, saj v Evropi prevladuje thatcherjanska desnica, ki jo ne odlikuje zapleteno sistemsko razmišljanje, ampak nagovarja gospodinsko in kmečko pamet.   Še večji problem, še bolj odgovorna je alternativa, t.i. levica, ki razen obtoževanja, demonizacije  nasprotnikov in prilagajanja njihovim programom (neoliberalnim) ni sposobna ničesar. Še posebej je cepljena proti samokritiki, proti vprašanju, s čim pa mi sami povzročamo tak razvoj. Politična korektnost, danske mesne kroglice in božično drevo v spodnejm članku je lep laboratorisjki vzorec obnašanja evrospke, verjetno tudi svetovne levice. Problem, upravičeno ali neopravičeno doživljanje orgoženih identitet je proglašen za neproblem, za zgolj desničarski fenomen. Zato  se ga zamolči ali prepove. Politična korektnost poskrbi, da se vsi problemi, nasprotja in napetosti vstrajno pometajo pod preprogo. Tako pritisk v evropskem loncu nekontrolirano narašča,  in nihče se ne ukvarja s trem, kako zmanjšati ogenj in kako katastrofalne bodo polsedice eksplozije.  Še kredibilnih akademskih študij na to temo ni. In to kljub temu, da smo vse to že nekoč videli, v predvojni weimarski Nemčiji .


Laerke Posselt for The New York Times:

Mikkel Dencker, a mayoral candidate in Hvidovre, Denmark, put up campaign posters. He has made the removal of meatballs from kindergarten in deference to Islam a campaign issue.

 A member of Denmark’s Parliament and, he hopes, mayor of this commuter-belt town west of Copenhagen, Mr. Dencker is furious that some day care centers have removed meatballs, a staple of traditional Danish cuisine, from their cafeterias in deference to Islamic dietary rules. No matter that only a handful of kindergartens have actually done so. The missing meatballs, he said, are an example of how “Denmark is losing its identity” under pressure from outsiders.

The issue has become a headache for Mayor Helle Adelborg, whose center-left Social Democratic Party has controlled the town council since the 1920s but now faces an uphill struggle before municipal elections on Nov. 19. “It is very easy to exploit such themes to get votes,” she said. “They take a lot of votes from my party. It is unfair.”

It is also Europe’s new reality. All over, established political forces are losing ground to politicians whom they scorn as fear-mongering populists. In France, according to a recent opinion poll, the far-right National Front has become the country’s most popular party. In other countries — Austria, Britain, Bulgaria, the Czech Republic, Finland and the Netherlands — disruptive upstart groups are on a roll.

This phenomenon alarms not just national leaders but also officials in Brussels who fear that European Parliament elections next May could substantially tip the balance of power toward nationalists and forces intent on halting or reversing integration within the European Union.

“History reminds us that high unemployment and wrong policies like austerity are an extremely poisonous cocktail,” said Poul Nyrup Rasmussen, a former Danish prime minister and a Social Democrat. “Populists are always there. In good times it is not easy for them to get votes, but in these bad times all their arguments, the easy solutions of populism and nationalism, are getting new ears and votes.”

In some ways, this is Europe’s Tea Party moment — a grass-roots insurgency fired by resentment against a political class that many Europeans see as out of touch. The main difference, however, is that Europe’s populists want to strengthen, not shrink, government and see the welfare state as an integral part of their national identities.

The trend in Europe does not signal the return of fascist demons from the 1930s, except in Greece, where the neo-Nazi party Golden Dawn has promoted openly racist beliefs, and perhaps in Hungary, where the far-right Jobbik party backs a brand of ethnic nationalism suffused with anti-Semitism.

But the soaring fortunes of groups like the Danish People’s Party, which some popularity polls now rank ahead of the Social Democrats, point to a fundamental political shift toward nativist forces fed by a curious mix of right-wing identity politics and left-wing anxieties about the future of the welfare state.

“This is the new normal,” said Flemming Rose, the foreign editor at the Danish newspaper Jyllands-Posten. “It is a nightmare for traditional political elites and also for Brussels.”

The platform of France’s National Front promotes traditional right-wing causes like law and order and tight controls on immigration but reads in parts like a leftist manifesto. It accuses “big bosses” of promoting open borders so they can import cheap labor to drive down wages. It rails against globalization as a threat to French language and culture, and it opposes any rise in the retirement age or cuts in pensions.

Similarly, in the Netherlands, Geert Wilders, the anti-Islam leader of the Party for Freedom, has mixed attacks on immigration with promises to defend welfare entitlements. “He is the only one who says we don’t have to cut anything,” said Chris Aalberts, a scholar at Erasmus University in Rotterdam and author of a book based on interviews with Mr. Wilders’s supporters. “This is a popular message.”

Mr. Wilders, who has police protection because of death threats from Muslim extremists, is best known for his attacks on Islam and demands that the Quran be banned. These issues, Mr. Aalberts said, “are not a big vote winner,” but they help set him apart from deeply unpopular centrist politicians who talk mainly about budget cuts. The success of populist parties, Mr. Aalberts added, “is more about the collapse of the center than the attractiveness of the alternatives.”

Pia Kjaersgaard, the pioneer of a trend now being felt across Europe, set up the Danish People’s Party in 1995 and began shaping what critics dismissed as a rabble of misfits and racists into a highly disciplined, effective and even mainstream political force.

Ms. Kjaersgaard, a former social worker who led the party until last year, said she rigorously screened membership lists, weeding out anyone with views that might comfort critics who see her party as extremist. She said she had urged a similar cleansing of the ranks in Sweden’s anti-immigration and anti-Brussels movement, the Swedish Democrats, whose early leaders included a former activist in the Nordic Reich Party.

Marine Le Pen, the leader of France’s National Front, has embarked on a similar makeover, rebranding her party as a responsible force untainted by the anti-Semitism and homophobia of its previous leader, her father, Jean-Marie Le Pen, who once described Nazi gas chambers as a “detail of history.” Ms. Le Pen has endorsed several gay activists as candidates for French municipal elections next March.

But a whiff of extremism still lingers, and the Danish People’s Party wants nothing to do with Ms. Le Pen and her followers.

Built on the ruins of a chaotic antitax movement, the Danish People’s Party has evolved into a defender of the welfare state, at least for native Danes. It pioneered “welfare chauvinism,” a cause now embraced by many of Europe’s surging populists, who play on fears that freeloading foreigners are draining pensions and other benefits.

“We always thought the People’s Party was a temporary phenomenon, that they would have their time and then go away,” said Jens Jonatan Steen, a researcher at Cevea, a policy research group affiliated with the Social Democrats. “But they have come to stay.”

“They are politically incorrect and are not accepted by many as part of the mainstream,” he added. “But if you have support from 20 percent of the public, you are mainstream.”

In a recent meeting in the northern Danish town of Skorping, the new leader of the Danish People’s Party, Kristian Thulesen Dahl, criticized Prime Minister Helle Thorning-Schmidt, of the Social Democrats, whose government is trying to trim the welfare system, and spoke about the need to protect the elderly.

The Danish People’s Party and similar political groups, according to Mr. Rasmussen, the former prime minister, benefit from making promises that they do not have to worry about paying for, allowing them to steal welfare policies previously promoted by the left. “This is a new populism that takes on the coat of Social Democratic policies,” he said.

In Hvidovre, Mr. Dencker, the Danish People’s Party mayoral candidate, wants the government in, not out of, people’s lives. Beyond pushing authorities to make meatballs mandatory in public institutions, he has attacked proposals to cut housekeeping services for the elderly and criticized the mayor for canceling one of the two Christmas trees the city usually puts up each December.

Instead, he says, it should put up five Christmas trees.

Od gradualizma do kolonizacije, pod okriljem EU


Crisis in Slovenia: from “gradualism” to “colonization”


Slovenia entered EU in 2004 as one of the most successful EU-candidates. At that time, Slovenian government debt was a little more than 20 per cent of GDP, one of the lowest ratios among the EU member states; the country had surplus in the net international investment position. The fact that Slovenia opted for gradual privatization in the 90-ies and that some sectors or companies remained in the state ownership cannot explain the present difficulties of Slovenian economy or the increase of public debt. Present difficulties were generated during the period of Slovenian EU and Eurozone membership: they originate in the unregulated financial sector, monetary politics, salvage of the banks by public funds. When difficulties begun, Slovenia has been an easy target of speculative financial markets, like other indebted countries. Having entered EU without deadweights from the past, Slovenia is a good example to show to what extent EU policies may contribute to the deterioration of economic and social development of a country. If we are not going to learn from this and eliminate the causes of the crisis on the level of EU, we will never find a stable way out of the crisis.

The difficulties started in 2004 when western capital, fleeing from low profit rates in the West, overflowed Slovenian banks. The indebtedness of usual suspects, the state and the households, remained low and almost negligible during the period 2004–2008. The thesis that considers the presumed immoderate consumption of the state and households to be the generator of economic crisis is false in the case of Slovenia. “Cheap” money available generated a new wave of privatisations, the second after the independence of Slovenia in 1991. Many top managers took this opportunity to attempt a buyout of the companies they managed. However, with the outbreak of the economic crisis in 2007-2008, companies could not have been skimmed for the payment of the credits any more. Buyout-schemes disintegrated and the “tycoons’” little empires sank. Due to the loose control over the banks and the financial system, credits were delivered to clients without due precaution. Some credits were given for real investments: however, because of economic recession enterprises now have difficulties to repay their debts. Many debts will not be repaid as the debtor companies have gone bankrupt (esp. in the construction industry, enterprises owned by Slovenian Catholic Church etc.). Between 2008 and 2009, when deleveraging of the private sector started, the public debt started to grow, an indicator that the debt of the private sector has progressively been transferred to the public budget.

Slovenia faces similar problems as the bailed-out Eurozone countries (Greece, Portugal, Spain, Ireland and Italy): recovery from the economic crisis and the attempt of fiscal consolidation has failed. Countries still have negative economic growth with modest recovery in Ireland as an exception; forecasts for the next year are poor. The objective to repay their debts is now less attainable than before. Countries are trapped into the vicious circle of an increasingly expensive borrowing and a decreasing economic growth: their combination generates increasing unemployment and impoverishment. The situation that is emerging has historical precedents known as “development of underdevelopment”.

It is against any sense of justice that people with low income pay for the mistakes of rich capital owners. This is actually what austerity measures and salvaging of the financial sector are about. Before the crisis, the risk of poverty rate was considerably low in Slovenia, while in the period 2008–2011 it noticeably increased in comparison to other EU countries (Eurostat). In 2012, the new law called Exercise of the Rights to Public Funds Act deprived 185.000 persons of their previous social benefits. The benefits that have most often been annulled were child benefits and scholarships. The savings amounted to 102 million euro (if compared to the social welfare spending a year before; source: Računsko sodišče).

Salaries in the public sector were stagnant from 2009 on, and started to decrease in 2012, while salaries in the private sector have stagnated since 2012 (source: Umar – Government Office for Macro-economic Research). The minimum wage is every year raised proportionally to the growth of prices; it is an important factor of the income equality and has so far remained unchanged. During the period 2010-2012 the number of employed persons receiving a minimum wage has tripled. It is important to note that a person living alone and having no other income but the minimum wage is exposed to the risk of poverty. In 2012, 83.000 persons, i.e., almost 12 per cent of all the employed persons, received an income that was below the risk of poverty threshold (source: SURS – Office of Statistics).

Employers and politicians often present two arguments that presumably explain why Slovene economy is weak: social contributions and taxes on wages are too high and the employment protection is too rigid. None of the two arguments is true. The implicit tax rate for labour is, in average, 2.5 point lower than in other Eurozone countries. The implicit tax rate for capital is 3.4 points lower than in other Eurozone countries, so the owners of capital already have quite comfortable provisions in Slovenia (Eurostat). The employment protection of regularly employed workers is considerably higher than in other OECD countries; however, flexible employments have particularly increased during the crisis and they already exceed 40 per cent of all the active workforce. Simultaneously, the capacity of state institutions to sanction and to prevent the abuses of Labour Law (including forms of slave labour) has importantly declined. As a result, companies which respect Labour Law have to compete with companies do not and consequently have lower production costs. So the law-abiding companies become “uncompetitive”; it follows that progressive erosion of labour rights is inevitable. Therefore the reduction of labour rights and labour costs is no solution, since it leads towards the race to the bottom that has no end.

We have no time to describe the impact of austerity measures upon public services. To conclude, we wish to emphasise that after the launch of severe austerity measures Slovenia is a much less democratic society than it was few years ago. In 2011, about 100 new laws were adopted by the fast procedure. Many of these laws retroactively deprived people of their already acquired rights (like pensions), and the Constitutional Court already decided upon the unconstitutionality of some of these measures. On 31 May 2013, the articles 90, 97 and 99 of Slovenian’s constitution were amended to deny the people the access to referendum when fiscal questions or ratification of international agreements are at stake. In September 2013, a severe punishment of protestors, sentenced to 7 months of prison for having manifested in the streets of Maribor, was a warning to others who may consider attending protests in the future. One can understand why people are demoralised.

Meanwhile, the European institutions look away, pretend that Slovenian problems are not a result of their past politics and deliver advises how to “reassure financial markets”. They offer a simple alternative: immediate socialization of banks credits (i.e. the risk should not be returned back to private money-lenders neither the debt can be even partially abolished), further reduction of public spending and new austerity measures as well as privatization of financially consolidated banks and companies in the state ownership (IMF, Slovenia 2013 Staff Visit, March 2013) – or a bailout under the same or even worst terms of Troika.

To summarize, Slovenia will have to give up to gradualism and social welfare, the policy which brought Slovenia into the EU as a prosperous society with a high social equality. New austerity measures will lead to a greater economic recession and social turmoil. By way of austerity measures, Slovenia will have to submit to “shock therapy”, although Slovenian gradual economic policy before 2004 is a good example that there is a better alternative. The country will be destroyed in order to minimize resistance and maximize profits for capital owners. In the long term, Slovenia will become a net exporter of capital and will be incorporated into colonial interrelations within the EU.

It is important to note that also corruption of local and state officials multiplied after the entering EU. It is a sign that corruption is not a result of poor local business culture: the present accumulation of capital regime boosts extra-exploitation and corruption. It puts no obstacle to management’s buyouts, private-public partnership, downgrading of workers’ rights, and misuses of financial instruments which generate mismanagement and corruption. Furthermore, governments and political elites are also pulled into this corruptive environment. EU consists of “national economies” that have neither economic nor political independence. The effect of such structure is that member states compete with each other in domains still under their sovereignty: by downgrading the standards of welfare state, rule of law, social and workers’ rights, while, at the same time, they have to relieve the capital owners from the economic risks (by privileges, subsidies, and even socialization of private debt). It is therefore necessary that political groups collaborate with capitalist class and the range of their politics is drawn to their function of local compradors.

Our politicians are obviously without any political imagination in the midst of class and colonial war. We have, on the other side, nothing to lose.


Maja Breznik

October, 2013

Krugman: Kako so se mogli ekonomisti tako zmotiti

How Did Economists Get It So Wrong?


Published: September 2, 2009

It’s hard to believe now, but not long ago economists were congratulating themselves over the success of their field. Those successes — or so they believed — were both theoretical and practical, leading to a golden era for the profession. On the theoretical side, they thought that they had resolved their internal disputes. Thus, in a 2008 paper titled “The State of Macro” (that is, macroeconomics, the study of big-picture issues like recessions), Olivier Blanchard of M.I.T., now the chief economist at the International Monetary Fund, declared that “the state of macro is good.” The battles of yesteryear, he said, were over, and there had been a “broad convergence of vision.” And in the real world, economists believed they had things under control: the “central problem of depression-prevention has been solved,” declared Robert Lucas of the University of Chicagoin his 2003 presidential address to the American Economic Association. In 2004, Ben Bernanke, a former Princeton professor who is now the chairman of the Federal Reserve Board, celebrated the Great Moderation in economic performance over the previous two decades, which he attributed in part to improved economic policy making.

Last year, everything came apart.

Few economists saw our current crisis coming, but this predictive failure was the least of the field’s problems. More important was the profession’s blindness to the very possibility of catastrophic failures in a market economy. During the golden years, financial economists came to believe that markets were inherently stable — indeed, thatstocks and other assets were always priced just right. There was nothing in the prevailing models suggesting the possibility of the kind of collapse that happened last year. Meanwhile, macroeconomists were divided in their views. But the main division was between those who insisted that free-market economies never go astray and those who believed that economies may stray now and then but that any major deviations from the path of prosperity could and would be corrected by the all-powerful Fed. Neither side was prepared to cope with an economy that went off the rails despite the Fed’s best efforts.

And in the wake of the crisis, the fault lines in the economics profession have yawned wider than ever. Lucas says the Obama administration’s stimulus plans are “schlock economics,” and his Chicago colleague John Cochrane says they’re based on discredited “fairy tales.” In response, Brad DeLong of the University of California, Berkeley, writes of the “intellectual collapse” of the Chicago School, and I myself have written that comments from Chicago economists are the product of a Dark Age of macroeconomics in which hard-won knowledge has been forgotten.

What happened to the economics profession? And where does it go from here?

As I see it, the economics profession went astray because economists, as a group, mistook beauty, clad in impressive-looking mathematics, for truth. Until the Great Depression, most economists clung to a vision of capitalism as a perfect or nearly perfect system. That vision wasn’t sustainable in the face of mass unemployment, but as memories of the Depression faded, economists fell back in love with the old, idealized vision of an economy in which rational individuals interact in perfect markets, this time gussied up with fancy equations. The renewed romance with the idealized market was, to be sure, partly a response to shifting political winds, partly a response to financial incentives. But while sabbaticals at the Hoover Institution and job opportunities on Wall Street are nothing to sneeze at, the central cause of the profession’s failure was the desire for an all-encompassing, intellectually elegant approach that also gave economists a chance to show off their mathematical prowess.

Unfortunately, this romanticized and sanitized vision of the economy led most economists to ignore all the things that can go wrong. They turned a blind eye to the limitations of human rationality that often lead to bubbles and busts; to the problems of institutions that run amok; to the imperfections of markets — especially financial markets — that can cause the economy’s operating system to undergo sudden, unpredictable crashes; and to the dangers created when regulators don’t believe in regulation.

It’s much harder to say where the economics profession goes from here. But what’s almost certain is that economists will have to learn to live with messiness. That is, they will have to acknowledge the importance of irrational and often unpredictable behavior, face up to the often idiosyncratic imperfections of markets and accept that an elegant economic “theory of everything” is a long way off. In practical terms, this will translate into more cautious policy advice — and a reduced willingness to dismantle economic safeguards in the faith that markets will solve all problems.


The birth of economics as a discipline is usually credited to Adam Smith, who published “The Wealth of Nations” in 1776. Over the next 160 years an extensive body of economic theory was developed, whose central message was: Trust the market. Yes, economists admitted that there were cases in which markets might fail, of which the most important was the case of “externalities” — costs that people impose on others without paying the price, like traffic congestion or pollution. But the basic presumption of “neoclassical” economics (named after the late-19th-century theorists who elaborated on the concepts of their “classical” predecessors) was that we should have faith in the market system.

This faith was, however, shattered by the Great Depression. Actually, even in the face of total collapse some economists insisted that whatever happens in a market economy must be right: “Depressions are not simply evils,” declared Joseph Schumpeter in 1934 — 1934! They are, he added, “forms of something which has to be done.” But many, and eventually most, economists turned to the insights of John Maynard Keynes for both an explanation of what had happened and a solution to future depressions.

Keynes did not, despite what you may have heard, want the government to run the economy. He described his analysis in his 1936 masterwork, “The General Theory of Employment, Interest and Money,” as “moderately conservative in its implications.” He wanted to fix capitalism, not replace it. But he did challenge the notion that free-market economies can function without a minder, expressing particular contempt for financial markets, which he viewed as being dominated by short-term speculation with little regard for fundamentals. And he called for active government intervention — printing more money and, if necessary, spending heavily on public works — to fight unemployment during slumps.

It’s important to understand that Keynes did much more than make bold assertions. “The General Theory” is a work of profound, deep analysis — analysis that persuaded the best young economists of the day. Yet the story of economics over the past half century is, to a large degree, the story of a retreat from Keynesianism and a return to neoclassicism. The neoclassical revival was initially led by Milton Friedman of the University of Chicago, who asserted as early as 1953 that neoclassical economics works well enough as a description of the way the economy actually functions to be “both extremely fruitful and deserving of much confidence.” But what about depressions?

Friedman’s counterattack against Keynes began with the doctrine known as monetarism. Monetarists didn’t disagree in principle with the idea that a market economy needs deliberate stabilization. “We are all Keynesians now,” Friedman once said, although he later claimed he was quoted out of context. Monetarists asserted, however, that a very limited, circumscribed form of government intervention — namely, instructing central banks to keep the nation’s money supply, the sum of cash in circulation and bank deposits, growing on a steady path — is all that’s required to prevent depressions. Famously, Friedman and his collaborator, Anna Schwartz, argued that if the Federal Reserve had done its job properly, the Great Depression would not have happened. Later, Friedman made a compelling case against any deliberate effort by government to push unemployment below its “natural” level (currently thought to be about 4.8 percent in the United States): excessively expansionary policies, he predicted, would lead to a combination of inflation and high unemployment — a prediction that was borne out by the stagflation of the 1970s, which greatly advanced the credibility of the anti-Keynesian movement.

Eventually, however, the anti-Keynesian counterrevolution went far beyond Friedman’s position, which came to seem relatively moderate compared with what his successors were saying. Among financial economists, Keynes’s disparaging vision of financial markets as a “casino” was replaced by “efficient market” theory, which asserted that financial markets always get asset prices right given the available information. Meanwhile, many macroeconomists completely rejected Keynes’s framework for understanding economic slumps. Some returned to the view of Schumpeter and other apologists for the Great Depression, viewing recessions as a good thing, part of the economy’s adjustment to change. And even those not willing to go that far argued that any attempt to fight an economic slump would do more harm than good.

Not all macroeconomists were willing to go down this road: many became self-described New Keynesians, who continued to believe in an active role for the government. Yet even they mostly accepted the notion that investors and consumers are rational and that markets generally get it right.

Of course, there were exceptions to these trends: a few economists challenged the assumption of rational behavior, questioned the belief that financial markets can be trusted and pointed to the long history of financial crises that had devastating economic consequences. But they were swimming against the tide, unable to make much headway against a pervasive and, in retrospect, foolish complacency.


In the 1930s, financial markets, for obvious reasons, didn’t get much respect. Keynes compared them to “those newspaper competitions in which the competitors have to pick out the six prettiest faces from a hundred photographs, the prize being awarded to the competitor whose choice most nearly corresponds to the average preferences of the competitors as a whole; so that each competitor has to pick, not those faces which he himself finds prettiest, but those that he thinks likeliest to catch the fancy of the other competitors.”

And Keynes considered it a very bad idea to let such markets, in which speculators spent their time chasing one another’s tails, dictate important business decisions: “When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done.”

By 1970 or so, however, the study of financial markets seemed to have been taken over by Voltaire’s Dr. Pangloss, who insisted that we live in the best of all possible worlds. Discussion of investor irrationality, of bubbles, of destructive speculation had virtually disappeared from academic discourse. The field was dominated by the “efficient-market hypothesis,” promulgated by Eugene Fama of the University of Chicago, which claims that financial markets price assets precisely at their intrinsic worth given all publicly available information. (The price of a company’s stock, for example, always accurately reflects the company’s value given the information available on the company’s earnings, its business prospects and so on.) And by the 1980s, finance economists, notably Michael Jensen of the Harvard Business School, were arguing that because financial markets always get prices right, the best thing corporate chieftains can do, not just for themselves but for the sake of the economy, is to maximize their stock prices. In other words, finance economists believed that we should put the capital development of the nation in the hands of what Keynes had called a “casino.”

It’s hard to argue that this transformation in the profession was driven by events. True, the memory of 1929 was gradually receding, but there continued to be bull markets, with widespread tales of speculative excess, followed by bear markets. In 1973-4, for example, stocks lost 48 percent of their value. And the 1987 stock crash, in which the Dow plunged nearly 23 percent in a day for no clear reason, should have raised at least a few doubts about market rationality.

These events, however, which Keynes would have considered evidence of the unreliability of markets, did little to blunt the force of a beautiful idea. The theoretical model that finance economists developed by assuming that every investor rationally balances risk against reward — the so-called Capital Asset Pricing Model, or CAPM (pronounced cap-em) — is wonderfully elegant. And if you accept its premises it’s also extremely useful. CAPM not only tells you how to choose your portfolio — even more important from the financial industry’s point of view, it tells you how to put a price on financial derivatives, claims on claims. The elegance and apparent usefulness of the new theory led to a string of Nobel prizes for its creators, and many of the theory’s adepts also received more mundane rewards: Armed with their new models and formidable math skills — the more arcane uses of CAPM require physicist-level computations — mild-mannered business-school professors could and did become Wall Street rocket scientists, earning Wall Street paychecks.

To be fair, finance theorists didn’t accept the efficient-market hypothesis merely because it was elegant, convenient and lucrative. They also produced a great deal of statistical evidence, which at first seemed strongly supportive. But this evidence was of an oddly limited form. Finance economists rarely asked the seemingly obvious (though not easily answered) question of whether asset prices made sense given real-world fundamentals like earnings. Instead, they asked only whether asset prices made sense given other asset prices. Larry Summers, now the top economic adviser in the Obama administration, once mocked finance professors with a parable about “ketchup economists” who “have shown that two-quart bottles of ketchup invariably sell for exactly twice as much as one-quart bottles of ketchup,” and conclude from this that the ketchup market is perfectly efficient.

But neither this mockery nor more polite critiques from economists like Robert Shiller of Yale had much effect. Finance theorists continued to believe that their models were essentially right, and so did many people making real-world decisions. Not least among these was Alan Greenspan, who was then the Fed chairman and a long-time supporter of financial deregulation whose rejection of calls to rein in subprime lending or address the ever-inflating housing bubble rested in large part on the belief that modern financial economics had everything under control. There was a telling moment in 2005, at a conference held to honor Greenspan’s tenure at the Fed. One brave attendee, Raghuram Rajan (of the University of Chicago, surprisingly), presented a paper warning that the financial system was taking on potentially dangerous levels of risk. He was mocked by almost all present — including, by the way, Larry Summers, who dismissed his warnings as “misguided.”

By October of last year, however, Greenspan was admitting that he was in a state of “shocked disbelief,” because “the whole intellectual edifice” had “collapsed.” Since this collapse of the intellectual edifice was also a collapse of real-world markets, the result was a severe recession — the worst, by many measures, since the Great Depression. What should policy makers do? Unfortunately, macroeconomics, which should have been providing clear guidance about how to address the slumping economy, was in its own state of disarray.


“We have involved ourselves in a colossal muddle, having blundered in the control of a delicate machine, the working of which we do not understand. The result is that our possibilities of wealth may run to waste for a time — perhaps for a long time.” So wrote John Maynard Keynes in an essay titled “The Great Slump of 1930,” in which he tried to explain the catastrophe then overtaking the world. And the world’s possibilities of wealth did indeed run to waste for a long time; it took World War II to bring the Great Depression to a definitive end.

Why was Keynes’s diagnosis of the Great Depression as a “colossal muddle” so compelling at first? And why did economics, circa 1975, divide into opposing camps over the value of Keynes’s views?

I like to explain the essence of Keynesian economics with a true story that also serves as a parable, a small-scale version of the messes that can afflict entire economies. Consider the travails of the Capitol Hill Baby-Sitting Co-op.

This co-op, whose problems were recounted in a 1977 article in The Journal of Money, Credit and Banking, was an association of about 150 young couples who agreed to help one another by baby-sitting for one another’s children when parents wanted a night out. To ensure that every couple did its fair share of baby-sitting, the co-op introduced a form of scrip: coupons made out of heavy pieces of paper, each entitling the bearer to one half-hour of sitting time. Initially, members received 20 coupons on joining and were required to return the same amount on departing the group.

Unfortunately, it turned out that the co-op’s members, on average, wanted to hold a reserve of more than 20 coupons, perhaps, in case they should want to go out several times in a row. As a result, relatively few people wanted to spend their scrip and go out, while many wanted to baby-sit so they could add to their hoard. But since baby-sitting opportunities arise only when someone goes out for the night, this meant that baby-sitting jobs were hard to find, which made members of the co-op even more reluctant to go out, making baby-sitting jobs even scarcer. . . .

In short, the co-op fell into a recession.

O.K., what do you think of this story? Don’t dismiss it as silly and trivial: economists have used small-scale examples to shed light on big questions ever since Adam Smith saw the roots of economic progress in a pin factory, and they’re right to do so. The question is whether this particular example, in which a recession is a problem of inadequate demand — there isn’t enough demand for baby-sitting to provide jobs for everyone who wants one — gets at the essence of what happens in a recession.

Forty years ago most economists would have agreed with this interpretation. But since then macroeconomics has divided into two great factions: “saltwater” economists (mainly in coastal U.S. universities), who have a more or less Keynesian vision of what recessions are all about; and “freshwater” economists (mainly at inland schools), who consider that vision nonsense.

Freshwater economists are, essentially, neoclassical purists. They believe that all worthwhile economic analysis starts from the premise that people are rational and markets work, a premise violated by the story of the baby-sitting co-op. As they see it, a general lack of sufficient demand isn’t possible, because prices always move to match supply with demand. If people want more baby-sitting coupons, the value of those coupons will rise, so that they’re worth, say, 40 minutes of baby-sitting rather than half an hour — or, equivalently, the cost of an hours’ baby-sitting would fall from 2 coupons to 1.5. And that would solve the problem: the purchasing power of the coupons in circulation would have risen, so that people would feel no need to hoard more, and there would be no recession.

But don’t recessions look like periods in which there just isn’t enough demand to employ everyone willing to work? Appearances can be deceiving, say the freshwater theorists. Sound economics, in their view, says that overall failures of demand can’t happen — and that means that they don’t. Keynesian economics has been “proved false,” Cochrane, of the University of Chicago, says.

Yet recessions do happen. Why? In the 1970s the leading freshwater macroeconomist, the Nobel laureate Robert Lucas, argued that recessions were caused by temporary confusion: workers and companies had trouble distinguishing overall changes in the level of prices because of inflation or deflation from changes in their own particular business situation. And Lucas warned that any attempt to fight the business cycle would be counterproductive: activist policies, he argued, would just add to the confusion.

By the 1980s, however, even this severely limited acceptance of the idea that recessions are bad things had been rejected by many freshwater economists. Instead, the new leaders of the movement, especially Edward Prescott, who was then at the University of Minnesota(you can see where the freshwater moniker comes from), argued that price fluctuations and changes in demand actually had nothing to do with the business cycle. Rather, the business cycle reflects fluctuations in the rate of technological progress, which are amplified by the rational response of workers, who voluntarily work more when the environment is favorable and less when it’s unfavorable. Unemployment is a deliberate decision by workers to take time off.

Put baldly like that, this theory sounds foolish — was the Great Depression really the Great Vacation? And to be honest, I think it really is silly. But the basic premise of Prescott’s “real business cycle” theory was embedded in ingeniously constructed mathematical models, which were mapped onto real data using sophisticated statistical techniques, and the theory came to dominate the teaching of macroeconomics in many university departments. In 2004, reflecting the theory’s influence, Prescott shared a Nobel with Finn Kydland of Carnegie Mellon University.

Meanwhile, saltwater economists balked. Where the freshwater economists were purists, saltwater economists were pragmatists. While economists like N. Gregory Mankiw atHarvard, Olivier Blanchard at M.I.T. and David Romer at the University of California, Berkeley, acknowledged that it was hard to reconcile a Keynesian demand-side view of recessions with neoclassical theory, they found the evidence that recessions are, in fact, demand-driven too compelling to reject. So they were willing to deviate from the assumption of perfect markets or perfect rationality, or both, adding enough imperfections to accommodate a more or less Keynesian view of recessions. And in the saltwater view, active policy to fight recessions remained desirable.

But the self-described New Keynesian economists weren’t immune to the charms of rational individuals and perfect markets. They tried to keep their deviations from neoclassical orthodoxy as limited as possible. This meant that there was no room in the prevailing models for such things as bubbles and banking-system collapse. The fact that such things continued to happen in the real world — there was a terrible financial and macroeconomic crisis in much of Asia in 1997-8 and a depression-level slump in Argentina in 2002 — wasn’t reflected in the mainstream of New Keynesian thinking.

Even so, you might have thought that the differing worldviews of freshwater and saltwater economists would have put them constantly at loggerheads over economic policy. Somewhat surprisingly, however, between around 1985 and 2007 the disputes between freshwater and saltwater economists were mainly about theory, not action. The reason, I believe, is that New Keynesians, unlike the original Keynesians, didn’t think fiscal policy — changes in government spending or taxes — was needed to fight recessions. They believed that monetary policy, administered by the technocrats at the Fed, could provide whatever remedies the economy needed. At a 90th birthday celebration for Milton Friedman, Ben Bernanke, formerly a more or less New Keynesian professor at Princeton, and by then a member of the Fed’s governing board, declared of the Great Depression: “You’re right. We did it. We’re very sorry. But thanks to you, it won’t happen again.” The clear message was that all you need to avoid depressions is a smarter Fed.

And as long as macroeconomic policy was left in the hands of the maestro Greenspan, without Keynesian-type stimulus programs, freshwater economists found little to complain about. (They didn’t believe that monetary policy did any good, but they didn’t believe it did any harm, either.)

It would take a crisis to reveal both how little common ground there was and how Panglossian even New Keynesian economics had become.


In recent, rueful economics discussions, an all-purpose punch line has become “nobody could have predicted. . . .” It’s what you say with regard to disasters that could have been predicted, should have been predicted and actually were predicted by a few economists who were scoffed at for their pains.

Take, for example, the precipitous rise and fall of housing prices. Some economists, notably Robert Shiller, did identify the bubble and warn of painful consequences if it were to burst. Yet key policy makers failed to see the obvious. In 2004, Alan Greenspan dismissed talk of a housing bubble: “a national severe price distortion,” he declared, was “most unlikely.” Home-price increases, Ben Bernanke said in 2005, “largely reflect strong economic fundamentals.”

How did they miss the bubble? To be fair, interest rates were unusually low, possibly explaining part of the price rise. It may be that Greenspan and Bernanke also wanted to celebrate the Fed’s success in pulling the economy out of the 2001 recession; conceding that much of that success rested on the creation of a monstrous bubble would have placed a damper on the festivities.

But there was something else going on: a general belief that bubbles just don’t happen. What’s striking, when you reread Greenspan’s assurances, is that they weren’t based on evidence — they were based on the a priori assertion that there simply can’t be a bubble in housing. And the finance theorists were even more adamant on this point. In a 2007 interview, Eugene Fama, the father of the efficient-market hypothesis, declared that “the word ‘bubble’ drives me nuts,” and went on to explain why we can trust the housing market: “Housing markets are less liquid, but people are very careful when they buy houses. It’s typically the biggest investment they’re going to make, so they look around very carefully and they compare prices. The bidding process is very detailed.”

Indeed, home buyers generally do carefully compare prices — that is, they compare the price of their potential purchase with the prices of other houses. But this says nothing about whether the overall price of houses is justified. It’s ketchup economics, again: because a two-quart bottle of ketchup costs twice as much as a one-quart bottle, finance theorists declare that the price of ketchup must be right.

In short, the belief in efficient financial markets blinded many if not most economists to the emergence of the biggest financial bubble in history. And efficient-market theory also played a significant role in inflating that bubble in the first place.

Now that the undiagnosed bubble has burst, the true riskiness of supposedly safe assets has been revealed and the financial system has demonstrated its fragility. U.S. households have seen $13 trillion in wealth evaporate. More than six million jobs have been lost, and the unemployment rate appears headed for its highest level since 1940. So what guidance does modern economics have to offer in our current predicament? And should we trust it?


Between 1985 and 2007 a false peace settled over the field of macroeconomics. There hadn’t been any real convergence of views between the saltwater and freshwater factions. But these were the years of the Great Moderation — an extended period during which inflation was subdued and recessions were relatively mild. Saltwater economists believed that the Federal Reserve had everything under control. Fresh­water economists didn’t think the Fed’s actions were actually beneficial, but they were willing to let matters lie.

But the crisis ended the phony peace. Suddenly the narrow, technocratic policies both sides were willing to accept were no longer sufficient — and the need for a broader policy response brought the old conflicts out into the open, fiercer than ever.

Why weren’t those narrow, technocratic policies sufficient? The answer, in a word, is zero.

During a normal recession, the Fed responds by buyingTreasury bills — short-term government debt — from banks. This drives interest rates on government debt down; investors seeking a higher rate of return move into other assets, driving other interest rates down as well; and normally these lower interest rates eventually lead to an economic bounceback. The Fed dealt with the recession that began in 1990 by driving short-term interest rates from 9 percent down to 3 percent. It dealt with the recession that began in 2001 by driving rates from 6.5 percent to 1 percent. And it tried to deal with the current recession by driving rates down from 5.25 percent to zero.

But zero, it turned out, isn’t low enough to end this recession. And the Fed can’t push rates below zero, since at near-zero rates investors simply hoard cash rather than lending it out. So by late 2008, with interest rates basically at what macroeconomists call the “zero lower bound” even as the recession continued to deepen, conventional monetary policy had lost all traction.

Now what? This is the second time America has been up against the zero lower bound, the previous occasion being the Great Depression. And it was precisely the observation that there’s a lower bound to interest rates that led Keynes to advocate higher government spending: when monetary policy is ineffective and the private sector can’t be persuaded to spend more, the public sector must take its place in supporting the economy. Fiscal stimulus is the Keynesian answer to the kind of depression-type economic situation we’re currently in.

Such Keynesian thinking underlies the Obama administration’s economic policies — and the freshwater economists are furious. For 25 or so years they tolerated the Fed’s efforts to manage the economy, but a full-blown Keynesian resurgence was something entirely different. Back in 1980, Lucas, of the University of Chicago, wrote that Keynesian economics was so ludicrous that “at research seminars, people don’t take Keynesian theorizing seriously anymore; the audience starts to whisper and giggle to one another.” Admitting that Keynes was largely right, after all, would be too humiliating a comedown.

And so Chicago’s Cochrane, outraged at the idea that government spending could mitigate the latest recession, declared: “It’s not part of what anybody has taught graduate students since the 1960s. They [Keynesian ideas] are fairy tales that have been proved false. It is very comforting in times of stress to go back to the fairy tales we heard as children, but it doesn’t make them less false.” (It’s a mark of how deep the division between saltwater and freshwater runs that Cochrane doesn’t believe that “anybody” teaches ideas that are, in fact, taught in places like Princeton, M.I.T. and Harvard.


Meanwhile, saltwater economists, who had comforted themselves with the belief that the great divide in macroeconomics was narrowing, were shocked to realize that freshwater economists hadn’t been listening at all. Freshwater economists who inveighed against the stimulus didn’t sound like scholars who had weighed Keynesian arguments and found them wanting. Rather, they sounded like people who had no idea what Keynesian economics was about, who were resurrecting pre-1930 fallacies in the belief that they were saying something new and profound.

And it wasn’t just Keynes whose ideas seemed to have been forgotten. As Brad DeLong of the University of California, Berkeley, has pointed out in his laments about the Chicago school’s “intellectual collapse,” the school’s current stance amounts to a wholesale rejection of Milton Friedman’s ideas, as well. Friedman believed that Fed policy rather than changes in government spending should be used to stabilize the economy, but he never asserted that an increase in government spending cannot, under any circumstances, increase employment. In fact, rereading Friedman’s 1970 summary of his ideas, “A Theoretical Framework for Monetary Analysis,” what’s striking is how Keynesian it seems.

And Friedman certainly never bought into the idea that mass unemployment represents a voluntary reduction in work effort or the idea that recessions are actually good for the economy. Yet the current generation of freshwater economists has been making both arguments. Thus Chicago’s Casey Mulligan suggests that unemployment is so high because many workers are choosing not to take jobs: “Employees face financial incentives that encourage them not to work . . . decreased employment is explained more by reductions in the supply of labor (the willingness of people to work) and less by the demand for labor (the number of workers that employers need to hire).” Mulligan has suggested, in particular, that workers are choosing to remain unemployed because that improves their odds of receiving mortgage relief. And Cochrane declares that high unemployment is actually good: “We should have a recession. People who spend their lives pounding nails in Nevada need something else to do.”

Personally, I think this is crazy. Why should it take mass unemployment across the whole nation to get carpenters to move out of Nevada? Can anyone seriously claim that we’ve lost 6.7 million jobs because fewer Americans want to work? But it was inevitable that freshwater economists would find themselves trapped in this cul-de-sac: if you start from the assumption that people are perfectly rational and markets are perfectly efficient, you have to conclude that unemployment is voluntary and recessions are desirable.

Yet if the crisis has pushed freshwater economists into absurdity, it has also created a lot of soul-searching among saltwater economists. Their framework, unlike that of the Chicago School, both allows for the possibility of involuntary unemployment and considers it a bad thing. But the New Keynesian models that have come to dominate teaching and research assume that people are perfectly rational and financial markets are perfectly efficient. To get anything like the current slump into their models, New Keynesians are forced to introduce some kind of fudge factor that for reasons unspecified temporarily depresses private spending. (I’ve done exactly that in some of my own work.) And if the analysis of where we are now rests on this fudge factor, how much confidence can we have in the models’ predictions about where we are going?

The state of macro, in short, is not good. So where does the profession go from here?


Economics, as a field, got in trouble because economists were seduced by the vision of a perfect, frictionless market system. If the profession is to redeem itself, it will have to reconcile itself to a less alluring vision — that of a market economy that has many virtues but that is also shot through with flaws and frictions. The good news is that we don’t have to start from scratch. Even during the heyday of perfect-market economics, there was a lot of work done on the ways in which the real economy deviated from the theoretical ideal. What’s probably going to happen now — in fact, it’s already happening — is that flaws-and-frictions economics will move from the periphery of economic analysis to its center.

There’s already a fairly well developed example of the kind of economics I have in mind: the school of thought known as behavioral finance. Practitioners of this approach emphasize two things. First, many real-world investors bear little resemblance to the cool calculators of efficient-market theory: they’re all too subject to herd behavior, to bouts of irrational exuberance and unwarranted panic. Second, even those who try to base their decisions on cool calculation often find that they can’t, that problems of trust, credibility and limited collateral force them to run with the herd.

On the first point: even during the heyday of the efficient-market hypothesis, it seemed obvious that many real-world investors aren’t as rational as the prevailing models assumed. Larry Summers once began a paper on finance by declaring: “THERE ARE IDIOTS. Look around.” But what kind of idiots (the preferred term in the academic literature, actually, is “noise traders”) are we talking about? Behavioral finance, drawing on the broader movement known as behavioral economics, tries to answer that question by relating the apparent irrationality of investors to known biases in human cognition, like the tendency to care more about small losses than small gains or the tendency to extrapolate too readily from small samples (e.g., assuming that because home prices rose in the past few years, they’ll keep on rising).

Until the crisis, efficient-market advocates like Eugene Fama dismissed the evidence produced on behalf of behavioral finance as a collection of “curiosity items” of no real importance. That’s a much harder position to maintain now that the collapse of a vast bubble — a bubble correctly diagnosed by behavioral economists like Robert Shiller of Yale, who related it to past episodes of “irrational exuberance” — has brought the world economy to its knees.

On the second point: suppose that there are, indeed, idiots. How much do they matter? Not much, argued Milton Friedman in an influential 1953 paper: smart investors will make money by buying when the idiots sell and selling when they buy and will stabilize markets in the process. But the second strand of behavioral finance says that Friedman was wrong, that financial markets are sometimes highly unstable, and right now that view seems hard to reject.

Probably the most influential paper in this vein was a 1997 publication by Andrei Shleifer of Harvard and Robert Vishny of Chicago, which amounted to a formalization of the old line that “the market can stay irrational longer than you can stay solvent.” As they pointed out, arbitrageurs — the people who are supposed to buy low and sell high — need capital to do their jobs. And a severe plunge in asset prices, even if it makes no sense in terms of fundamentals, tends to deplete that capital. As a result, the smart money is forced out of the market, and prices may go into a downward spiral.

The spread of the current financial crisis seemed almost like an object lesson in the perils of financial instability. And the general ideas underlying models of financial instability have proved highly relevant to economic policy: a focus on the depleted capital of financial institutions helped guide policy actions taken after the fall of Lehman, and it looks (cross your fingers) as if these actions successfully headed off an even bigger financial collapse.

Meanwhile, what about macroeconomics? Recent events have pretty decisively refuted the idea that recessions are an optimal response to fluctuations in the rate of technological progress; a more or less Keynesian view is the only plausible game in town. Yet standard New Keynesian models left no room for a crisis like the one we’re having, because those models generally accepted the efficient-market view of the financial sector.

There were some exceptions. One line of work, pioneered by none other than Ben Bernanke working with Mark Gertler of New York University, emphasized the way the lack of sufficient collateral can hinder the ability of businesses to raise funds and pursue investment opportunities. A related line of work, largely established by my Princeton colleague Nobuhiro Kiyotaki and John Moore of the London School of Economics, argued that prices of assets such as real estate can suffer self-reinforcing plunges that in turn depress the economy as a whole. But until now the impact of dysfunctional finance hasn’t been at the core even of Keynesian economics. Clearly, that has to change.


So here’s what I think economists have to do. First, they have to face up to the inconvenient reality that financial markets fall far short of perfection, that they are subject to extraordinary delusions and the madness of crowds. Second, they have to admit — and this will be very hard for the people who giggled and whispered over Keynes — that Keynesian economics remains the best framework we have for making sense of recessions and depressions. Third, they’ll have to do their best to incorporate the realities of finance into macroeconomics.

Many economists will find these changes deeply disturbing. It will be a long time, if ever, before the new, more realistic approaches to finance and macroeconomics offer the same kind of clarity, completeness and sheer beauty that characterizes the full neoclassical approach. To some economists that will be a reason to cling to neoclassicism, despite its utter failure to make sense of the greatest economic crisis in three generations. This seems, however, like a good time to recall the words of H. L. Mencken: “There is always an easy solution to every human problem — neat, plausible and wrong.”

When it comes to the all-too-human problem of recessions and depressions, economists need to abandon the neat but wrong solution of assuming that everyone is rational and markets work perfectly. The vision that emerges as the profession rethinks its foundations may not be all that clear; it certainly won’t be neat; but we can hope that it will have the virtue of being at least partly right.

NSA se brani


NSA Director Gen. Keith Alexander asserted yesterday that two “Boundless Informant” slides we published – one in Le Monde and the other in El Mundo – were misunderstood and misinterpreted. The NSA then dispatched various officials tothe Wall Street Journal and the Washington Post to make the same claim, and were (needless to say) given anonymity by those papers to spout off without accountability. Several US journalists (also needless to say) instantly treated the NSA’s claims as gospel even though they (a) are accompanied by no evidence, (b) come in the middle of a major scandal for the agency at home and abroad and (c) are from officials with a history of lying to Congress and the media.

That is the deeply authoritarian and government-subservient strain of American political and media culture personified: if a US national security official says something, then it shall mindlessly be deemed tantamount to truth, with no evidence required and without regard to how much those officials have misled in the past. EFF’s Trevor Timm last night summarizedthis bizarre mentality as follows: “Oh, NSA says a story about them is wrong? Well, that settles that! Thankfully, they never lie, obfuscate, mislead, misdirect, or misinform!”

Over the last five months, Laura Poitras and I have published dozens and dozens of articles reporting on NSA documents around the world: with newspapers and a team of editors and other reporters in the US, UK, Germany, Brazil, India, France and Spain. Not a single one of those articles bears even a trivial correction, let alone a substantive one, because we have been meticulous in the reporting, worked on every article with teams of highly experienced editors and reporters, and, most importantly, have published the evidence in the form of NSA documents that prove the reporting true.

It’s certainly possible that, like all journalists, we’ll make a mistake at some point. And if and when that does happen, we’ll do what good journalists do: do further reporting and, if necessary, correct any inaccuracy. But no evidence of any kind (as opposed to unverified NSA accusations) has been presented that this was the case here, and ample evidence strongly suggests it was not:

First, these exact same Boundless Informant documents have been used by newspapers around the world in exactly the same way for months. The NSA never claimed they were inaccurate until yesterday: when it is engulfed by major turmoil over spying on European allies.

More than three months ago – in late June – Der Spiegel published an article under the headline “Partner and Target: NSA Snoops on 500 Million German Data Connections.” It reported that the Boundless Informant documents “reveal that the American intelligence service monitors around half a billion telephone calls, emails and text messages in the country every month.” The report was based on the same set of documents, for the same time period, as the one published in France and Spain:

The statistics, which SPIEGEL has also seen, show that data is collected from Germany on normal days for up to 20 million telephone calls and 10 million Internet data exchanges. Last Christmas Eve, it collected data on around 13 million phone calls and about half as many online exchanges. On the busiest days, such as January 7 of this year, the information gathered spiked to nearly 60 million communication connections under surveillance.

A similar article, using the same set of documents, was published in Brazil’s O Globo a week later, reporting the NSA’s collection of the data for more than 2 billion calls and emails in Brazil in a single month. Another article, in the Indian dailythe Hindu, reported on bulk collection of the data of calls in India based on the same document set.

And the very first article on Boundless Informant documents was published in the first week of our reporting in the Guardian, and detailed how this set of documents “details and even maps by country the voluminous amount of information it collects from computer and telephone networks.” Those documents, we reported, “show the agency collecting almost 3 billion pieces of intelligence from US computer networks over a 30-day period ending in March 2013.” The article detailed several country-specific metadata totals based on those documents.

Nobody from the US government ever once – over the last four months – claimed that any of this reporting was inaccurate. The US government was asked for comment on all of these stories, including the ones in France and Spain, and never once claimed it was mistaken. That’s because this is exactly what these Boundless Informant documents show. Perhaps journalists should exercise a bit of skepticism – demand some evidence – when the NSA suddenly claims these documents are misreported in the midst of one of the agency’s worst scandals in history.

Second, note what the NSA is not denying: that they collect the data on the communications activities of millions and millions of people in European countries. They claim that these two slides in particular have been misinterpreted, but have not denied the story itself.

Third, look at the NSA’s own documents, and see how they themselves describe what these Boundless Informant documents actually count. As part of our reporting in early June at the Guardian on these documents, we published in full the NSA’s own document about what data is counted. Those interested should read the full document, but here are the relevant excerpts (emphasis added):

BOUNDLESSINFORMANT is a GAO [Global Access Operations, a branch of the NSA] prototype tool for a self-documenting SIGINT system. . . BOUNDLESSINFORMANT provides the ability to dynamically describe GAO’s collection capabilities (through metadata record counts) with no human intervention and graphically display the information in a map view, bar chart, or simple table. . . .

By extracting information from every DNI and DNR metadata record, the tool is able to create a near real-time snapshot of GAO’s collection capability at any given moment. The tool allows users to select a country on a map and view the metadata volume and select details about the collection against that country. The tool also allows users to view high level metrics by organization and then drill down to a more actionable level – down to the program and cover term.

Could that be any clearer? These documents provide a “near real-time snapshot” of the NSA’s “collection capability at any given moment”. The documents show the collection efforts “against that country.” Among the questions answered by these documents are “How many records are collected for an organizational unit” and “How many records (and what type) are collected against a particular country?”

Fourth, the fact some of this data is collected by virtue of cooperation with a country’s own intelligence service does not contradict our reporting. To the contrary: the secret cooperation between some European intelligence agencies and the NSA has been a featured part of our reporting from the start. Back in early July, der Spiegel, using Snowden documents and Snowden’s own words, reported on extensive cooperation between the German BND and NSA. And this morning, in an article we prepared weeks ago, El Mundo published an article – using Snowden documents – reporting the cooperation between the Spanish intelligence service and the NSA.

The NSA spies extensively with (but rarely on) its four closest, English-speaking surveillance allies in the “Five Eyes” group: the UK, Canada, Australia and New Zealand. But for many European nations, the NSA cooperates with those nations’ intelligence services but also spies on their populations and their governments without any such cooperation. That negates none of our reporting: it is simply a restatement of it.

Finally, contrary to the suggestions of one particularly gullible reporter that these slides are fake and of unknown origin, their authenticity is beyond dispute, just like every document we’ve thus far published. A separate top secret NSA document on Boundless Informant, to be published very shortly, in its title describes Boundless Informant as “Describing Mission Capabilities from Metadata Records“.

The first page states that its purpose is to “describe the collection capabilities and posture of our SIGINT infrastructure”. And it contains not only the Boundless Informant maps that were long ago published, but exactly the type of accompanying graphs that were published this week, taken from the same NSA electronic file. The core purpose of these Boundless Informant documents, it says, is to “review every valid DNI and DNR metadata record passing through the NSA SIGINT infrastructure”: exactly what our reporting stated.

Again, it’s certainly possible, given the number of reports and the complexity of these matters, that reporters working on these stories will at some point make a mistake. All reporters do. But this thing called “evidence” should be required before blindly believing the claims and accusations of NSA officials. If that lesson hasn’t been learned yet, when will it be?

V Grčiji začeli zapirati univerze – Closing greek universities – universités grecques sont forcées de suspendre toute activité

Dear friends and colleagues,
I am sure you have heard of the turmoil Greek Universities are going through the last 50 days. Approximately 40% of the administrative staff of eight large Greek Universities including the University of Athens are suspended due to austerity measures. My University and all its activities and logistics, from financial handling to the electricity safety in the buildings and heating depend on the already very few UoA employees (3.5 per 100 students) and the same holds true for the other Greek Universities as well.
Reducing administrative staff by 40% will only result in non-functional academic institutions.
Standing by the Greek Universities by signing the petition indicated later in this message will help prevent this ‘impossible’ situation from happening.
I sincerely thank you for your time and your support in advance.
Best wishes,
Kostas Mylonas
Dr. Kostas Mylonas
Associate Professor in Research Methods and Statistics in Psychology
IACCP Executive Committee Regional Representative (Europe)
Department of Psychology
The University of Athens
15784, ILISIA,
Athens, Greece
Tel.: 0030210 7277584
Fax.: 0030210 7277534 (attn. Dr. Mylonas)


Huit universités grecques sont forcées de suspendre toute activité suite à la décision unilatérale du ministère de l’éducation nationale de mettre en disponibilité 1349 employés de leurs administrations. Les universités concernées sont les suivantes:
Université d’Athènes, Université de Thessalonique, Ecole Polytechnique d’Athènes, Université de Gestion, Economie et Management d’Athènes, Université de Crète, Université de Patras, Université de Ioannina, et Université de Thessalie.
L’impact sur l’enseignement, la recherche, la santé et la coopération internationale est sans précédent. La menace qui pèse sur l’enseignement supérieur suite aux mesures d’austérité draconiennes imposées par l’Union Européenne suscite une grande inquiétude en Grèce et au-delà de ses frontières.
En tant que scientifiques, universitaires, étudiants ou autres, nous appelons l’Union Européenne et le gouvernement grec à protéger le statut et le personnel des universités grecques, afin que celles-ci puissent continuer leur mission d’éducation et de recherche, l’importance de ces institutions étant plus vitale que jamais. Elles sont et doivent rester les foyers de pensée critique au sein d’une Europe aux structures sociales érodées par des coupures massives et dans laquelle plane l’ombre d’un extrémisme dangereux.
Text in English
Eight universities in Greece (University of Athens, the Aristotle University of Thessaloniki the Athens Polytechnic and University of Economics and Business as well as the University of Crete, Ioannina, Thessaly and Patras) have been forced to halt all activities as a result of Greek ministry of education proposals to suspend unilaterally 1349 university administrative workers.
The impact on teaching, research, clinical work and international collaboration is unparalleled and the threat to higher education in Greece as a result of stringently imposed EU austerity measures is a cause of great concern far beyond Greece’s shores.
As academics, university workers, students and others, we call on the EU and the Greek government to protect the status and staff of Greek universities, to ensure that they remain able to engage in education and research and to recognize that these institutions are more important now than ever.
They are and must remain beacons of critical thinking in a Europe whose social structures are being eroded by massive cutbacks and over which the shadow of far-right extremism looms.




Uvod v knjigo The political Web

Snapshots from a revolt

On a cold and cloudy morning in late January 2013, demonstrators were gathering in one of the main squares in Ljubljana as part of a one-day national strike of public sector workers. Similar gatherings were taking place elsewhere in the city – notebaly at university campusues – as well as in other urban areas of the small (pop. two million) country of Slovenia. The strike was part of a larger, growing protest movement against the government, specially the prime minister, that had been growing in size and intesity since the autumn of the previous year, though largely beyond the coverage of the international news media. Slovenia had been the most prosperous republic within former Yugoslavia ; its transition to an independent state in June 1991 had proceeded with minimal bloodshed. Since independence, its economy flourished ; it joined both the EU and the eurozone.

However, there has been a spiraling economic crisis since 2008, and the recent EU-driven austerity measures were not only further paralaysing the country, but also making many private companies vulnerable to global finance speculators. This developments clearly served to mobilise many people, yet these citizens were protesting more than the dire economic situation and the cuts in the public sector. They were also angered by verified patterns of corruption among political elites generally and the degradation of the judicial system. The oppositonal parties in the parliament, for example, were largely perceived as part of the overall problem rather than offering any real alternatives.

One of the key figures in the coordination of the protest actions explained to me on that morning that the phrase, ‘the stolen state’ had taken root among demonstrators. Many citizens had become enraged by what appeared to be a plundering of society’s common assets, whereby politicians would sell off state-owned properties and holdings to others within the power elite networks. Such business transactions, often lacking in transparency, were done under the banner of neoliberal privatisation. Many demonstrators were thus calling for a whole new set of representatives; talk of establishing new parties was in the air.

Modern, post-communist Slovenia does not have a strong tradition of protest – which may correlate with its economic success story – but has had a viable democratic culture, including a wide array of civil society organisations, not least labour unions. Polling statistics ( show that voter turnout in parliamentary elections was impressively high at 85.9 percent in the first election held in 1992, yet remained high at 65.6 percent in 2011 (while voting in the EU parliamentary elections in 2004 and 2009 was low, at 28.3 percent both times).

Interestingly, many new, spontaneous groups were now being formed to help facilitate the protest actions ; these were collectives with rather flat and fluid organisational structures. Coordination throughout the country was effective; the protests were growing in size, and I was told that opinion polls showed massive support for the demonstrators, ca. 80 pecent (REF ?), while 16 percent of the population had already participated in at least one action (REF. ?).

Organisers at this demonstration spoke of the challenge of getting people onto the street, yet were happy with the results so far, noting especially the atmosphere of solidarity. In fact, some commented that the word had become very important within the movement, as the mobilisation was porceeding. The activists felt that the government had not only not engaged in any real serous dialogue since the protests began, but had been trying to discredit the protesters in crude ways. Top officials were in fact using Twitter a good deal to do this. Initial attempts to intmidate the protesters with police violence failed and only served to reinforce their resolve. The mobilistion was using Facebook a good deal for discussion and strategy oordination;; e-mail was also much in use, especially for discussion groups, and cell phones were also much in use.

Academic colleagues underscored for me that the dominant mass media and its journalistic activities were perceived to be doing a reasonably good professional job – indirectly confirmed, perhaps, by the government’s frequent expressions of displeasuret with the coverage. It was understood that theprotection of journlism was important to the movement. A number of figures, some established public intellectuals, others representing some newer voices, were being seen and heard in the mass media, while online there was a growing intensity of discussion and debate, with a few voices taking on some prominence in particular contexts or within certain groups. Along with the discussions there was also much affective expression of political views, including a good deal of satire and other forms of humour.

How the political crisis in Slovenia will be resolved remains uncertain at the time of writing. Moreover, it is one particular case and we should avoid drawing major, gneraliseable conclusions. Yet these snapshots capture a number of important themes that I will be discussing in the chapters ahead. These have to do with the frustration and anger citizens feel towards the established political system and its representatives, and how they are finding alternative paths to democracy. Another theme has to do with the forms and character of political participation, as well as the conditions that faclitate it. Moreover, we can see here also the question of people’s identities as political agents, how they emerge, and how they are reinforced ; the social character of political activity thus becomes a significant motif as well. Also looming large in these snapshots is the specific role and use of various media inthe political process. The situation in Slovenia will continue to be shaped by the interplay of many different factors, and the future is definitely not pre-ordained. However, from the standpoint of democracy there was much that was both encouraging and analytically interesting on that chilly January morning.

Peter Dahlgren:  The political web – Media Participation and Alternative Democracy, Palgrave Macmillan, London, New York