Left wing Sadopopulism

I’ve had a go at Sadopopulism of the right before, but I think its also necessary to highlight the shortcomings of sadopopulism of the left as well, as it has its own brand of the same, which shares many of the same problems. Namely that such policies are basically unworkable and would do far more harm than good.

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The Horseshoe theory of politics puts the extreme’s of the left and right closer than most assume…

Firstly it has to be acknowledged that the far right and left are often closer than they would like to acknowledge. This is how you can end up with Trump enacting trade tariff’s, which some left wing anti-globalisation activists have been previously calling for. Or how Alex Jones can interview Noam Chomsky and it doesn’t descent into fisty cuffs. How neo-nazi’s can show up to an event organised by the nation of Islam. Or how some leftwingers will pour cold water on anything they hear from the mainstream media, yet much like Trump, they’ll swallow whole and verbatim anything coming out of RT or other pro-Putin propaganda mouthpieces.

However they all share something else in common, they are angry. And in that anger they’ve latched onto various new age myths and promote policies that are basically unworkable and generally non-starters from day one. And with the left wing populist of Five star and right wing populist of the Northern league a possible future government of Italy, we could well see such a horseshoe government forming sooner rather than later.

Both parties are anti-EU and would like to pull Italy out of the EU and the euro. Actually I suspect many in Berlin would see a silver lining to that. In truth they were reluctant to let Italy into the euro in the first place and events seem to have proven it was a big mistake letting them join (at least in terms of how the euro was initially set up and administered). If our horseshoe government were to follow through on this, the likely outcome would be national bankruptcy.

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The irony is that the Italian economy, while still a bit ropy, is starting to show signs of recovery

Italian banks are only open for business because they are propped up by the ECB. If that life line were to be cut off, then they’d be unable to service their debts, international lenders would cease to lend and call in loans pretty quickly, capital flight would start in earnest, forcing most of Italy’s banks into bankruptcy. Cash machines would soon thereafter stop issuing money, credit cards would be stopped and Italian companies would lose their line of credit, forcing even healthy businesses to close. Deprived of EU funds and with imploding tax revenue, the Italian state would be unable to pay its civil servants, prompting a massive downsizing of the Italian public sector overnight. They would also likely be forced to stop paying for things like social welfare. And once a new Italian currency was issued, it would lose value pretty quickly. So anyone with savings or a pension would see all of that wiped out.

There are some who argue that long term Italy would be better off going back to the Lira and their old pre-euro economic model. However, that was then, this is now. Back then Italy was basically Europe’s China, churning out lots of cheap plastic stuff, shoes and clothes, constantly devaluing their currency to make themselves competitive. That model won’t work any more because A) We have China. B) We also have Eastern Europe and C) both China and Eastern Europe realise that being nothing more than a low cost manufacturing base is economically unwise long term and are desperately trying to diversify their economies.

There are various alternative economic models Italy could adopt, after all its hardly in a unique position, there’s plenty of other Europe countries who’ve faced the very same problems recently. There’s the Irish model, the German one, the Scandinavian model and so on. However, regardless of what economic model Italy adopts, regardless of whether they stay in the EU or not, they’ll need to get their house in order and bring some level of stability to the economy. Which will mean undertaking certain unpopular decisions. And that’s pretty much what the technocrats who just got voted out of power were trying to do.

In short if you are Italian and you think things are bad now, leaving the euro would make things an order of magnitude worse. And we saw this happen before with Greece. The Greeks under Tsipras, went to the edge of the abyss, then with the abyss staring back at them, they bottled it (possibly because the Greek civil service managed to talk Tsipras down), crept back from the edge and ended up accepting terms worse than they’d rejected a few days earlier.

Now don’t get me wrong, I think the EU handled the Greek crisis very badly. It was too little too late and the EU (notably Merkel) need to take some share of the blame for this. However, the Greek’s also have to acknowledge that they also bore some responsibility. For Tsipras to then go and start dredging up the ghosts of world war II just to score a few points has to be one of the worst examples of Godwin’s law in action ever. That’s just plain bad manners. And for the leader of any nation, unprofessional.

I’ve come across conservatives using the term quite a bit of “doing a Greece”. By which they refer to their belief in the myth that Greece is in an economic mess because a socialist government mismanaged its economy, spent money they didn’t have and allowed the public sector to become massive bloated and inefficient. I’ve use the term myself, but I don’t mean what conservatives mean by “doing a Greek”.

In truth the problems for Greece (good myth buster here) were caused by a conservative neo-liberal government. Prior to 2015 Greece had never had a left wing government in its entire history. The conservative government in Greece took advantage of a boom to cut taxes, while encouraging businesses to spend and invest recklessly, often deregulating when any pesky laws got in the way. This caused the economy to overheat, which led to higher inflation. Which put pressure on the public finances. They also conspired with the likes of Goldman Sachs to help hide the scale of Greece’s debts (I mean you can always trust a banker, can’t you?). In many ways Greece made the very same mistakes that Japan made in the 80’s & 90’s and the same mistakes that the US and the UK are currently making. Its just that the scale of the Greek economy meant they could only keep it up for so long.

Either way, yes the EU screwed up but so too did the Greeks. But the populist policies of Syriza failed because they were unworkable from day one. They were wedded to the idea that Greece could give the two fingers to the rest of the world without suffering any blow back. Which of course it couldn’t.

Had the Greek’s actually jumped however, as the Italians might, Venezuela provides us with a vision of the likely results, where the economy is imploding as its government lurches towards dictatorship. Again many on the right point to the failure of the Maduro government as “proof” that socialism doesn’t work. That his reforms only worked because of the high oil prices at the time (and thus any country that doesn’t have vast oil reserves can’t afford such socialist policies).

1280px-Crude_oil_prices_in_dollar_and_euro

The bulk of Chavez’s reforms occurred in the period 1999 to 2003, when oil prices were on average lower than the current oil price

However, the bulk of Chavez’s reforms occurred immediately after he came to power, around the period of 1999 to 2003, at which point the international oil price was actually lower than its current price (it did gradually creep up, but it was much lower than the current price for most of his first term when the bulk of the reforms occurred). So those arguments don’t quite line up with the facts. And there was limited capital flight out of Venezuela until recently.

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Recent capital flight from Venezuela, slow until recently, then the rush for the exits!

In truth most of Chavez early reforms weren’t really “socialism” (then again to republicans “socialism” is everything to the left of John McCain) they were a combination of medicare/medicaid, social welfare and maybe getting the rich to pay a little bit of tax once in a while. Where things started to go wrong was in the wake of the US supported coup against Chavez. Since then the Bolivarian regime, under Chavez and later Maduro has been adopting a number of authoritarian populist policies, which is largely the reason for the current wave of capital flight. So really the failure of Venezuela is more a failure of authoritarian populism than socialism.

So the likely outcome of this attempt to crash the system that both the sadopopulists on the right and left favour, is likely to be resetting the economy back to zero and wiping out everyone’s life savings and income. Which hardly seems a policy any sane person would support. But many angry people on both sides do support this idea because they argue, well I’ll have it bad, but at least those nasty billionaires will get their comeuppance. We burn, they burn. In truth…..maybe, maybe not.

Even in the worst of times, someone turns a profit.Ferengi rules of Acquisition:163

Certainly yes, some of the wealthy, particularly those with lots of assets that are based on speculative wealth, or assets which can’t be sold off quickly, will be in trouble. Capital flight isn’t a simple matter of pushing a button and your money magically moves to Switzerland (hence why many of Chavez opponents held off for so long). Its not as if you can load a factory onto a truck and head for the border. Selling assets at a time when everyone else is selling will make for a buyers market and you won’t get top dollar. Even financial assets can be difficult to transfer. You’ll face exchange fees, currency price differences, legal fees, etc. And certain financial positions can be expensive to unwind at short notice.

So anyone engaging in capital flight is taking a financial hit by doing so, hence why they’ll only do so when they’ve no other choice. I bring this up because it debunks the argument that enacting progressive policies or putting up taxes will send the rich fleeing for the exits. As I pointed out before, if that were true, California would be a wasteland and Kansas would be the richest state in the union (and Somalia would be the richest country in the world). But that said, there’s a limit to what a government can get away with. Push the envelope too far and the elites (or anyone with a savings account!) are going to accept the financial hit as a price worth paying to keep the bulk of their money safe.

So in the event of such a lights out scenario a lot of the rich will simply move their money out of the country and try to ride out the storm. Certainly yes, some of them will get wiped out and they’ll all take some sort of temporary hit, but some could actually do rather well out of such a crisis. Once things hit rock bottom everything will be in the bargain bin and they’ll have the cash to buy. And even if a factory owner can’t operate his factory because he lacks a line of credit, he still owns the factory, which is an asset he can sell or use as collateral.

It worth noting that the bulk of the wealth of the elites in many countries is based around property. For example, during the slump in the 70’s in the UK (as a consequence largely of the oil crisis), quite a few of those with money to spare took to buying up property in places like Notting hill in London or the Moray estate in Edinburgh. Here they could buy a dilapidated townhouse, subdivide it and rent it out cheaply to migrants or as office space and make a tidy wee profit. Pretty soon many wealthy people from around the world started to get in on the act, some not even bothering to rent or maintain the property. Well now that town house in Notting hill or Edinburgh that was bought in the 70’s for a few thousand is worth tens of millions.

And more recently in the US the real winners of the financial crisis has proven to be wall street. Several wall street firms have gone around buying up foreclosed properties at a massively discounted price and created massive rental firms that own tens of millions of houses country wide. And, as one trader let slip in a brain fart on BBC, there is no better time to be a trader than in a falling market. As it provides numerous opportunities for profit. And between brexit and the US a rudderless ship for the next four years, this is something of a happy time for traders. If hedge fund managers had a motto right now it would be “we didn’t start the fire, but if the rest of you want to burn the house down, fine by us, we can make plenty of money looting the place as it burns…plus we took out fire insurance sometime ago”.

This is not too suggest that it is impossible to implement progressive policies. The NHS, equal pay act, civil rights act, the Paris climate accords, the minimum wage act, Germany’s Energiewende all show that such changes are possible. However the successful progressive polices require a long term commitment. And to get that it needs responsible politicians to drive the policy forward. It requires a commitment to compromise and negotiate with other parties and stakeholders in order to achieve buy-in to this policy, both from the public and the opposition. This reduces the chances that right wing parties will be able to simply repeal the policy when they get back into power. Obamacare for example might well be flawed (given that its a watered down version of Romneycare), but its succeeded in that even with republican control of congress, the senate, presidency and supreme court, its still on the books.

The thing that worries me about populism, be it the left wing or right wing variety, is what happens when it becomes clear that they can’t achieve what they promised? The danger is we’ll see a lurch towards authoritarianism, as we’ve seen in Russia and increasingly in the US. And left wing populists are just as like to do this.

Case in point, Corbyn is under pressure due to anti-Semitism within labour. Now I suspect the media (who are not exactly pro-Corbyn) are making a mountain out of a mole hill (to some degree). Its more than a little hypocritical, given how being a xenophobic nutjob is practically an essential requirement for membership of UKIP or the Tories. Or given all the racist stuff you’ll see on many right wing newspapers. But this is not to say that labour doesn’t have a problem here. And Corbyn’s response? Threaten those MP’s who speak out with de-selection or suspension.

With all the allegations swirling around that the EU referendum, suggesting that it was less than honest and thus might not be legal, some in labour (and labour party members overwhelmingly voted remain) most notably Owen Smith suggested the party should be prepared to have another referendum. In response Corbyn sacked him.

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Labour party members voted overwhelmingly remain, Corbyn and his allies represent just 9% of the party

And recall Corbyn lost the last election because he won’t do a deal with the lib dems, SNP and Greens. This meant some Tories got in by less than a hundred votes. So its been suggested he should do a deal with these other parties before the next election. His response? Why they should just join the labour party, after all we can’t have factionalism in the Union of Soviet socialis……sorry labour party.

This of course ignores the fact that some labour policy is simply a non-starter for some of the other left wing parties, e.g. the Greens and SNP are opposed to nuclear power while all of the other parties are in favour of another EU referendum. But such opinions are being shouted down by his red shirts in momentum. In short, labour under Corbyn is starting to resemble East Germany under the stasi. He seems more interested in winning some sort of ideological battle with others on the left than he is in beating the Tories.

DW6git-VwAEnVkY

All in all, left wing sadopopulism is as flawed as the right wing variety. Both are little more than political vandalism. Lots of angry people using ballot boxes as urinals. Its entirely counter productive, with the likely outcome being chaos, political paralysis and potentially national bankruptcy. And far from bringing down the rich, it could leave them better off than they are now. Populism is not democracy in action, it is in fact substituting mob rule and authoritarianism for democracy.

6 thoughts on “Left wing Sadopopulism

  1. Alex Jones and Noam Chomsky, huh? A false equivalence between a foremost expert on Israel-palestine vs mister ‘gay bomb’? I don’t believe that, and neither do you.

    Anyways…I’ll admit I don’t really know what it’s like to be in (or just out of) the EU as an American, so I’ll tell you a bit more about the American situation.

    In the US, we’ve had about ~40 years of stagnant middle-class wages under the neoliberal regime. Over this time, national democratic leaders have generally accommodated/pandered to/capitulated to the disillusion policies of this regime, most of all Bill Clinton (welfare ‘reform’, mass incarceration, NAFTA, deregulation of wall street). Hillary wasn’t bill, and a lot of blame she got for that legacy was unfair – but she also did remain firmly attached to that legacy. Now that Trump won, in the eyes of our left the centrists in the democratic party have basically lost all credibility – they couldn’t even do the one thing they’ve been claiming justifies their leadership of the party, their supposed superior ability to win elections. Because third parties are really hard to build up in America, many Berniecrat activists have adopted a strategy of effective cross-endorsement, except that instead of through a party like the the old-school US populists (e.g William Jennings Bryan) it’s through a few private organizations. Not perfect, but it seems to have some impact. More importantly, it accomplishes something incredibly necessary: it makes a credible threat to democratic neoliberals without acting as a ‘spoiler’ in our two-party-dominated system. Credible threats are necessary when dealing with people who will never agree with you. I’m glad that social democrats in America have finally learned this. Some of the ‘impractical’ proposals of these cross-endorsing groups (Brand New Congress, Justice Democrats, etc) include:

    -Single-payer, now dubbed ‘medicare for all’, since we know medicare is a pretty popular program.
    -A $15/hour minimum wage (don’t really agree with this one nationally, but I’m ok with them trying)
    -100% renewable energy
    -tax cuts for low and middle income brackets
    -infrastructure investment.

    What a bunch of lunatics. Meanwhile, the center-‘left’ is responsible for Obamacare, a submerged-state, province-delegated policy. It has enough good stuff that the GOP can’t outright repeal it (even though they tried twice), but they’ve been pretty successful in rotting it out from the inside by exploiting its weaknesses. I don’t know how soon 100% renewables is possible, but the center ‘left’ is still staging Pandora’s Promise viewing parties. At the national level we have one party devoted to the filthy rich, and another party dominated by the upper brackets of the professional class. I know that won’t change overnight, but I’m ok with helping some people make credible threats. Also, some things I wish I saw more of given our political/economic situation:

    -Ending the deficit/inflation obsessions and re-politicizing the central bank: Deficits don’t cause inflation (confirmed by Richard Vague https://www.ineteconomics.org/perspectives/blog/rapid-money-supply-growth-does-not-cause-inflation). From what little I’ve looked at it seems like the big inflations of history are caused by a combination of PHYSICS (shortage in some key commodity). And it seems like an incredibly remote risk in our current weak-labor economy. The other side of this coin is that I wish people would abandon deficit hawkism. It’s been insincerely weaponized here by republicans and (tragically) sincerely believed by many national democrats.

    -Ending the free-trade dogma. NAFTA made both the US and Mexico worse-off than we would have been otherwise. The TPP would have destroyed some more American jobs while making medicine more expensive for the poorer countries signing that deal. Who’s the sadist again?

    -Reregulating big finance and deliberately reducing private debt. Richard Vague showed that despite all the economists’ derping, public debt doesn’t create economic supernovas. But private debt does cause economic black holes (debt-deflation spirals). And post-crash, that private debt is a ball an chain slowing economic growth. Creating a debt relief program for both people and businesses (both are necessary) would not only be good policy, it would accomplish the important thing of uniting both business owners and other people against big finance if they opposed it. If a democrat ran on that I could see them winning West Virginia or Arkansas.

    Finally, if the result is a ‘horseshoe’ government, I don’t see why that’s such a bad thing in America. Julius Krein, somewhat of an ex-conservative intellectual, has openly stated his support of that eventual goal. In the present neoliberal environment in which important issues like trade are defined out of existence by people who supposedly know better and we’re told everyone who disagrees is a creep, naturally the right-wing side of things has attracted quite a few creeps. But I think a horseshoe congress with social democrats on one side and non-creepy market-skeptical republicans on the other would be quite successful, and much more representative of the range of American people’s opinions than what we have now. http://www.people-press.org/2017/10/24/political-typology-reveals-deep-fissures-on-the-right-and-left/

    If you think America is two ‘right wing’ for that to ever happen, here’s some excerpts…from the National Review of all places…

    Peter Spiliakos: “The central problem is that neither Republican officeholders nor voters can internalize the idea that sometimes small business is an interest like any other and might want things it shouldn’t have. That means that the local chamber of commerce is the ruling class of the GOP because most Republican officeholders can’t imagine a conflict between the public interest and what the local business interests want.” https://www.nationalreview.com/corner/republicans-establishment-libertarians-paul-ryan-scott-walker-business-interests-immigration/

    Michael Brendan Dougherty: “Instead of an industrial policy, and a national medical system that takes care of “everyone” as he promised, Trump has delivered an enormous corporate tax cut.

    I was told that Trump’s unique character deficiencies, his verbal crudity, were the price of entry for injecting a few nationalist and populist ideas into a moribund conservative governing philosophy. The only way to get beyond jabbering to ourselves about free trade, and humanitarian intervention absent any concern for the life of the nation itself, was this man whose popularity finally exploded our elite consensus.

    But the returns are in for the populists, and I have to ask, are you really putting up with all the embarrassments of the Trump presidency for a “mirror tax” in Canadian lumber?”

    https://www.nationalreview.com/2018/01/donald-trump-populism-trade-foreign-policy/

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    • A horse shoe government won’t be a bad thing? You’re talking about enabling fascists. In Italy the 5S/NL government is now talking about building detention camps for migrants (one assumes they’ll find a more PC name than “concentration camp”, happy camps maybe). Trump is using bible scripture and the “NAFTA failed” line to deport migrants (and the evidence points to NAFTA benefiting both the US and Mexico, job losses through it were cancelled out by new jobs created) and start a trade war (which will just wallop an extra 25% onto the cost of everything for Americans. As Trump proves fascists will always prioritise their own racist agenda (and raiding the treasury) over everything else, even what’s in the best interest of the country.

      While I’m no fan of neo-liberalism, it doesn’t mean populist can just fill in the blanks with any fantasy idea they can come up with. Its also important to separate out globalisation and neo-liberalism. They are two different things. There’s nothing wrong with free trade, its just the current rules are written to benefit the rich at the expense of the environment, rather than the other way around.

      To my mind, America’s difficulty is it isn’t really a proper democracy. Many government’s in Europe copied the US constitution, but they made several crucial changes. For example, separating out the powers of the head of state and head of government. President’s actions are constrained by law. So while the Irish president has pardoning powers, he only pardon someone on the advice of the department of Justice and theoretically the Supreme court could get involved, so three arms of government have to agree. Similarly he can veto bills, but only with good reason (e.g. the Supreme court has doubts about the legality of the bill). And proportional representation means smaller parties have their say and new ideas get through. This is why Ireland, which is actually a fairly right wing country (never had a majority left wing government in the entire history of the state) is seen now as much more progressive than the UK or US. An Irish Trump isn’t that likely and the damage he could do is limited.

      If I was living in the US, I’d prioritise getting rid of Trump above all else. While he’s in power and the republicans are chipping away at things, its only going to get worse. If ye can get some proper left wingers voted in at the mid-terms great, but frankly anyone who is willing to help with his impeachment is better than the alternative (some Trump supporting racist crook). And its important to remember that the US IS a fairly right wing place. Yes in the cities its different, but its the parts of rural swing states where elections are won and lost and anyone calling themselves “a socialist” would be lucky to get out of these areas alive, let alone get someone to vote for them. Its about least worse options.

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  2. “Trump is using bible scripture and the “NAFTA failed” line to deport migrants (and the evidence points to NAFTA benefiting both the US and Mexico, job losses through it were cancelled out by new jobs created) and start a trade war (which will just wallop an extra 25% onto the cost of everything for Americans. As Trump proves fascists will always prioritise their own racist agenda (and raiding the treasury) over everything else, even what’s in the best interest of the country.”

    But somehow, I have failed to see this 25% price hike yet in the stores. Perhaps mainstream media warnings of trade-war fallout tend to be overblown. Yeah, I think the latest round of the Trump trade conflict has gotten ridiculous (it needed to be focused, we should have coordinated with the rest of the world against China instead of lashing out at everyone, complaining about intellectual property is counter-productive), but perhaps we should talk about the real risks instead of the ones imagined by economists. e.g Harley Davidson gets a huge tax cut with a provision that encourages outsourcing (https://thinkprogress.org/corporations-incentivized-offshore-jobs-tax-1cd19cc24ff3/) and then claims that it’s relocating because of a relatively small tariff? Apparently Trump isn’t the only con artist, and I don’t think it’s constructive for liberals to unwittingly provide cover for this con through blanket criticism of any action by Trump. And What evidence, exactly, for NAFTA being such a success? Mexico’s poverty rate is higher now than it was a decade ago, and it was a big contributor to the outsourcing waves in America (and to generally weakening labor by strengthening the hand of companies that could from then on merely threaten to move to shut the workers up).
    http://cepr.net/images/stories/reports/nafta-mexico-update-2017-03.pdf?v=2
    NAFTA had about exactly the effect desired by the corporate and top-of-the-professional-class types who pushed it – it weakened labor in the US and contributed to why we’ve had 40 years of stagnant middle-class wages here.

    The ‘rules of trade’ recently have generally been written to protect plutocrats (corporate CEOs) and the top-rungs-of-the-professional-class (intellectual property, which unfortunately Trump appears to be taking up the cause of) at the expense of nearly everyone else and the environment. But that’s just one leg of the table. The other leg is that ‘free trade’ isn’t even necessarily that helpful by definition. You’re an engineer, right, you believe in the second law of thermodynamics? What happens with rampant outsourcing? The economic textbook says that’s ‘efficient’, but a lot of built-up capacity turning to rust is a waste of resources and of energy – I suspect the energy part will matter a lot more in the future if energy becomes as scarce as you expect. Or think that, say, some production process that’s been relocated several times in a short period (e.g US–>Mexico–>China–>Malaysia), what do you want to bet the factory in Malaysia has about the same level of technology as the US plant did ~20 years ago. Imagine how much quicker the useful forms of “automation” might have taken hold if companies weren’t so dedicated to searching the world for the cheapest labor. And then there’s the less-tangibles like socioeconomic stability and what people call a ‘way of life’. Liberals and pro-‘free-trade’ centrists often talk about how this tribe or that is going to lose their hunting habitat or something because of global warming then turn around and say that laid-off Americans should just learn some other “skills” and/or “just move”. People are people, not homo-economicus – whether that’s here or in the low-lying parts of Bangladesh.

    But Back to NAFTA and the mistakes of the ’90s . Think about that period in terms of sectoral balances (the approach used by visionary UK economist Wynn Godley). Because of a combination of NAFTA and the 90s budget balancing, in two of the sectors – trade balance and govt – were subtracting money from the economy. The only way for the economy to keep growing was through private debt bubbles, which is exactly what it did.

    Btw, the point for me isn’t necessarily about getting someone into office as ‘left-wing’ as possible. It’s about finding people who are willing to think and act outside of the orthodoxies of mainstream economics and interventionist foreign policy and/or pressuring the mainstream of the democratic party to step out of its comfort zone in these areas. Which also often ends up btw being better at winning elections than centrism. Also, there needs to be a viable back-up to impeachment. If there’s no smoking gun discovered from the Russia investigation ever, what do democrats do if they win a majority and can’t impeach Trump? Hopefully something that’s actually helpful to the country.

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