This week I’m lifting a few noteworthy articles about 1968 from the British press.

The second one is this gem by Lucy Kellaway of the Financial Times:

“It took business about 20 years to work out that the 1960s had happened at all…

1968 happened in offices around about 1988, and in 2008 the ideas of the 1960s are still affecting the ways we behave and think at work.

In the early 1960s a group of radical American students got together and drew up a blueprint for what they thought the world ought to look like.

The celebrated Port Huron Statement called for work that was ‘educative, not stultifying; creative, not mechanical; self-directed, not manipulated, encouraging independence… a willingness to accept social responsibility.’

As Anthony Dworkin pointed out in the current issue of Prospect magazine, these ideas have now become enshrined in the workplace ideal that business schools preach.

Empowerment, creativity, team-work, lifelong learning, values and visions: all these ideas had their roots in the 1960s.

Students got over it. Business never has.

Some of these ideas have turned into a good thing in workplaces, others less so.

The business equivalent of free love is job hopping, which means that employees can get into bed with any old employer and if it doesn’t work out they can dump them and move on.

In moderation this is good; in excess it is expensive for employers and destabilising for employees.

The idea of instant, and constant, gratification was also a big thing in the 1960s, but is not so good when translated to work.

Jobs are often dull, and so if we expect the earth to move for us every time, we end up feeling cheated and disappointed when it doesn’t.

Above all what characterised the 1960s was people pretending to be cool when they were actually quite square.

‘Far out, man,’ and ‘be free,’ they used to say.

The same now applies to most corporate executives.

They speak a language infected with the spirit of the 1960s because they think it sounds good, not because they really mean it.

My favourite example was the JP Morgan manager who instructed investment bankers to “take the time today to call a client and tell them you love them”.

Peace and love proved a dodgy dictum even when applied to students. When applied to bankers it beggars belief…

“Let me take you down, ’cause I’m going to Strawberry Fields,” sang the Beatles. “Nothing is real, nothing to get hung about.”

But that is just the trouble and that is why the spirit of the 1960s jars at work. In business it is real, and there is much to get hung about.”

The press in Britain, just like in France, is awash with comments about the legacy of 1968.

Over the coming days I mention a few that have caught my attention.

The first is by the economist Paul Ormerod, and published in Prospect Magazine:

“I observed the events of May 1968 from my council estate in Rochdale. They seemed to have no relevance to us.

We saw on our television screens self-indulgent children of the bourgeoisie calling for the overthrow of the system.

This system had brought a modicum of prosperity and security to a population with memories of both the grim inter-war years and the pride and sacrifice of the war itself.

These feelings of bewilderment were enhanced when I arrived at Cambridge later that year.

Public schoolboys, with glittering careers awaiting in finance, the media and the law, occupied buildings and pontificated about revolution.

It was hard to treat it seriously, as anything other than some live street version of Footlights. These people were surely not for real. I was wrong.

The passage of the 1968 generation through the body politic has had devastating consequences not just for the working class but for society as a whole.

Not that I am invoking a mythical golden age. Things needed to change; that was why we supported Labour.

Class divisions were wide, complacency was rife, patriarchy and sexism deeply embedded.

But things were getting better, economically and socially, under the banner of the social democratic compromise all parties had embraced.

The distinguishing feature of the 68ers has continued to be their capacity for self-indulgence, and their blindness about the consequences of their actions for others.

The systematic denigration of western culture by the 68ers has impoverished the lives of millions.

The concept of a high culture had once been embraced without question by generations of working-class activists.

The generation that won the Second World War knew Shakespeare and Beethoven.

They aspired to an idea of progress that would allow their children to access high culture as readily as the bourgeoisie.

So too with the idea of history. The 68er interpretation of British history is a relentlessly negative one.

No country’s history is perfect, but we can be proud of much of our legacy, from defeating European dictators to abolishing slavery.

Children with no sense of history are deprived of their inheritance as citizens.

And the family? The proposition that the conventional nuclear family is on average the best structure in which to bring up children has one of the firmest empirical backings in the whole of social science.

Yet this has been blithely ignored. The result has been the virtual destruction of the conventional family among the poor, with resulting increases in their social and economic degradation.

Multiculturalism is in partial retreat, though the spirit of ‘68 is hard to eradicate.

During the past decade, Britain has experienced one of the greatest movements of population in Europe since the collapse of the Roman empire.

Yet we are invited to believe that this has no adverse effects on our sense of well-being and cohesion. Again, it is the poor who bear the brunt of the dislocations this policy creates.

Those middle-class students who took to the streets in 1968 sought to make common cause with the oppressed.

Yet the impact of their posturings has been to reduce social mobility and to trap people in lives devoid of cultural nourishment.”

Le Monde hails Sarkozy’s “liberal (i.e. pro-market) clarification”.

According to the paper, the French president will be much more forceful and coherent in reforming the economy his second year in office than he was in his first.

Le Monde praises the centerpiece of his new program, the “law on economic modernisation”, saying it marks a “resolute acceptance of supply side policy.”

Would that it was true. I too support the bill, which aims to encourage an entrepreneurial society by cutting red tape, strengthening competition, and generally putting consumers first.

But I doubt that the move will deliver the “rupture” that Sarkozy once promised – for two main reasons.

The first is that he may already have blown his chances. During his first six months in office, Sarkozy wasted a strong popular mandate for change and huge majority.

He implemented some reforms but balked at radical measures such as scrapping the 35-hour week, and shied away from confrontation with vested interest.

I can’t see how he can re-invent himself as an effective modernizer after running out of political capital.

But the more fundamental reason to be skeptical is that Sarkozy is not a conviction politician in the mould of Reagan or Thatcher.

He is only a lukewarm reformer. The Economist hit the nail on the head when it wrote recently:

“For at the heart of Sarkonomics is a contradiction: Mr Sarkozy promises both to create an entrepreneurial, risk-taking society and to protect workers, factories and jobs.

When he was running for president, his campaign stop of preference was the factory floor, where he would surround himself with industrious-looking men in hard hats and promise never to let France lose its factories, because, “Once the factories go, everything goes.”

He may call himself a liberal but he also believes in national champions, and in a strong industrial policy to defend them.”

“You cannot bring prosperity by discouraging thrift.
You cannot help small men by tearing down big men.
You cannot strengthen the weak by weakening the strong.
You cannot lift the wage earner by pulling down the wage payer.
You cannot help the poor man by destroying the rich.
You cannot keep out of trouble by spending more than your income.
You cannot further brotherhood of men by inciting class hatred.
You cannot establish security on borrowed money.
You cannot build character and courage by taking away man’s initiative and independence.
You cannot help men permanently by doing for them what they could and should do for themselves.”

Rev. William J. H. Boetcker, 1916

(PS: this quote is sometimes wrongly attributed to Abraham Lincoln.)

When it comes to economic policy, I am impressed by none of the candidates for the US presidency.

But on energy, their proposals are downright idiotic.

With gas prices rising all the time, John McCain is calling for a moratorium on the 18.4-cent federal gas tax.

This is a misguided solution to a non-existent problem.

The rise in US gas prices is relative: Europeans would love to pay only $4 a gallon. And then is it such a bad thing?

With everyone, from Bush to environmentalists, rightly complaining that America is “addicted to oil”, lower demand should be welcome.

And McCain wants to spur consumption through lower prices…

Barack Obama, for his part, wants a new tax on the ill-gotten profits of those nasty oil companies.

This idea is even sillier than McCain’s. As the Wall Street Journal wrote recently:

“You may… be wondering how a higher tax on energy will lower gas prices. Normally, when you tax something, you get less of it, but Mr. Obama seems to think he can repeal the laws of economics.

We tried this windfall profits scheme in 1980. It backfired. The Congressional Research Service found in a 1990 analysis that the tax reduced domestic oil production by 3% to 6% and increased oil imports from OPEC by 8% to 16%.

Mr. Obama nonetheless pledges to lessen our dependence on foreign oil, which he says “costs America $800 million a day.” Someone should tell him that oil imports would soar if his tax plan becomes law.

The biggest beneficiaries would be OPEC oil ministers.”

The Walll Street Journal also notes that the energy industry’s earnings are not as outrageous as people think.

Profits from the oil and natural gas industry over the past year were 8.3% of investment, while the all-industry average is 7.8% - and this was a boom year for oil.

An analysis by the Cato Institute found that between 1970 and 2003, the oil and gas business was “less profitable than the rest of the U.S. economy.”

As the journal writes: “These are hardly robber barons.”

Desparing to make any sense of the frontrunners’ energy programs, I turned to Hillary Clinton – who claims executive experience a pragmatic approach.

And it turns out she wants both a McCain’s style gas-tax moratorium and and Obama-style windfall tax on companies.

Far from repudiating her rivals’ follies, she compounds them.

How can such smart people trained at the best schools in the world (well, for Clinton and Obama, at least) come up with such dumb ideas?

The answer, of course, is that they want to get elected.

The idiocy of their proposals betrays not so much their own as their constituents’ ignorance.

I see this as another vindication of Bryan Caplan’s theory of “voter irrationality”.

The Wall Street Journal piece quoted is here. I recommend Caplan’s brilliant website.

“Food is a vital issue that must not be left solely at the mercy of the laws of the market and of international speculation”.
Michel Barnier, French agriculture minister

_________________________________________

Enemies of economic liberalism are blaming the current food crisis on markets.

Mass hunger has been added to the evils that capitalism is loosing upon the world - on top of poverty, exploitation, inequality, health hazards, and climate change.

This, of course, is nonsense: high food prices have nothing to do with selfish speculators or free markets. The reason is rising demand, mostly from fast-developing countries like China and India.

Governments, from alleviating the problem, have so far made it worse.

In the rich world, they are still paying farmers not to grow crops, not an ideal way to boost supply.

The US and the EU are also blocking food imports and subsidizing exports, which is destroying farming in the developing world.

And as everyone except officials seem to realise these days, subsidizing biofuels is crazy.

In America, ethanol soaks up almost 20% of corn production, and encouraging ever more farmers to grow for fuel, not food.

The EU, which mostly castigates US policies when they make sense, is following suit.

In the developing world, governments have dealt with the crisis in equally idiotic ways.

They have fixed prices, punished “hoarding” (punishable by life imprisonment in the Philippines), and restricted exports.

All of this, of course, reduces incentives for farmers to grow more, making the problem worse.

Government could and should do something to alleviate shortages and stave off mass poverty, but interfering with price signals and castigating “speculators” is exactly the wrong way to go about it.

Here are a couple of good articles I’ve read on the subject recently – in the The Economist and The Wall Street Journal.

Let me know about any other I may have missed.

During my recent trip to the Balkans, I was struck by the attitude of people towards communism.

In that country, which endured the most stifling brand of totalitarianism for decades, there is no sense that its passing was a milestone.

Communism is not popular, but neither is it regarded as absolutely evil, like Nazism in Germany, or fascism in Italy or Spain, or apartheid in South Africa.

I visited a fortress that was used as a jail and torture center until 1968. The row of empty cells contained no explanation, and conveyed none of the horror they had seen. Robben Island it wasn’t.

In Enver Hoxha’s house – which has been turned into an “ethnographic museum” – there was no sense that one of Europe’s worst dictators lived there.

I could not imagine Salazar’s family home being turned into the replica of an ordinary Portuguese house in the early 20th century. When I asked the guide how the people view Hoxha, she said some remembered him fondly, others not.

She pointed to a bunch of flowers placed on a table by local admirers for the 23rd anniversary of his death.

Some of the people we spoke to were not shy about noting some of the achievements of the old regime. One pointed out that it had educated a country that was 80% illiterate in 1945. There was no crime or prostitution under the communists, he said.

Our hosts described Hoxha as a tyrant, but they insisted that nothing was black and white. Yes, socialism was an abject failure, but it had positive aspects.

The worst our guide was willing to say about it was: it looked great on paper, but the reality didn’t match the ideals. Unlike fascism, the ideology itself is not stigmatized.

This, of course, is partly a question of generation. Younger people did not mention the positive side of communism. But neither do they see 1992 as a watershed.

All, young and old, insist on the corruption of the current leadership. You might say: it is understandable for people to highlight the problems they face - those of today, not those of the past.

Current leaders don’t deserve to be thanked just because they are not communist. All very true. Similarly, it would be absurd to ignore the failings of the ANC for the sake of the past struggle against apartheid.

But the comparison with South Africa highlights a big difference. Few of those who criticize Mbeki, Zuma et al would have anything good to say about apartheid; the same is not true of communism is that small country.

Communism, on the other hand, is controversial. It is not taboo, something that must be condemned in polite society – that would attract the comment “inveigh against it” in Flaubert’s Dictionary of Received Ideas.

I see this as another example of what Jean-François Revel called communism’s “most favored totalitarianism” status.

Before taking a two-week vacation, I thought I’d mention a leader by The Economist, in which the paper clarifies its position on financial regulation.

In recent weeks it had appeared to look favorably on much stricter controls, but this piece warns officials against overdoing it:

“Regulators cannot know how trust will ebb and flow as new markets develop the experience and practice they need to work better. They therefore cannot predict the peril of new ideas. They have to let new markets develop, or stifle them.

The system learns—dangerous junk bonds are reborn as respectable high-yield debt; bankers will now be scared of extreme leverage—but it is delicate, as the world learned last summer. The regulator is condemned to muddle through.

The notion that the world can just regulate its way out of crises is thus an illusion. Rather, crisis is the price of innovation, so governments face a choice.

They can embrace new financial ideas by keeping markets open. Regulation will be light, but there will be busts. The state will sometimes have to clear up and regulation must be about cure as well as prevention.

Or governments can aim for safety and opt for dumbed-down financial systems that hobble their economies and deprive their people of the benefits of faster growth. And even then a crisis may strike.”

The whole leader is here, and links to an interesting article on financial regulation.

PS: Never mind the text opposite. I don’t have time to do any translating before leaving, and just copied and pasted something in French to fill the space.

I profess my ignorance, for once (I usually keep quiet about it).

Would someone help me understand what’s so new about the current financial crisis?

Why should the classic pro-market view on such things – that the state usually makes things worse by stepping in – no longer be valid?

This view was popularized by Milton Friedman, who argued in his book “Free to Choose” that the Great Depression had been caused not by flawed markets but by the policies of the Federal Reserve.

The regulatory system, Friedman wrote, tends to blame

“all problems on external influences beyond its control and takes credit for any and all favorable occurrences.

It thereby continues to promote the myth that the private economy is unstable, while its behaviour continues to document the reality that government is today the major source of economic instability.”

Some commentators have used similar arguments in the context of the present crisis.

Alvaro Vargas Llosa, in the New Republic, argued that the Fed had created conditions for the turmoil through credit expansion, which encouraged reckless lending.

But the underlying problem, as Vargas Llosa sees it, is not so much the Fed’s decisions as its very existence: a financial system underpinned by the officials wielding monopoly power can never be as stable as one where private banks are free to issue money.

Vargas Llosa, of course, knows that abolishing the Fed but is inconceivable right now, but nevertheless calls for bold thinking:

“There are less dramatic measures that can be taken on the road toward a definitive solution. The most obvious one is to simply stop using the Federal Reserve to inflate the currency.”

The strange thing is, this classical view of the crisis is very much in the minority – even among analysts that are usually pro-market.

In The Wall Street Journal, Arthur Levitt Jr blames new fancy financial instruments for the debacle:

“The combination of structured financial products and subprime mortgages fundamentally changed the lending business.

No longer did those doing the lending have to expose themselves to the credit risks of the borrowers. Instead, they packaged their loans for sale to the investing public.

With no exposure, loan originators offered mortgages to just about anyone they could find.”

Levitt does not exonerate regulators, but he says their basic failure was not too much supervision, but too little – “regulatory underkill”, as he puts it.

The Economist, meanwhile, defends the emergency measures taken by the Fed to tackle the crisis: helping JP Morgan acquire Bear Stearns, lowering the discount rate, and offering $200bn in short-term loans to investment banks, etc.

The Financial Times‘ Martin Wolf – one of the most eloquent advocates for globalization – also seems to take a positive view of the Bear Stearns rescue and other moves by officials, and argues that the era of financial deregulation is over.

His point is best encapsulated by a banker he quotes: “I no longer believe in the market’s self-healing power.”

For these analysts, the rules of the game have radically changed: the financial system has become inherently unstable, and it is incumbent on enlightened officials to save it against itself.

I’m not dismissing such ideas out of hand.

But before I turn my back on Milton Friedman and give up on a central tenet of my faith in markets, I want to make sure it is truly obsolete.

You see, I have a sneaking suspicion that these guys are rushing into the protective arms of the state – as people tend often do in times of trouble. Help anyone?

I’m watching the race for the Democratic nomination with all the interest of a Liverpool Fan for the struggle between Manchester United and Arsenal in the English Premiership (except, of course, that McCain, unlike my favourite club, has a chance of winning.)

From this detached position, I confess a preference for Barack Obama – although this is due to Clinton fatigue on my part rather than an active appreciation of their rival.

The same reflex leads me to cheer any opponent of Manchester. OK: I’m dropping this tired metaphor NOW.

But such lack of enthusiasm for either candidate is much more of a problem for a liberal American than it is for a conservative European.

To get an idea of how frustrating it can be to feel cold about a candidate you’re supposed to love, I strongly recommend Jonathan Rauch’s latest column about his own “Obama resistance complex”.

As usual, it’s eye-opening and highly entertaining.