Wednesday, July 22, 2020

There Can Be No Equality Without a Dramatic Renewal of Employment Opportunity for All American Workers

By William Lazonick, Philip Moss, and Joshua Weitz

JUL 16, 2020 |

To fulfill MLK’s vision of jobs and freedom for Black Americans, Washington must rein in corporate greed
In his “I Have a Dream” speech at the March on Washington for Jobs and Freedom on August 28, 1963, Dr. Martin Luther King declared that a century after the Emancipation Proclamation, “the Negro is still badly crippled by the manacles of segregation and the chains of discrimination. One hundred years later the Negro lives on a lonely island of poverty in the midst of a vast ocean of material prosperity.” Racial justice demanded equal employment opportunity.

Upon the signing of the Civil Rights Act on July 2, 1964, discrimination in access to jobs because of an individual’s race, color, religion, sex or national origin became illegal under the landmark legislation’s Title VII. The following year, the U.S. government created a new federal agency, the Equal Employment Opportunity Commission (EEOC), to implement Title VII. But what, in fact, was the employment opportunity that white males possessed to which Blacks, other minorities, and women, wanted equal access?

The employment opportunity that privileged the white male was much more than a job. By the 1960s, growing numbers of white men had employment that gave them steadily rising real earnings, often with decades of tenure at one organization. The “career-with-one-company” (CWOC) that had become the employment norm by the beginning of the 1960s included health insurance and a defined-benefit pension, both funded by the employee’s business corporation or government agency. This white-man’s world constituted the foundation for the “vast ocean of material prosperity” to which Dr. King referred. It is what, in the decades immediately after World War II, turned much of white America into a growing and thriving middle class.

This was a white middle class made up of, at the lower end, blue-collar workers with no more than a high-school education. Union representation in collective bargaining enforced the unions’ first-hired, last fired “seniority” principle while securing wage increases in step with productivity growth, with “cost-of-living allowances” that adjusted wages for inflation usually built into the contracts. Aided by government subsidies such as the federal GI Bill and tuition-free higher education at state “land grant” colleges, the male offspring of the white blue-collar worker had ample opportunity to transition to higher incomes, superior benefits, and even more employment security as white-collar workers. In the 1950s, the white male who had recently ascended to the upper echelons of the middle class became known as “the organization man.”
Our forthcoming book, Fifty Years After: Black Employment in the United States under the Equal Employment Opportunity Commission, analyzes how, in the immediate aftermath of the 1964 Civil Rights Act, African Americans with no more than a high-school education gained access to CWOC employment at the blue-collar level. Owing to strong demand for production workers in the 1960s and 1970s and affirmative-action support under the EEOC, Blacks were making inroads into white-male privilege by gaining substantial access to well-paid and secure operative and craft occupations; big steps up from the common-laborer jobs into which they had previously been segregated.

In research published last month on the website of the Institute for New Economic Thinking (INET), we outline how the decline of unionized jobs from the beginning of the 1980s in the United States decimated an emergent African American blue-collar middle class. Over the decades it became clear, however, that, while African Americans were hit earlier and harder than whites, they were not the only ones to fall out of the middle class. Increasingly, white blue-collar workers with no more than a high-school education also lost their middle-class status as the ideology that companies should be run to “maximize shareholder value” put a permanent end to the CWOC norm. Over subsequent decades and up to the present, growing numbers of American workers with only a high-school education, regardless of race, have experienced stagnating incomes, downward socioeconomic mobility, and even, at certain times, declining life expectancy.

In our new INET Working Paper, “Employment and Earnings of African Americans, Fifty Years After: Progress?”, we provide a statistical overview of the devastating impact that the decline of the American middle class has had on Blacks. For a quest for economic equality to become a reality, the pay and stability of employment for Blacks must be improved far more than for whites. But in view of the downward mobility of white workers, even a substantial closing of the Black-white income gap will not solve the problems of poverty and injustice in the United States. Contrary to the situation in the 1960s, in the presence of the impoverished and vulnerable American working class of the 2020s, “equal employment opportunity” will not yield the “jobs and freedom” that the 1963 March on Washington demanded for Blacks.

It should be no surprise that the Covid-19 crisis is having an especially devastating impact on people of color, but workers of every race and ethnicity are feeling immense pain. But even when the public-health crisis has abated, the gargantuan political task for the years and decades ahead will be the restoration of employment opportunity that will enable all Americans to live healthy, secure, and happy lives.

The government-policy equivalent of therapies and vaccines will be required to eradicate the malicious “maximizing shareholder value” disease, which bears prime responsibility for the decades-long destruction of the American middle class. On July 9, in outlining his economic platform, Democratic presidential candidate Joe Biden declared that “it is way past time to put an end to the era of shareholder capitalism.” Yet there is virtually nothing on the subject in the 110 pages of the Biden-Sanders Unity Task Force Recommendations released the previous day. The only policy aimed at U.S. corporations that Biden mentioned was an increase in the corporate tax rate from 21% to 28%, which would put it halfway back to where it was before the Republican tax cuts.

As Americans unite to fight for jobs and freedom, we are curious what happened to the Joe Biden who, in September 2016, as vice-president of the United States, wrote in a Wall Street Journal op-ed: “The federal government can help foster private enterprise by providing worker training, building world-class infrastructure, and supporting research and innovation. But government should also take a look at regulations that promote share buybacks, tax laws that discourage long-term investment and corporate reporting standards that fail to account for long-run growth. The future of the economy depends on it.” At this fraught juncture in American history, bold leadership matters.

William Lazonick
Professor of Economics, University of Massachusetts Lowell
President, The Academic-Industry Research Network

Philip Moss
Professor of Economics, University of Massachusetts Lowell

Joshua Weitz
Research Associate, Academic-Industry Research Network

The EU’s Green Deal: Bismarck’s ‘What Is Possible’ versus Thunberg’s ‘What Is Imperative’ in the Age of Covid-19

By Servaas Storm

What ails the EU Green Deal is exactly what troubles the Union in general — an absence of social democracy at work

Past problems remain and will not go away

The unstoppable global health emergency has ripped away the fabric of normality. Every day brings news of developments which, only a few weeks ago, would have felt utterly impossible. Who would have believed, in mid-February, that schools and universities would be closed by mid-March, public gatherings cancelled, cities and whole nations and billions of people would be put under lock-down, and hundreds of millions of people around the world would be out of work? Who would have predicted that many governments would work tirelessly to put together some of the largest economic stimulus packages in history, to support (big, and sometimes also small) firms and give income protection to workers and households, that central banks would (again) provide emergency liquidity, commercial banks would be waiving mortgage payments, and landlords would refrain from collecting rents?

Who could have imagined that the majority of people, forced to remain at home, are glued to their computers and/or smart phones, more dependent than ever on the Big Tech companies, feeding them – willingly or unwillingly – with ever more private information, thereby putting the already fast growth of surveillance capitalism on steroids? Or that governments would be using drones to impose social distancing on their populations and/or using mobile phone tracking to do the same?

While the world will not be the same once this is over, we must recognize that novel disasters and emergencies do not remove or resolve older, existing problems—the biggest one of which is, without doubt, accelerating climate change. Despite clear differences, the Covid-19 calamity and global warming share important similarities: both problems present catastrophic risks to humanity which were long identified by scientists and both have been willfully neglected by governments and most political parties unable to see beyond the next election; both problems require unprecedented levels of global co-operation to be sorted and both demand transformative change today in order to prevent catastrophic outcomes in future; and redressing the risks of pandemics and global warming will require new innovative effective forms of coordinated, government-led action worldwide, rather than reliance on the ‘logic of the marketplace’ and private-sector initiative.

This brings me back to the future: if we manage to get to a post-covid-19 world, humanity still will have to confront the problem and risks of global warming. The one credible strategy to bring about ‘climate neutrality’ is the European Union’s Green Deal, which is almost forgotten in the corona-tragedy and the coming global recession. It is deserving of a closer look.

The European Union’s ‘man-on-the-moon’ moment …..

The European Union (EU) has done it, or so it appears. Its “Green Deal”, an ambitious rethinking of the European economy, transport, building and energy sectors, unveiled by the European Commission in December 2019, has been hailed as the first comprehensive plan to achieve “climate-neutrality” at a continental scale. It involves a €1 trillion, 10-year investment plan to fund a drastic reduction of the EU’s greenhouse gas (GHG) emissions in 2030 by 55% compared with 1990 — and to realize zero (net) emissions or “climate neutrality” by 2050. The investment programme of €1 trillion is to be financed from leveraged public and private funds and to be channelled into greening the economy. Ursula von der Leyen, the President of the European Commission calls the Green Deal “Europe’s man-on-the-moon moment” and has outlined a detailed roadmap of more than 50 actions the EU will have to take over the next decade to reach its emissions goal.

The Green Deal has received a mostly warm welcome. Most commentators see it as a courageous, bold and even visionary step in the right direction of a prosperous, socially inclusive and environmentally sustainable economy. Jeffrey Sachs hails it “a demonstration of European social democracy at work. A mixed economy, combining markets, government regulation, the public sector, and civil society, will pursue a mixed strategy, combining public goals, public and private investments, and public support”.

Predictably, business interests and centre-right economists fear the Green Deal will cripple European industries, as the new rules will raise cost of production, the proposed carbon border tax will hurt international trade, and the EU’s moral grandstanding on a go-it-alone transition to a carbon-neutral economy will do nothing to stop global warming from accelerating. Perhaps surprisingly, strong critiques have been voiced by climate scientists, environmental activists and critical economists, to whom Europe’s Green Deal is not ambitious and transformative enough, offering too little, too late.

The latter critics are, in turn, accused of not offering constructive engagement with the Green Deal and, by burning down what is in essence a far-reaching reform of the EU policy orientation, they are accused of promoting fatalism and cynicism. Indeed, this is the dilemma: if Otto von Bismarck was right that “politics is the art of the possible, the attainable — the art of the next best”, then the Green Deal does constitute a major advance and all efforts should be concentrated on expanding what is “attainable”.

I am not so sure. First, all the evidence is telling us that ‘business-as-usual’ is over, as the climate emergency is building fast: on present trends, humanity will have exhausted the remaining global carbon budget in a decade. Either we act decisively, or we don’t — in which case we have to brace ourselves for the damage coming from runaway warming, and adaptation to climate change becomes a must. Half-hearted tinkering will not bring us anywhere. Second, the Green Deal is the new signature mission of the Union, its new raison d’être, and a failure to bring about a green and economically inclusive and just transformation of the EU economy cannot but give the project of European unification a fatal blow. The stakes are high, therefore, and a dispassionate, constructive look at the Green Deal is needed in light of the climate reality. This is what the Working Paper does.

Ambition and speed

To achieve the Green Deal emission reduction target of 55% by 2030, GHG emissions by the EU-27 have to decline by as much as 5.2% per year during the next decade — which is three times faster than during 1990-2020. The ambition level is certainly commendable, yet it still falls short of what is, according to climate science, needed to prevent the global mean temperature from rising above the safe threshold of 1.5° Celsius (with a probability of 66%). The EU-27 have an obligation and ability to do more, in order to protect enough the ‘carbon development space’ for the more than six billion people in the developing countries. Bigger reductions in GHG emissions will require even faster decarbonisation and a shift toward 100% renewable energy of the EU as soon as possible — the ‘binding’ target of achieving a renewable energy share of final energy use of at least 32% in 2030 falls short of what is necessary.

Scale of the Green Deal

The European Commission estimates that the EU27 need € 260 billion of green investments per year over the next decade to bring down GHG emissions by 40% in 2030. €260 billion amounts to around 2% of GDP of the EU27. These numbers do not take into account the new stricter target to reduce GHG emissions in 2030 by 55% (and not 40%). The higher reduction target will require higher capital expenditures; the investment requirement for a 55% emission reduction target would roughly be around 3% of GDP (or €400 billion) each year, and for a more ambitious goal to cut emissions by 65% in 2030 investment would amount to around 4.5% of GDP per annum. The current Green Deal is under-funded.

Furthermore, almost all of the public Green Deal funding is money reshuffled from existing EU funds or based on national co-financing or founded on promises to leverage private-sector capital by taking away the risk for these investors, whose investments will be guaranteed by the EU budget. National co-financing is unlikely to involve additional spending, because member states have to stick to the deflationary straightjacket of the Stability and Growth Pact. All in all, the Green Deal will generate only € 1.1 billion per year in new expenditures by the European Commission under the Just Transition Mechanism (JTM).

This reprogramming of already projected expenditures makes it a bit of a stretch to call the Green Deal a ‘growth strategy’. The extent to which it will spur private investment is highly uncertain. The transition to a carbon-neutral economy will lead to massive disinvestment and ‘stranded assets’ (in fossil-fuel based industries) and the destruction of large numbers of jobs in extractive industries (coal mining), fossil-fuel energy-producing and manufacturing industries (such as automobiles). True, the Green Deal will be creating new jobs in renewable energy generation, housing renovation, building and maintaining low-carbon energy infrastructures and in services. But the transformation will be upsetting, massive and risky, and the slower the radical restructuring and the reallocation of labour across industries, and the larger the distributional impacts, the higher will be the overall transition costs and the more economic growth will be hurt. The European Commission takes too narrow a view of the distributional consequences of the Green Deal, which makes it look rather badly prepared to guide the process of structural transformation — and this is careless in view of the rather low level of popular support for the climate transition.

Substance of the Deal

On paper the Green Deal looks impressive: it includes a ‘farm-to-fork’ sustainable agriculture strategy and plans for a carbon-neutral ‘circular economy’; it proposes to start a ‘renovation wave’ to improve energy efficiency of the building stock; it favours the rapid development of renewable energy generation; it proposes a carbon border tax on carbon-polluting foreign firms in an effort to provide space to EU firms to decarbonize; and it wants to reform the EU Emissions Trading System (EU-ETS) and raise carbon prices to make it more effective. All this makes sense, but the capacity to bring about a structural transformation of the EU27 economy and society is compromised by the under-funding of the investment plan, an unwillingness to envision how the green transition can be made to generate significant co-benefits (in terms of job growth, improved health outcomes and a more fair income distribution) and an under-estimation of restructuring costs, distributional impacts and uncertainties.

Consider the Green Deal’s “Just Transition Mechanism” (JTM), which was put forward as a “pledge of solidarity and fairness”. The JTM will mobilize €100 billion over 10 years, mostly to support the economic restructuring of the regional coal-producing economies of the EU. However, the proposed JTM budget likely falls short of what will be needed to shoulder the social restructuring cost of the ‘coal exit’ and destruction of mining jobs in the EU27. But the EU climate transition is not just affecting the more than 400,000 miners, but is estimated to lead to the destruction of around 4.7 million jobs in so-called ‘brown’ industries (including in automobile manufacturing). What, if anything, does the Green Deal promise these workers in terms of ‘solidarity and fairness’?

To be clear, the job destruction is only one side of the transition. The shift to EVs will create jobs in building the (fast) charging infrastructure and in producing EV components and batteries (which are now mainly imported from China). There is enormous potential for the growth of green jobs in energy-saving renovation of the building stock and in smart public transport (zero-emission electric buses, trams and light-rail). Hence, when managed properly, the Green Deal will create new jobs in renewable energy generation, housing renovation, and transport. According to ILO (2018), green job growth in the EU during 2020-2030 could exceed ‘brown’ job destruction by around 2 million jobs. But to achieve the green job growth, the EU would need to considerably broaden its current focus — on building charging and refuelling infrastructures for the 13 million zero- and low-emission (mostly private and very expensive) vehicles expected to be on Europe’s roads by 2050 — to smart (and cheap) public transport systems, and from imposing the cost of energy-efficiency renovation on households to socialize the investment cost of housing stock renovation.

Rapidly phasing out fossil fuels in power plants (burning coal), industrial facilities, buildings and vehicles will improve air quality by reducing ambient air pollution and this could reduce premature deaths in the EU27 by 300,000 persons each and every year and also drastically lower morbidity, lost working days, and healthcare care (Boyce 2020). The relatively high additional mortality in Europe caused by air pollution has much to do with burning coal. Thirty-three of the 50 most polluted towns in Europe are in Poland, where burning coal is deemed ‘patriotic’ by the government. In a back-of-the-envelope calculation, using the official EU default value of € 3.387 million for the value of a statistical life (VSL), an in itself dubious concept to put a euro-value on human mortality, I estimate that the “co-pollutant cost of carbon” in the EU27 would amount to €1 trillion per year.

Strategic reliance on ‘green finance’

The European Commission puts its faith in private finance to fund the climate transition by promoting green capital formation through a favourable regulatory treatment of green finance, de-risking and credit subsidies. Having lost the battles for tougher regulation and higher taxation and spending, the Commission’s hope is that private finance will do the job of greening the economy. Hence, the idea is to do ‘whatever it takes’ to persuade institutional investors to redirect the trillions of money they are managing to specific activities that are officially labelled as being ‘green’ or ‘sustainable’ according to an official EU Taxonomy. Global finance will only do this of its own accord if it serves its interest. What makes these ‘green investments’ attractive for private finance is the fact that such green assets will be de-risked through EU subsidies and ECB guarantees to support the liquidity of these assets (Gabor 2020a). The EU provides a first-loss guarantee, enabling the EIB to fund riskier (climate-related) investment under the heading of the InvestEU programme.

The problem with this periphrastic strategy is that it relies heavily on private global financiers — such as BlackRock and Goldman Sachs — who are all waist-deep in fossil-fuel investments and, as large shareholders, have been routinely voting against shareholder motions directing corporate boards to take climate action and to integrate environmental concerns in their activities (Gabor 2020a). The Green Deal will be subsidizing carbon financiers, allowing them to make a profit from the climate transition, rather than holding them liable for the GHG emissions (see Richard Heede 2017). The Green Deal offers long-time fossil-fuel financiers a rather easy way out, by providing a cushioned, subsidized exit from fossil-fuel investments toward de-risked ‘green assets’.

The new class of highly liquid ‘de-risked’ assets, which will be as safe as German Bunds because they are guaranteed by EU (German) taxpayers and the ECB, will be in high demand. After all, the global shadow banking system is permanently short of safe securities, which it can use to collateralize global institutional cash pools (Storm 2018). That is, the ‘de-risked’ assets will further enable the already excessive liquidity preference of global financial investors, who have parked at least $ 5 trillion in collateralized spaces within the global shadow banking system, ready for immediate use in privately very profitable, but socially unproductive financial speculation in short-term exotic derivative instruments. The Green Deal thus ‘rewards’ an already malfunctioning global financial system, rather than ‘punishes’ and regulates it in ways which make ‘brown assets’ more expensive and liable for the (environmental, social and economic) damage it is causing.

Incentivizing private finance will not be enough to bring about the fast and just transition to climate neutrality promised by the European Commission — which requires green industrial policies to catalyze and support private-sector investment and leaning in zero-carbon activities, and proper management of aggregate demand. Industrial policy will be indispensable if the Green Deal is to exploit the considerable potential for energy savings and job growth of large-scale energy-efficiency renovation in buildings. Further, smart public transport requires building up the (charging) infrastructure, using public procurement (of electric buses, trams and trains) to promote the new mobility model, and investing in the development and demonstration of early-phase (battery) technologies and electro-fuels. However, large multinational corporations could, after benefiting from public money, offshore their clean-tech innovations to low-wage countries; indeed, battery production for EVs is currently concentrated in Asia (in China, Japan and South Korea). Green Deal spending should therefore include social clauses, requiring companies to base their production in countries with certain wage levels and labour and environmental legal standards (Gaddi and Garbellini 2019).

Another issue is that the Green Deal spending will require European planning in order to promote the construction of integrated European value chains (to make the most of economies of scale) and to actively reduce the existing regional imbalances in employment and industrial capabilities between Member States (Gaddi and Garbellini 2019). These tasks cannot be delegated to green financial markets, but require an actual industrial plan—which, so far, is missing. Finally, the industrial plan must include tougher (national) regulation and standards. Regulation should not be regarded as a cost, a hindrance or an obstruction. This is a very static view, and a view which neglects the potential “technology-forcing” impacts of norms, rules, standards which may well force firms to become more innovative; the EU should use this potential in support of the climate transition.

Greening the economy will not lower living standards …..

The EU’s Bismarckian approach to the Green Deal is best illustrated by the following comment by European Commissioner Josep Borrell, a leading Spanish social democrat:

“I would like to know if young people demonstrating in Berlin calling for measures against climate change are aware of what such measures will cost them” [….] “and if they are willing to lower their living standards to offer compensation to Polish miners, because if we fight against climate change for real, they will lose their jobs and will have to be subsidized.”

Mr. Borrell’s comment brings out the Commission’s view that the massive investments needed for the climate transition can only be financed by raising taxes on and lowering living standards of ordinary citizens. This argument is not just bereft of any political vision or plan, but it is also disingenuous, because it is supposes (and wrongly so) that there are no other sources than higher income taxes for the 99% to finance the climate investment. If Mr. Borrell’s statement reflects the mood in Brussels, it is indistinguishable from sentiments in Eastern-European Member States, where conservative parties are framing the debate on the climate transition as a hard choice between ‘investments in infrastructure and growth’ versus ‘greening the economy while lowering living standards’. Quite like centre-right politicians in Poland, Hungary and Romania, Mr. Borrell is ignoring the considerable potential for job growth, health co-benefits as well as income growth for ordinary citizens.

But let me help Mr. Borrell and highlight a couple of realistic sources of funding the Green Deal, which do not put the burden on ordinary people nor give preferential treatment to global private finance:

· Abolishing existing fossil-fuel subsidies of €250 billion per year. This will raise Member States’ government revenue by an estimated €100 billion per year.

· Introducing a tax on carbon of €75 per tonne of CO2eq. This will generate some €270 billion as annual tax revenue — of which €200 billion can be used to compensate the one-third poorest households, most affected by higher energy prices.

· Raising the rate of corporate profit taxation back to the level of the late 1990s (and being tough on corporate tax evasion). This will raise annual tax revenues by €55 billion. Doing this makes sense: corporations will, without doubt, be major beneficiaries of the Green Deal investment programme and industrial policy.

· Introduce a modest wealth tax to channel some of the mostly unearned capital and wealth gains into the public coffers to fund the Green Deal. This could generate around €175 billion per year for the EU27 as a whole. Note that tax revenues can be increased by a similar amount, even without higher or new taxation, by reducing or eliminating exemptions, loopholes and shelters and reducing (corporate) tax avoidance.

Hence, contrary to Mr. Borrell’s claim, the Green Deal could be financed without lowering the living standards of 99% of European citizens. On top of all this, the European Commission can leverage more funding without begging private financiers for money. Pension funds in the EU27 hold assets worth more than €4 trillion. The European Commission could oblige European pension funds to channel (say) one-fourth of their assets (i.e. €1 trillion or €100 billion per year during 2020-30) into officially approved Green Deal activities with the risk-free guarantee of a net return of (say) 4%.

Concluding observations

Investing these resources (some €500 billion per year) in renewable energy, housing renovation and public transport will create millions of extra jobs, reduce emissions and save hundreds of thousands of lives — each year. Compared to the €250 billion of annual fossil-fuel subsidies paid by the EU and to the (fossil-fuel caused) negative public health externality of €1 trillion per annum, this package looks like a bargain.

This is not the mind set in Brussels, unfortunately, where Mr. Borrell and some of his colleagues in the European Commission worry about the need to choose between ‘paying for climate action’ versus ‘maintaining or raising living standards’. The inconvenient truth is that a transition to climate neutrality is a condition for sustainable economic prosperity. A failure to decarbonize and transit to a zero-carbon economy will inflict considerable economic damage, drastically reduce living standards and increase inequality within the EU, as is clearly shown by the scenarios developed in the European Commission’s PESETA III study (2018).

In addition, when properly managed, this Green Deal would generate massive co-benefits in the form of millions of well-paid jobs, an improved quality of life (because of lower air pollution and lower mortality), and reduced inequalities in mobility, life expectancy, and incomes and wealth. The failure to recognize an existential threat (global warming in this case) for what it is and the incapacity to envision an inclusive strategic response to achieve climate neutrality while improving living standards are, to say the least, not very Bismarckian. We cannot leave it to social democrats such as Mr. Borrell or to conservative governments in Central and Eastern Europe to define ‘what is politically possible’.

Despite of all good intentions, the Commission’s Green Deal (as it is) will not work, because the Commission decided to work with and through (financial) markets, taking what Gabor 2020b has called a “politics as usual, third-way approach that seeks to nudge the market towards decarbonisation.” By choosing to make the Green Deal dependent on global finance, the European Commission itself is closing down all avenues for systemic change through tougher regulation, higher taxation and higher spending, as well as for an ambitious green macroeconomics and green industrial policies, which would enable achieving climate neutrality in a socially and economically inclusive manner. Jeffrey Sachs’ assessment is wrong, in other words: what ails the EU Green Deal is exactly what troubles the Union in general — an absence of social democracy at work. Public finances should be made to work for the common good and be protected from carbon financiers.

Post-script The way the European Union is responding to the covid-19 pandemic, or failing to respond, does not augur well for its Green Deal. The coronavirus crisis response so far was a complete car crash: the request for the one-off issuance of “corona bonds” as a means of European solidarity by the most crisis-struck countries Italy and Spain was rudely rejected by the “frugal four” – Germany, the Netherlands, Austria and Finland – who argued that the issuance of a common debt instrument would punish the ‘frugal’ countries, which (arguably) had ‘saved’ to create sufficient fiscal policy space to respond to the pandemic, but would encourage further fiscal mismanagement by those ‘spend-thrift’ countries which did not. Solidarity creates just moral hazard, is what my compatriot Wopke Hoekstra, the Dutch minister of finance, incorrectly claims. As a Dutch citizen, I apologise for the disturbing lack of international solidarity as well as the alarming absence of basic political, historical and economic understanding of the process of European economic unification shown by the Dutch government. Italy’s prime minister, Giuseppe Conte, has it right, when saying: “If Europe does not rise to this unprecedented challenge, the whole European structure loses its raison d’être to the people. We are at a critical point in European history.” If the Union cannot solve the covid-19 catastrophe in a rational, and therefore solidaristic, manner, the Green Deal will be doomed.

The Economics and Politics of Social Democracy: A Reconsideration

By Servaas Storm

MAY 14, 2020 | GOVERNMENT & POLITICS

To able to deal with these consequences, our crisis response now should not lock us in into a permanent state of austerity, greater inequality and heightened vulnerability to future health calamities. New-old social democratic solutions are needed more than ever before.

The inescapable dilemma facing social democracy

Social democracy, the political force that shaped post-1945 Western Europe more than any other political movement, is in terminal decline—or so it appears. In recent years, in European country after country, voter support for social-democratic parties has collapsed. In France, Greece and the Netherlands social democrats hold less than 10 percent of the seats in parliament. In Germany and Italy, social-democratic parties are at a historic low. Britain’s Labour Party’s last electoral win dates back to 2005— half a generation ago. The result has been a remarkable, steady decline in the political relevance and influence of Europe’s social-democratic parties. The long-run decline of electoral support for social democracy reflects a failure of social-democratic parties in Europe to strike a convincing and effective balance between ‘short-term practical relevance’ and ‘progressive, egalitarian reformism’ (Bhaduri 1993). This paper argues that this failure originates in a flawed macroeconomic thinking.

Short-term practical relevance requires social democracy to accept, at least partly, the very socio-economic and political conditions of ‘really-existing capitalism’ which it purports to change in the longer run. Once social democrats chose to work within the rules of capitalism, they had to abandon their radical goal of systemic transformation and commit themselves to maintain private property in the means of production. After all, the capitalist class has the power to block any egalitarian transformation of the property-rights and economic system by sharply reducing firm investment, which, in turn, reduces demand and employment in the short run and has negative impacts on long-run growth as well. Hence, working within the capitalist system creates an inescapable dilemma for social democracy: its policies must at the same time strengthen the productive power of capital and counteract the (political) power of capitalists. Through the state, social democrats had to assure capitalism’s efficiency and the growth of its productive capabilities, while at the same time mitigating adverse distributional effects.

Phase I (1950-1975): co-operative capitalism, partly enabled by ‘wage-led’ demand

The Keynesian revolution in macroeconomics led to a drastic reorientation of European social democratic thinking: away from the revolutionary ‘nationalization of the means of production’ to the ‘nationalization of consumption’, as Swedish economist Bertil Ohlin (1938) put it. Reformism was abandoned—and capitalism accepted—on the condition that it be regulated and disciplined by the state, without any need to socialize the means of production. Social democrats developed a full-fledged ideology of the ‘welfare state’, as the means to nationalize consumption and bring about mass-consumption-driven economic expansion. Thus, during the 1950s and 1960s, Keynesian demand management helped sustain a full employment regime, which featured high real wage growth, shortening of the working week, and the build-up of welfare states. What was critical is that the high wage growth, the shortening of the working week and welfare-state expansion did not hurt the profitability of firms. To the contrary, the ‘golden age of co-operative capitalism’ managed to avoid a profit squeeze, because of four factors which more than offset the negative impact of higher wages on the profit rate.

First, aggregate demand was ‘wage-led’ (Bhaduri and Marglin 1990), which meant that higher wages led to higher demand and hence to higher capacity utilization; higher capacity utilization raised the profit rate of firms. Second, the pressure of high wages on the profit rate was reduced, because higher demand and higher utilization led to higher labour productivity through the Kaldor-Verdoorn relation. The third factor was that high wages were supported by fiscal policy intended to keep the economy (and utilization) close to full employment. The fourth and final factor was the high growth of world trade, enabled by the Bretton Woods system of stable exchange rates, and the restrictions imposed on cross-border capital mobility in most economies. Full-employment-oriented fiscal policy was the key ingredient, because it made possible (and stabilized) high productivity growth and hence high wage growth, helped by the overall wage-led nature of demand. Taken together, the four factors safeguarded adequate profit rates for firms, and thus offered a solution to the dilemma facing European social democracy.

The co-operative compromise unravelled in response to the ‘stagflation’ of the 1970s. The reason for the breakdown was more political than economic: decades of (near) full employment had unleashed, as Michaɬ Kalecki (1943) warned, forces which directly threatened the authority structure of capitalism—forces which became manifest in growing wage pressure, heightened worker militancy, calls for more redistribution, and growing demands for a radical democratization of society, the economy and the workplace. The breakdown of the Bretton Woods system in 1971 added further fuel to stagflation, leading to heightened uncertainty for exporters, competitive exchange rate devaluations (triggered by the devaluation of the U.S. dollar), a slowing down of world trade growth, two oil-price shocks, and import-cost inflation (Halevi 2019). Demand growth declined, which in turn depressed productivity growth—and this drove up the wage share even more. The ‘indiscipline’ of workers, the collapse of the Bretton Woods order, and the consequent ‘profit squeeze’ led governments to implement structural policy reform aimed at improving the ‘climate’ for private investment and finance.

Phase II (1975-end of 1980s): co-operative capitalism with ‘profit-led’ demand

The collapse of wage-led growth and the crisis of stagflation brought back, with a vengeance, the dilemma of social democracy—in a profit-led system, profits must be protected from demand of the masses, because if profits are not ‘sufficient’, then eventually wages and/or employment must decline. Reviving private investment became the focal point of a new wave of conservatism, which, championed by British Prime Minister Margaret Thatcher and U.S. President Ronald Reagan, centred on wage moderation, monetarist inflation control (instead of full-employment-oriented fiscal policy), the deregulation of labour and financial markets, privatization, (corporate) tax reductions, globalization and (accompanying) military build ups, and the scaling down of ‘nanny’ welfare states (Halevi 2019).

The stagflation seemed to prove that in an open profit-led economy, full employment demand management and radical redistributive policies are not in the material interest of wage-earners, because they result in high wages and poor international cost competitiveness, and therefore low profitability, sluggish investment and stagnation. Some social democrats internalized this lesson quickly. West-German Bundeskanzler Helmut Schmidt (1976), a leading European social democrat, articulated it in Le Monde as follows: “The profits of enterprises today are the investments of tomorrow, and the investments of tomorrow are the employment of the day after.” Other social democrats needed more time—Francois Mitterand, the social-democratic President of France, who was elected on the promise of Keynesian demand stimulus, capitulated only in 1981-83 after bond and currency markets started to protest against his – half-hearted – fiscal stimulus.

Schmidt’s argument won the day and became the cornerstone of the post-1970s social democratic consent of capitalism. Perhaps the clearest expression of this reorientation of social democracy within the EU is the Dutch ‘Polder Model’ consensus on strict real wage restraint. Dutch real wage growth was kept below productivity growth, which raised the profit share and lowered Dutch relative unit labour cost. Dutch unemployment declined steeply in the 1980s and 1990s, exactly when unemployment in other E.U. countries remained high or even increased. This way, the Dutch social democrats set the example to emulate, and from the late 1980s onwards, their European comrades followed suit, choosing to co-operate to reproduce capitalism and rather drastically tone down whatever was left of their initial reformist intentions. However, social democratic consent was still based on the common understanding that aggregate demand mattered for profits and investment. Keynesianism was not dead yet. Social democrats could continue to argue in favour of fiscal stabilization, (decent) minimum wages, collective wage bargaining, and welfare-state support for the unemployed, the disadvantaged and the elderly, because these ‘Keynesian’ interventions could be argued to contribute to stabilizing aggregate demand and protecting the profit rate. ‘We are all Keynesians now’, captured the mood in this period.

Phase III (early 1990s - now): final surrender to TINA

Social democracy’s compromise with ‘profit-led’ capitalism broke down in the early 1990s, under the impacts of two powerful forces. The first one was the collapse of communism in the Soviet Union and much of Eastern Europe. The collapse of communism deprived European social democracy from its ideological ‘doppelgänger’ and left it with nothing distinctive to offer, except its “exhausted language” (Judt 2010). The second force to undermine the compromise of the 1980s, no less important than the first, was the demise of Keynesianism. The victory of Thatcher-Reagan conservatism might not have happened, as Tony Judt (2010) argued, without a supporting intellectual revolution—one which succeeded in overthrowing the Keynesian consensus and turning ‘government’ into the problem, rather than the solution. This is the essence of the neoliberal turn in Europe’s political formation: rather than entrusting the state, or the ‘Staatsvolk’ in Wolfgang Streeck’s (2016) terminology, with the task to stabilize the unstable capitalist economy, the new conservatism relegated to deregulated (financial) markets, or Streeck’s ‘Marktvolk’, the task to maintain the stability of the social and political order.

In macroeconomics, the ‘intellectual revolution’ gave birth to the New Consensus Macroeconomics (NCM) in the 1980s. NCM rejected Keynesianism by arguing that the stagflation of the mid-1970s ‘proved’ that the Phillips-curve trade-off between inflation and unemployment could only exist in the short run, for as long as actors in the economy were wrong about (actual and expected) inflation. In the longer run, once actors had learned from experience and correctly started to anticipate the rate of inflation, the NCM claims that the Phillips Curve is vertical at a given rate of unemployment—the ‘natural’ rate of unemployment, also known as the non-accelerating inflation rate of unemployment (NAIRU).

Accordingly, monetary policy could only affect the unemployment-inflation trade-off in the short run, but economic activity could not deviate from its ‘natural’ level, as determined by the NAIRU, in the long run. Likewise, fiscal policy cannot have permanent, long-run, impacts without causing unmanageable accelerating inflation, which would force the central bank to increase the interest rate. Higher interest rates would, in turn, crowd out private-sector investment—and unemployment would converge back to the NAIRU. There is, in this approach, only one way to structurally raise growth and permanently reduce unemployment in a non-inflationary manner, namely imposing structural reforms on the labour market, which lower the NAIRU. This way, the NCM created the governing myth that governments and central banks should refrain from intervening actively, using fiscal and/or monetary policy instruments, to smooth short-run fluctuations or to steer the economy, but rather concentrate on creating the structural conditions for deregulated (labour) markets to grind out the ‘natural’ long-run equilibrium.

The NCM has one profound policy message, which constitutes a radical denial of the promise of Keynesian demand management in a wage-led economy: macro-economic policy faces an inescapable trade-off between ‘growth’ (or ‘efficiency’) and ‘equality’. What it means in common parlance is that any policy intervention to reduce inequality, for instance by means of labour market regulation and welfare-state redistribution, carries a welfare cost, because it raises the NAIRU and hence must lower growth. Vice versa, any attempt to permanently raise economic growth means lowering the NAIRU by deregulating the labour market and downsizing the welfare state—which must raise inequality. Andrew Glyn (2006) appropriately called it the ‘Nasty Trade-Off’ between higher wages and more jobs—or, more generally, between economic growth and egalitarianism.

The death of Keynesianism left it clueless and without any effective policy levers to counteract the power of capitalists. The ideological emptiness created by the collapse of communism and the demise of Keynesianism in favour of NCM was filled by ‘Third Way’ pragmatic compromising, strategic rebranding and technological tinkering. The defining feature of New Labour of the ‘Third Way’ variety is its complete internalization of the idea that the ‘Nasty Trade-Off” really exists. As a result, New Labour discarded fiscal policy activism in favour of rule-based fiscal austerity, supported the independence of central banks (in effect, handing over the levers of monetary policy to unelected and democratically unaccountable technocrats), completely submitted to ‘reactionary’ financial interests (of the ‘Marktvolk’) by endorsing central-bank inflation targeting and deregulation of financial markets, and, in doing so, lost all sense of shared purpose. Peter Mandelson’s statement that “we are all Thatcherites” captures the new mood perfectly.

In the U.K., Tony Blair’s ‘Third Way’ economic policies intended to create a business- and finance-friendly economic environment (Osler 2002)—by means of the (semi-) privatization of public services, social dumping to attract foreign investors, tax cuts for the rich and social-benefit cuts for the (undeserving) poor, opting out of the European social charter, unconditional support for financial globalization, harsh law & order policies and deregulation of labour and financial markets, while turning a blind eye on rising income and wealth inequality.

But it is not just Britain’s New Labour. In the 1990s, it was widely felt that European social democracy needed a modern makeover, in order to become more market-friendly. As a result, social democracy became a conservative force, both politically and economically, in France, Germany, the Netherlands and Italy—and most governments adopted the strategy of blaming the EU and Brussels for unpopular policy reforms, which they themselves were (covertly) favouring. Labour law reforms such as the Hartz reforms by the Schröder government in Germany but also elsewhere, created a larger ‘disposable’ labour force, a flexible reserve army of the under-employed, and through this, raised (income, wealth and job) inequality in Europe.

The economic consequences of New Labour

New Labour’s compromise did succeed in reducing unemployment in Europe, but it rather spectacularly failed to improve overall macroeconomic performance. Real GDP growth continued its secular stagnation—notwithstanding the structural reforms introduced on New Labour’s brief. The reason for the growth slowdown is ironic: as is shown by study after study, aggregate demand in these six economies is robustly ‘wage-led’. This means that the New Labour strategy of wage restraint and structural reform, coupled with strict rule-based fiscal austerity (Storm 2019), which was meant to reduce the NAIRU, raise the profit rate and push up utilization, backfired. The reason: it did reduce demand and utilization and hurt both the profit rate and investment. To paraphrase Mark Twain, the report of the death of Keynesianism seems to have been an exaggeration.

But the macroeconomic damage done is larger. The labour market deregulation and supply-side measures which pushed more people into the labour market were, as noted above, successful: unemployment came down and labour force participation went up, which was exactly the intention. However, it is impossible to read this as (social and/or emancipatory) progress—because what it reflects on the ground is the growth of low-productivity, low-pay, generally temporary ‘alternative working arrangements’, mostly in private services industries—arrangements which in post-Schröder Germany are often ‘mini-jobs’, in Italy are all fixed-term contracts and in the Netherlands most often mean temporary self-employment. And at the macro level, the slowdown of economic growth and the increase in employment growth imply, when taken together, a decline in labour productivity growth.

This slowdown of productivity growth puts welfare states under growing fiscal pressure. The stagnation of wage-led aggregate demand and the growing job and income insecurity, characteristic of the New Labour compromise, helped to undermine its political legitimacy. The rapid growth of deregulated financial markets provided policymakers with an opportunity to defer this threat by enabling a strong growth of private borrowing, by households and firms, to keep ‘the show going’ by sustaining demand. Crouch (2009) calls it ‘privatised Keynesianism,’ and its defining feature is the dramatic increase in the system’s reliance on household and corporate debt to defer distributional conflicts and continue to meet the electorate’s welfare expectations.

The failed New Labour compromise has caused political damage as well. First, big parts of social democracy’s core constituency have defected to either the more extreme Left movement or to (extreme) right-wing populist parties. There is a growing polarization in the polity—with growth on the far left and even more on the far right. In Italy, France and the U.K., this polarization has already seriously destabilized the established political system—to (as yet) unknown effect. Germany, the Netherlands and Sweden each have seen not just growing right-wing populism, but also a considerable shift of the political centre and ‘accepted political discourse’ to the right. Governing is becoming increasingly difficult under these polarized conditions. The other form of damage comes in more subtle ways: growing (income and wealth) inequalities have made class and status divisions more powerful, have considerably reduced (upward) social mobility, and strengthened residential segregation and segregation in education (Wilkinson and Pickett 2019). In contrast, in more equal societies, citizens trust each other, there is a greater willingness to help each other, and general attitudes to the social welfare state and taxation are more positive. Adam Smith (1776/1976, p. 88) put it like this: “No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable.” As inequality rises, all this goes in reverse. Seen this way, the recent collapse in support for social democracy is a largely self-inflicted wound—and unprecedented act of self-destruction.

What is to be done?

What sort of political-economy framework can the Left propose to explain its objectives and justify its goals? For a start, social democrats should discard the now discredited NCM thinking, and draw the right lesson from Keynes, namely that capitalism is inherently unstable and needs to be ‘wisely managed’ in order to become more efficient. Markets turned out to be ‘bad masters’, and now have to be turned into ‘good servants’. We need social and political organization to impose stability on unruly markets, including through imposing cross-border capital controls (when and where necessary). Social democrats also have to understand that it makes no sense to let financial markets determine the fiscal capacity of the state—this is a fundamentally political decision which involves matching society’s levels of taxation to its social (spending) ambitions and deciding on how to finance a public deficit (in case it arises). This is not a plea for Big States, nor for maximum monetary financing, but rather for meaningful deliberative democracy in which citizens have a say in politics when and where it matters most. It is a firm plea against the de-politicization of fiscal and monetary policy as well as against the corrupting influence of political money on democracy—which should have been obvious to social-democrats anyway.

Second, social democrats must reject the ideology of the ‘Nasty Trade-Off’ for what it is: a conservative fantasy. In the European economies, higher wages and progressive income redistribution do indeed improve macro-economic performance and benefit both workers and firms, especially when supported by aggregate demand management. Social democrats ought to stand for both fair real wage increases and a credible commitment in macroeconomic policymaking to full employment (rather than low inflation)—demands which do not conflict with productivity growth and profitability (if properly managed). Likewise, welfare states and protective labour market institutions must not be considered a cost and a drain, but rather constitute efficient frameworks which by helping nations to share the costs and benefits of globalization and technological progress, make firms more flexible and raise their international competitiveness. The above is by no means a covert defensive call for a return to an idealized past (e.g. the ‘golden age’), but instead it is an evidence-based diagnosis of where we are and how we got there and a recognition that there are alternatives to Thatcherism. Capitalism needs to be managed, and if citizens do not do it (through the political process) than ‘superstar’ firms, big banks, big-tech companies and billionaires will do it for us.

However, any reimagined social democracy worth the name must begin by imposing discipline on banks and financial markets—and by domestication, turn them from the powerful over-lords (who they currently are) into useful servants to the societal interest. This, in turn, requires a counter-revolution in economic thinking, one which overthrows the NCM in favour of more realistic (less utopian) and more humane approaches. NCM must be seen for what it is: stale nineteenth-century pre-Keynesian thinking, a parody of an accountant’s nightmare, in John Maynard Keynes’ (1933) words.

The global recession caused by the COVID-19 lockdown is making such a counter-revolution in economic thinking only more urgent. The current panicky ‘emergency Keynesianism’ which is upending decades of ruthless austerity in Britain, France, Germany and elsewhere does not come close to what is needed. Yes, governments will be paying “for the war against COVID-19” by taking on much more debt, but once the crisis is over, higher public indebtedness will turn out to be socially unjust and economically inefficient. After all, the Pavlovian response of politicians and a majority of economists, brainwashed by modern (NCM) macroeconomic theory, is a return to fiscal austerity with a vengeance, on the argument that debts must be repaid, bringing another lost decade of ruthless spending cuts (in public investment) and structural shortages and lowered wages in exactly those services, such as health care, social support and education, which are now deemed ‘essential’ during the health emergency.

A simple and effective, Keynesian and social democratic, alternative to fund the unprecedented public rescue packages would be much higher taxes on wealth, incomes and (rentier) finance. This way, the strongest shoulders will carry the largest burden without corroding and undermining economic growth and public health in the future. The longer-term impact of the COVID-19 recession will be chronically painful, if we do not apply the right lessons learned from earlier crises. While the virus may go away, helped by massive social distancing and the lockdown of the global economy, we must remain alert to the consequences of a longer stay or the arrival of a new mutant. To able to deal with these consequences, our crisis response now should not lock us in into a permanent state of austerity, greater inequality and heightened vulnerability to future health calamities. New-old social democratic solutions are needed more than ever before.

Three comments on this essay can be found here. The first is by Joseph Halevi and Peter Kriesler; the second is by Duncan Foley, and the third is by Thomas Ferguson.

References

Bhaduri, A. 1993. ‘The economics and politics of social democracy.’ In P. Bardhan, M. Datta-Chaudhuri and T.N. Krishnan (eds.). Development and Change. Essays in honour of K.N. Raj. Delhi: Oxford University Press, pp. 59-67.

Bhaduri, A. and S. Marglin. 1990. ‘Unemployment and the real wage: the economic basis for contesting political ideologies.’ Cambridge Journal of Economics 14 (4): 375-393.

Crouch, C. 2009. ‘Privatised Keynesianism: an unacknowledged policy regime.’ British Journal of Politics and International Relations 11 (3): 382-399.

Glyn, A. 2006. Capitalism Unleashed. Finance, Globalization and Welfare. Oxford: Oxford University Press.

Halevi, J. 2019. ‘From the EMS to the EMU …. and to China.’ INET Working Paper No. 102. New York: Institute for New Economic Thinking. https://www.ineteconomics.org/…

Judt, Tony. 2010. Ill Fares the Land. A Treatise on Our Present Discontents. London: Penguin Books.

Kalecki, M. 1943. ‘Political aspects of full employment.’ The Political Quarterly 14 (3): 322-330.

Keynes, J.M. 1933. ‘National self-sufficiency.’ The Yale Review 22 (4): 755-769.

Ohlin, B. 1938. ‘Economic progress in Sweden.’ The ANNALS of the American Academy of Political and Social Science 197 (1): 1-6.

Osler, D. 2002. Labour Party PLC. New Labour as a Party of Business. London: Mainstream Publishing.

Smith, A. 1976/1776. An Inquiry into the Nature and Causes of the Wealth of Nations. Chicago: University of Chicago Press.

Storm, S. 2019. ‘Lost in deflation. Why Italy’s woes are a warning to the whole Eurozone.’ International Journal of Political Economy 48 (3): 195-237. https://doi.org/10.1080/089119…

Streeck, W. 2016. How Will Capitalism End? London: Verso.

Wilkinson, R. and K. Pickett. 2019. The Inner Level: How More Equal Societies Reduce Stress, Restore Sanity and Improve Everyone’s Well-being. London: Penguin Random House.

Vaccine by Easter a best-case scenario, researcher says
YEAH EASTER 2022, OR 2023, OR 2024, OR....

Issued on: 22/07/2020 -

The race to find a vaccine continues, with more than 150 candidates in development around the world, of which vaccines in Oxford and China are furthest ahead in development. Simon Clarke, microbiologist at Reading University, says if the vaccines can make it to clinical trials, the earliest available deployment in Europe would be around Easter 2021.

Humans in America 30,000 years ago, far earlier than thought

Issued on: 22/07/2020 -

Ciprian Ardelean first excavated the Chiquihuite Cave in 2012 but did not discover the oldest artefacts until 2017. ORLANDO SIERRA AFP

Paris (AFP)

Tools excavated from a cave in central Mexico are strong evidence that humans were living in North America at least 30,000 years ago, some 15,000 years earlier than previously thought, scientists said Wednesday.

Artefacts, including 1,900 stone tools, showed human occupation of the high-altitude Chiquihuite Cave over a roughly 20,000 year period, they reported in two studies, published in Nature.

"Our results provide new evidence for the antiquity of humans in the Americas," Ciprian Ardelean, an archeologist at the Universidad Autonoma de Zacatecas and lead author of one of the studies, told AFP.

"There are only a few artefacts and a couple of dates from that range," he said, referring radiocarbon dating results putting the oldest samples at 33,000 to 31,000 years ago.

"However, the presence is there."

No traces of human bones or DNA were found at the site.

"It is likely that humans used this site on a relatively constant basis, perhaps in recurrent seasonal episodes part of larger migratory cycles," the study concluded.

The stone tools -- unique in the Americas -- revealed a "mature technology" which the authors speculate was brought in from elsewhere.

The saga of how and when Homo sapiens arrived in the Americas -- the last major land mass to be populated by our species -- is fiercly debated among experts, and the new findings will likely be contested.

- 'Clovis-first' debunked -

"That happens every time that anybody finds sites older than 16,000 years -- the first reaction is denial or hard acceptance," said Ardelean, who first excavated the cave in 2012 but did not discover the oldest items until 2017.

Until recently, the widely accepted storyline was that the first humans to set foot in the Americas crossed a land bridge from present-day Russia to Alaska some 13,5000 years ago and moved south through a corridor between two massive ice sheets.

Archeological evidence -- including uniquely crafted spear points used to slay mammoths and other prehistoric megafauna -- suggested this founding population, known as Clovis Culture, spread across North America, giving rise to distinct native American populations.

But the so-called Clovis-first model has fallen apart over the last two decades with the discovery of several ancient human settlements dating back two or three thousand years before earlier.

Moreover, the tool and weapon remnants at these sites were not the same, showing distinct origins.

"Clearly, people were in the Americas long before the development of Clovis technology in North America," said Gruhn, an anthropology professor emerita at the University of Alberta, in commenting on the new findings.

In a second study, Lorena Becerra-Valdivia and Thomas Higham, researchers at the University of Oxford's Radiocarbon Accelerator Unit, used radiocarbon -- backed up by another technique based on luminescence -- to date samples from 42 sites across North America.

Using a statistical model, they showed widespread human presence "before, during and immediately after the Last Glacial Maximum" (LGM), which lasted from 27,000 to 19,000 years ago.

- Megafauna wiped out -

The timing of this deep chill is crucial because it is widely agreed that humans migrating from Asia could not have penetrated the massive icesheets that covered much of the continent during this period.

"So if humans were here DURING the Last Glacial Maximum, that's because they had already arrived BEFORE it," Ardelean noted in an email.

Human populations scattered across the continent during an earlier period also coincide with the disappearance of once abundant megafauna, including mammoths and extinct species of camels and horses.

"Our analysis suggests that the widespread expansion of humans through North America was a key factor in the extinction of large terrestrial mammals," the second study concluded.

Many key questions remain unanswered, including whether the first of our species to wander across the frozen tundra of Beringia made their way south via an interior route or -- as recent research suggests -- by moving along the coast, either on foot or in boats of some kind.

It is also a mystery as to "why no archaeological site of equivalent age to Chiquihuite Cave has been recognised in the continental United States," said Gruhn.

"With a Bering Straits entry point, the earliest people expanding south must have passed through that area."

© 2020 AFP

Middleman in Malta reporter murder 'attempted suicide' before hearing

Issued on: 22/07/2020

Daphne Caruana Galizia's killing triggered protests in Malta STRINGER AFP
Valletta (AFP)

The self-confessed middleman in the murder of Maltese journalist Daphne Caruana Galizia was in a critical condition Wednesday, after what police said looked like a botched suicide attempt.

Taxi driver Melvin Theuma, who was granted a presidential pardon last year to give evidence on the deadly 2017 car bombing, was found late Tuesday lying in a pool of blood, according to police commissioner Angelo Gafa.

The incident occurred just hours before he had been due to give evidence in court.

"The indications are that Theuma's wounds were self-inflicted," Gafa told journalists at a press conference Wednesday.

Theuma's testimony lead to the arrest of wealthy businessman Yorgen Fenech, who is awaiting trial on accusations of plotting the murder. Theuma alleges he was paid by Fenech to contract a team to place the bomb.

The taxi driver was found at his residence in Swieqi. His lawyer had raised the alarm after being unable to contact him.

Gafa said that there was no sign of forced entry.

"We saw no defensive wounds, and even the blood splatter was concentrated showing no signs of a struggle," Gafa said.

"Who was to gain most from Melvyn Theuma's suicide? Did he decide to commit suicide, or could there also be the possibility that he was pressured to do it?" Malta's Repubblika civil rights organisation said in a statement.

- Hangman's noose -

Gafa said the police had not been aware Theuma had been suffering from suicidal thoughts.

The residence was guarded by two guards, but a third policeman who had been stationed inside had been recalled after Theuma requested privacy, he said.

"The institutions failed yet again. We demand that responsibilities are shouldered," opposition leader Adrian Delia said on Twitter.

Gafa also said Theuma had told paramedics and inspector Keith Arnaud -- who is the lead investigator on the Caruana Galizia case -- that he had inflicted the wounds on himself.

Dutch MEP Sophie in't Veld said it was an "extremely worrying development" in the murder case, and called on the government to "immediately investigate" and "show its full commitment to the rule of law".

Caruana Galizia, a journalist and blogger described as a "one-woman WikiLeaks", exposed cronyism and sleaze within the country's political and business elite. She died aged 53.

Three men suspected of placing the car bomb that killed her are currently on trial in Valletta.

Repubblika said prominent witnesses and lawyers in the case should be offered better police protection.

Maltese media reported Wednesday the discovery of a hangman's noose hung outside the court, with one newspaper comparing it to Mafia warnings traditionally sent to "pentiti", or those who turn state evidence.

© 2020 AFP