Watch the wheels

Last Monday, the National Bureau of Economic Research (NBER) announced that its Business Cycle Dating Committee had just established that June 2009 marked the trough in business activity thus marking the official end of the recession. The NBER’s release, however, warned against misinterpretation of its findings.

Their words: “In determining that a trough occurred in June 2009, the committee did not conclude that economic conditions since that month have been favourable or that the economy has returned to operating at normal capacity. (…) Economic activity is typically below normal in the early stages of an expansion, and it sometimes remains so well into the expansion.”

Commentators have sniggered at this scholastic note: “The committee decided that any future downturn of the economy would be a new recession and not a continuation of the recession that began in December 2007.” Though it is true that it is a mere corollary of their “decision” that another recession has ended, the point of the statement is lost if not taken in the context of the NBER’s longer-term view.

The 1920-born NBER (16 of the United States’s 31 economics Nobel laureates have at some point been its researchers) has traditionally had a long-term interest in the business cycle. Wesley Mitchell, whose classic work on business cycles appeared in 1913, guided the NBER between 1920 and 1945. With the Great Depression (that started in 1929 and whose end in the US appeared to begin in the spring of 1933), looming large in its early research history, the NBER continues to be concerned with how the business cycle works. The length of this recession (at 18 months the longest one since WWII, with the 1973-75 and 1981-82 episodes as runners-up with 16 months) has revived interest in the Great Depression.

Especially interesting to recession watchers today is the long tail of the Great Depression. In fact, the US gross national product did not return to the 1929 level before WWII and its unemployment rate – although down from the 25 per cent of 1933 – was still around 15 per cent in 1940. Indeed, business observers such as Richard Davis of the Consumer Metrics Institute (CMI), visualise the recession of 1937-1938 as “a recession nested within the Great Depression”.

“The economy,” says Davis, “had been improving significantly from early 1933 through 1936 before the wheels came off the recovery in mid-1937.” Back in the present, the CMI – whose daily indexing of US consumer demand is closely watched by investors with a vital interest in the state of the wheels of the current recovery – warned, just over a week ago, that “consumer demand is still contracting, albeit at a slower rate”. More dramatically, it added that though the “flood-gauge may have just peaked, the downstream damage remains inevitable – it simply hasn’t arrived yet”.

The NBER was on the frontline in 1937, providing Roosevelt with data about the new downturn. Today, its concern with underlining as precisely as possible the point of demarcation between the recession whose tail we are experiencing and any future one, is not intended to encourage premature cries of pleasure. On the contrary, it reflects the NBER’s interest in understanding the tail ends of business cycle contractions. The underlying concept is that you cannot understand (and therefore cannot prepare yourself for) recessions unless you understand business cycles.

President Obama was right in pointing out that the unemployed and all those that have suffered and continue to suffer from the recession will not be consoled by the news that the recession is technically over. They will hardly jump for joy when they learn that a committee of academics has “decided” that what it defines as a recession ceased fitting its definition of it in June 2009.

Earlier this month, the Bureau of Labour Statistics announced: “The number of unemployed persons (14.9 million) and the unemployment rate (9.6 per cent) were little changed in August (2010). From May through August, the jobless rate remained in the range of 9.5 to 9.7 per cent.”

Further: “In August, the civilian labour force participation rate (64.7 per cent) and the employment-population ratio (58.5 per cent) were essentially unchanged. The number of persons employed part-time for economic reasons (sometimes referred to as involuntary part-time workers) increased by 331,000 over the month to 8.9 million. These individuals were working part-time because their hours had been cut back or because they were unable to find a full-time job.”

On September 20, the same day as the NBER’s release, the Bureau of Economic Analysis stated: “Personal income in 27 states has now climbed above the current dollar level reached before the recession. Excluding transfer receipts (such as unemployment compensation and social security retirement benefits), however, personal income in only two states (…) has returned to that level.”

What has all this got to do with us in Malta where, as usual, everything is doing just fine and where whatever is just short of performing perfectly is due to what Labour governments may or may not have done 12 to 14 or even 23 to 39 years ago? A country like ours, completely dependent on foreign markets for our goods and services, must watch the wheels of the recovery very carefully and gear itself for the tougher world economy that is emerging from the recession.

Readers are encouraged to read the texts I quoted. They may be accessed at www.nber.org/cycles/sept2010.html, www.consumerindexes.com/Overview.pdf, www.bls.gov/news.release/empsit.nr0.htm, and www.bea.gov/newsreleases/regional/spi/spi_newsrelease.htm.

The original of this article appeared in Dr. Vella’s regular coloumn on The Times of Malta on September 27, 2010 and may be accessed at http://www.timesofmalta.com/articles/view/20100927/opinion/watch-the-wheels

Cumin, pepper and other spices: roots of Maltese racism

Remember Paola Maijstral, Pappy Hod’s Maltese wife in Pynchon’s V, saying that the “Maltese think they are a pure race and the Europeans think they’re Semitic, Hamitic, crossbred with North Africans, Turks and God knows what all”? One still meets Maltese readers of this great American novel who are irritated by the reminder that not all in the West regard us – a form of life endemic in this “stone fish (Malta) and Għawdex and the rocks called Cumin-seed and Peppercorn” – as quite Western. This irritation, fuelled by our own unspeakable subterranean doubts regarding our own identity, drives some of us to racism. It is as if by despising those we regard as not Western, we suppress our lack of confidence in our claim to be Western.

Get back to V after you’ve read Colin Calleja, Bernard Cauchi and Michael Grech’s Education And Ethnic Minorities In Malta. At 51 pages, it is a small booklet but a step forward for the self-understanding of those of us that identify themselves as Maltese. This study was commissioned by the Malta partner of e-Spices (Social Promotion of Intercultural Communication Expertise and Skills), a European project involving partners from Belgium, Germany, Greece, Malta, Poland and Turkey.

Mr Calleja, is European coordinator of the Let Me Learn project, has worked in Sudan with the Christian doctrine society MUSEUM and teaches at the Faculty of Education. Mr Cauchi, formerly assistant coordinator of Let Me Learn, teaches history at St Albert’s College. Mr Grech lectures philosophy at the Junior College.

In their words, this study, “explores the relation between institutionalised education and ethnic minorities”. This issue “has for long been considered as irrelevant, owing to a prevalent mistaken belief as to the common ethnic and historical origins and character of the inhabitants of these islands”. They note that “Maltese cultural models tend to promote an essentialist understanding of Maltese history, identity and civilisation”. Referring to a previous paper by Mr Grech, they characterise these templates as a “set of properties and features… believed to be rigid, constant and inflexible”.

These properties and features are promoted by local elites as being eternal, include (quote) “the Catholic religion, a particular language (Italian or, later on, Maltese), descent from a particular ethnic group and certain characteristics like generosity and valour”, the latter imagined as “common to all Maltese”. Within this self-understanding, one “cannot be Maltese and not exhibit these characteristics”. According to this world view, close encounters of our culture – conceived of as always having been as it is now imagined to be, homogenous and monolithic – with another, cannot take place “without corrupting or obliterating” our own.

Our imaginary cultural oneness requires us, firstly, to repress any memory of disturbing elements in Malta’s own culturally and ethnically complex history – even a cursory study of which is enough to dispel any dream of uninterrupted homogeneity – and, secondly, to construct an “other” or, even better, an “enemy”. The authors cite Koster’s Prelates And Politicians In Malta. Under the Order’s regime, he argues, the idea of a common enemy – a confused amalgam of Turks and Arabs, Moslem and black – provided the Maltese “with a reason to accept the rule of a foreign oligarchic clique: it protected them against the ‘horrible Muslims’”. Any extant memories of a Muslim past, therefore, had/has to be extinguished.

The authors point out that, under British rule, Maltese elites demanding a share of power invariably emphasised the otherness of non-European subjects of the Empire and our cultural oneness with our foreign rulers. Admittedly, it took the elites a while to come to terms with the mother country’s own linguistic and religious otherness. Eventually, however, an increasingly idiosyncratic English language replaced Italian and the Protestant bogey was exorcised. Happily, we could now again concentrate on the ultimate “other” and “enemy”, the same Saracen fought by our ancestors under the Knights (albeit the Order regarded the natives as an inferior race). Finally Malta was where “all history seemed simultaneously present” (again, Pynchon).

In these cultural circumstances – which we may dislike but which are nonetheless real – the inflow of predominantly sub-Saharan African asylum seekers since 2002 has caught us psychologically unprepared. Although African immigrants constitute only 1.4 per cent of the population, although they are a fraction of all those of them that landed here, the sight of biblical boatloads has triggered irrational fears of Africanisation and – although many of them are Christians and Catholics – of an Islamisation of this country.

These are the ideal circumstances for racism. This is especially true in times of slow economic growth when workers are subtly and not so subtly encouraged to blame immigrant labour for the increased uncertainty of their future (one way of discouraging them from demanding a wage that enables them to cope with the cost of living) especially by employers with an outrageous record of disrespect for employment laws. It is not enough to condemn racism for it not to spread. The migration of thousands of workers from the parties of the left and centre-left in Europe to racist and xenophobic parties of the far right is principally due to the fact that little was done to address the fears of employees, unemployed and self-employed for their livelihood.

This article appeared in Dr Vella’s regular column on The Times of Malta on September 13, 2010. The original, as well as the online debate it stimulated, may be accessed at  http://www.timesofmalta.com/articles/view/20100913/opinion/cumin-pepper-and-other-spices