Believe it or not, there were people before the crisis who believed there’d never be another recession. Of course, there are always people who act as if there’ll never be another recession — e.g. the suckers who buy at the top of the market just before the crash. But I’m referring to a more select group — those who’d thought about economic stability as a policy challenge and concluded that the central banks had got it licked.

Suggested Reading

The most important policy we don't talk about

By Peter Franklin

The source of their confidence was the decision of western governments to transfer control over interest rates to independent monetary experts. The hope was that, free from the meddling of fly-by-night politicians, Al Greenspan et al would keep the money supply just tight enough to tame inflation, but never so tight as to strangle growth. It was called the ‘Great Moderation’ — a Goldilocks economy skipping along happily ever after.

But we all know how that turned out, don’t we boys and girls? Goldilocks ran into some very mean bears and was never seen again.

Or was she? The Great Recession (in both the US and UK) ended 10 years ago – and there hasn’t been a recession since, not even a little one.

This is unprecedented, says The Economist:

“Around the world investors, businesses and central bankers are grappling with a startling fact: at the end of July America’s economy will have been growing for 121 months, the longest run since records began in 1854, according to the NBER, a research body.”

No one is talking about a Great Moderation this time around. Indeed, some markets are showing signs of nervousness. And yet other indicators are still positive — not least job creation:

“…in June America’s economy created a whopping 224,000 new jobs, more than twice as many as needed to keep up with the growth of the workforce. “

There are all sorts of things that could still go badly wrong: war with Iran; a chaotic Brexit; a renewed Eurozone crisis; an unforeseen build-up of instability in the global financial system; or a delayed reaction to all those doses of quantitative easing.

Suggested Reading

Why low interest rates poison the economy

By Peter Franklin

Nevertheless, it’s clear that the economy isn’t behaving the way it used to. But then why should it? Western economies have gone through big and permanent shifts in the past. There’s no reason why they shouldn’t do so again.

We speak of economic ‘growth’ without thinking through the implications of the organic metaphor. In growing, living things don’t just get bigger over time they undergo qualitative changes too. A tree, for instance, isn’t just a larger version of sapling, let alone the seed the sapling grew from. Or take human development: an adult behaves differently from a teenager (or ought to), who in turn behaves differently from a primary school age child, who behaves differently from a toddler.

Perhaps economies are like people in this respect. They grow, and also grow-up. It would be nice to think that we’re moving on from the exhausting tantrums and meltdowns of the toddler economy into something a little more self-controlled.

The Economist notes that while Americans are living through the longest economic expansion on record, the average rate of GDP growth in this period has been significantly lower than in the three previous expansions (2.3% versus 3.6%). But is slower growth a price worth paying for greater stability?

Not in the long run, it isn’t. Seemingly small percentage differences in annual growth will make a big difference when compounded over generations. If you care about the standard of living your children or grandchildren might enjoy when they’re your age now, then the difference between 2.3% and 3.6% is chasmic.

Even in the short run, economic stability isn’t so great if it comes at the expense of political stability. If there’s not enough growth to make everyone feel they’re getting on in life, then you can bet that those missing out won’t he happy about it —A especially if the wealthy (plus a larger cohort of college-educated knowledge workers) take the lion’s share of what’s available.

One theory is that the skewed distribution of the proceeds of growth is what’s causing the long, but slow, expansion that we’re living through. It all starts from the fact that the rich save a greater proportion of their money than the non-wealthy. This means lower levels of consumption and heavier flows of capital looking for a home. Therefore economies are less likely to run short of consumable items or capital. Prices stay low. Interest rates stay low. And the economy strolls on.

Suggested Reading

Is too much money a bad thing?

By Peter Franklin

The catch is that for too many workers, wages also stay low. So, instead of inflationary pressures building up in the economy, it’s resentment in the body politic.

Can we shift the economy into a higher gear? It would help if the rich could be persuaded to put more of their money into productivity-boosting investments. Smart reforms to the tax system might just do the trick — but only if enough innovations worth investing in actually exist.

The economy’s strange behaviour may reflect a slowing down of technological progress. While we’ve become much better at matching supply to demand and thus avoiding inflationary crunches, some economists fear that we’re not making the big breakthroughs that drove up productivity and wages in 20th century.

If this is true and permanent, then our economy is not leaving its infancy behind but entering its dotage.

The gilets jaunes protests in France are a case in point. Once it was clear that Emmanuel Macron would not be toppled, the British press shifted its attention back to Brexit. With his abysmal approval ratings now recovering, the French President looks much safer in his job than, say, Theresa May.

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How the gilets jaunes could save Macron's skin

By John Lichfield

That, however, is not the end of the story. For a start, the protests are far from over, and while the British may joke that ‘the French are always revolting’, there’s nothing typical about the events of the last few months.

In an extraordinary essay for the American Interest, Claire Berlinski describes the immense cost of the protests so far:

“According to the police, there have so far been 1,700 serious injuries among the protesters, and 1,000 among law-enforcement officers. In no normal social movement in France do you have violence like this.”

She does add, however, that the “police may well be making things worse by using weapons that cause awful wounds.”

Then there’s the economic cost:

“It is hard to put a precise figure on the economic damage the rioters have done so far. From the Arc de Triomphe to Place de la République, windows have been shuttered, covered in plywood, or smashed. Before the New Year, professional and business associations were suggesting the figure exceeded $15 billion…

“According to the Ministry of Labor, some 58,000 people have lost their jobs or been partially unemployed by the crisis.”

Berlinski also mentions the targeted vandalism of “roughly half of France’s traffic radar detection systems” – considered fair game because the protesters believe “the state was running a speeding-ticket racket.”

Clearly, the protesters consider Macron’s presidency to be fair game too. Indeed, the extent of their fury would suggest that the government is not just unpopular, but also, in their eyes, illegitimate.

But on what grounds? Macron was elected by a two-to-one margin and his supporters have a thumping majority in the French Assembly. Theresa May, Angela Merkel and Donald Trump can only dream of so convincing a mandate.

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Flyover France – the forgotten frontier

By Peter Franklin

But, as Berlinski acknowledges, there is another narrative:

“…critics have been swift to say that Macron is not popular and does not have the support of the masses. This is true: Macron was elected by white-collar professionals who amount to about 20-30 percent of the electorate. He won by default, because the alternatives were so disgusting.”

This is the problem with the French electoral system: it is a generator of negative votes. Both the President and members of the Assembly are elected through a two-round voting process – the top two candidates from the first round going through to a run-off in the second round. This encourages voting for protest parties in the first round because voters know that they can make a more serious decision in the second round. However, that second round may be between two candidates that most of the electorate didn’t vote for in the first. For instance, in the 2017 Presidential election, the combined first round vote share for Emmanuel Macron and Marine Le Pen was just 45 per cent. Thus in the second round, most voters are effectively casting another kind of negative vote – against whichever of the final two candidates they like the least.

But it gets worse. The profile that the first round gives to protest parties has enabled the hard Right and hard Left to build their strength. Even in Presidential elections, there is a very realistic possibility of a protest candidate making it through to the run-off (as happened with Marine Le Pen). This leaves the moderate majority of voters with no choice but to elect the establishment candidate.

Berlinski says this is no argument against Macron’s legitimacy – “a vote against is as valid, electorally, as a vote for.”

Constitutionally, she’s right – but democratically, it’s a disaster. Of course, no electoral system is perfect. First past the post and proportional representation systems have their flaws, but by-and-large they encourage people and communities to make a positive choice for whoever they most prefer.

Suggested reading

Could Brexit fix our broken politics?

By Giles Fraser

The French system, though, is an accident waiting to happen. A slightly different first round result in 2017 could have presented the voters with a final choice between two extreme candidates. What actually happened wasn’t as bad, but is still dangerous. Everyone can see that the system hands all of the power and most of the representation to the ‘knowledge class’, while excluding those angriest about being left behind.

None of this is deliberate – the rules were drawn up decades ago – but they couldn’t be better designed to stoke up resentment.

Brutalism’s trendiness won’t be damaged by the fact that Donald Trump doesn’t care for it. His particular bugbear is the J Edgar Hoover Building, the FBI’s HQ – just down the road from the White House.

This is how Jonathan Swan reports the story for Axios:

“In the midst of one rant about the FBI, he lit into the building. ‘Even the building is terrible,’ he observed to an Axios source. ‘It’s one of the brutalist-type buildings, you know, brutalist architecture. Honestly, I think it’s one of the ugliest buildings in the city.’”

Swan goes on to report another source as saying that the President wants to personally oversee a redevelopment at an “excruciating level of detail.”

Further reading

Free minds: Jane Jacobs, a fearless foe of all things prefabricated

By Peter Franklin

Commenting on the story for Slate, Henry Grabar associates brutalist buildings with an “idealistic vision of what government can and should take responsibility for”. If, however, you don’t like modernism then, watch out, you could be a fascist:

“The far right appears to be leading a broader backlash against architecture self-evidently built with 20th-century technology. Such structures, in addition to their perceived deviance from the ‘Western traditions’ venerated by American fascists, represent the tastes and lifestyles of America’s treacherous urban elite.”

The relationship between fascism and architecture is far from straightforward. On the one hand, there’s the fascist predilection for monumental pseudo-classical designs (for instance, Hitler’s plan for the redevelopment of Berlin – ‘Welthauptstadt Germania‘); on the other hand, fascists were also promoters and patrons of modernist architecture. For instance, the Casa del Fascio in Como is regarded as a model of 1930s modernism (and bears more than a passing resemblance to some of the buildings I see going up in London today).

And let’s not forget that Le Corbusier, a pioneer of various modernist styles, including brutalism, was also a fascist and an antisemite. Should we separate the man and his work from his politics? Personally, I’m disinclined to – not when his architectural vision so vividly embodies the totalitarian impulse to erase the past and dominate the future.

Grabar, for his part, is focused on the present. He invites us to contrast the “bold, uncompromising shape” of brutalist buildings and their “dynamic patterns of sun and shadow” with the “reflective expanses” of the blank, glassy towers of contemporary corporate architecture (as exemplified by New York’s Trump Tower). “All that reflective glass,” he says, is a “metaphor for the hidden flows of capital that make the towers pencil out.”

He compares the aesthetic to “the aviator sunglasses favored by state troopers nationwide”. That’s an appropriately uncompromising image of power, though I’d personify such a building not as an officer of the law, but as a rich jerk in a sharp suit and mirror shades – the kind of guy who looks down on the ‘little people’, while avoiding all contact with them. Brutalist buildings, in clear distinction, very much want to involve themselves in our lives (though, admittedly, the same could be said of a mugger).

Further reading

The false promise of the vertical city

By Peter Franklin

Grabar quotes the architecture critic Alexandria Lange:

“My theory about why we love concrete architecture now is simple: It has body… Even as we consume design in pixels, we long for spaces where we can feel the weight of the world.”

He concludes with a related observation of his own :

“In a world wrapped in glass that masks where weight really falls, a big chunk of concrete sometimes just feels honest.”

Honesty is a personal characteristic, so let’s go back to the idea of buildings as people – and how they ought to behave. When in the presence of others, a considerate individual should neither ignore those around him, nor impose himself upon them.

That might seem an old-fashioned idea of good manners, but it would explain why old-fashioned buildings succeed where the towers of glass or concrete so miserably fail.