Elites: The Selfish Gene

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“Greed has taken over”.*

These are not my words but those of David Rubinstein (2007) who made $billions on Wall Street. He recognised the grab epidemic that had gripped the centre of finance. The selfish gene had infected just about everyone, and the infatuation with the big bucks overpowered the otherwise educated.

*Suzanne McGee – Chasing Goldman Sachs (p177)

Of course greed has long been a deadly sin and thus part of the human make up. Wherever there are winners and losers greed has been dangling its lustful bait.

Though greed and elites have been around quite a while the world has now changed significantly and the divide is much more noticeable. Ordinary Joe has become more aware of their daily grind and the comparison with those of wealth. Television, films and books help to keep them informed.

The dramatic change came with the advent of socialism, Marxism and democracy. These developments brought the growth of political parties and trade unions which have changed the dynamics by keeping people aware. Social media has a world audience that means we are neighbours in many respects.

Moreover, information on the great divide is well documented. Noam Chomsky, How the World Works deals with it by mentioning the philosophers David Hume (p129-30) and Aristotle (p209-210). Hume acknowledges that leaders are only in power as long as the people tolerate them.

Aristotle was challenged by a question on how to deal with the great divide – reduce poverty or reduce democracy. His answer was to lessen the impact of poverty, a purely logical conclusion.

It is quite obvious that if you are a part of the elite that you would chose to maintain your status. However, history teaches us that empires always fall and therefore the wise counsel of Aristotle should be heeded.

Unfortunately, greed clouds judgment.  Joseph E. Stiglitz – The Price of Inequality (p5) clarifies the great divide by pointing out that in America the top 1% gets 40% more in one week than the bottom 20% get in a year. Bloody hell! you may whisper to yourself but the worse is yet to come.

The top 0.1% in one and a half days (1.5 days) gets what the bottom 90% make in a year. Now you can scratch your head in disbelief. NO WAY you say, but. Obviously the elite is deaf to the wisdom of Aristotle (384 – 322 BC)

Francis Fukuyama – Political Order and Political Decay (p479) hits the nail on the head when he states, “In the contemporary United States, elites speak the language of liberty but are perfectly happy to settle for privilege”. The same argument can be espoused for the elite everywhere. One consequence is that the poor and poorly educated become marginalized. (p488) Further consequence flow from this reality.

Therefore, few would dispute the analysis of Suzanne McGee (p354) when she says that attitudes on Wall Street have not improved since the 2008 financial crash that battered the poor hard. The cry of the financial elite is, “me first, me foremost, and only me”.

Though the election surprises of 2016, and going into 2017 may wake the elite from their slumber. The Brexit election in the UK and the Trump victory in the presidential election may bring a wakeup call with the cockerel. Throughout Europe we are witnessing a growing dissatisfaction with the elite and their political acolytes.

Furthermore, throughout the world people are standing up and letting it be known that they are fed up with the status quo.

Protestthiec512pf

South Africa:      Since 2008 an average of 2 million people has taken to protesting annually.

Main complaint: poor services and corruption.

www.en.wikipedia.org/wiki/Protests_in_South_Africa

Venezuela:         Polls show that 75% of people are unhappy with the government of Nicolas Maduro. Massive oil reserves suggest it should be a wealthy country.

Main complaint: food shortages, power cuts and corruption.

www.bbc.co.uk/news/world-latin-america-36319877

September 2016 over 1million protest against government. NY Times suggest mainly middle class but then they can be the most dangerous.

www.en.wikipedia.org/wiki/2014%EZ%80%9316_Venezuela_protests

El Salvador:         Main complaint: Corruption – effects food shortages and poor services.

Brasil:                    April 2016 poll shows 63% don’t like the government of Dilma Rousseff. Since been ousted, her successor has faced similar protests.

Main complaint: high inflation, bad recession = prices & unemployment + corruption

www.bbc.co.uk/news/world-latin-america-35810578

Equatorial Guinea:  has one of Africa’s largest oil reserves but is one of the continents poorest. Their leader is estimated to have amassed a personal fortune of $600 million.

Around the world a better informed populace are beginning to assert their rights. Power to the people!

thXB41ZEDFCorruption

A keyword in many instances is ‘corruption’. However, corruption takes many forms, from direct bribery to filling one’s own pocket surreptitiously. Moreover, corruption is not solely attributed to developing countries. Britain was rocked by the expenses scandal when our Members of Parliament took to giving themselves handsome handouts, leaving the taxpayer to pick up the bill. Then of course, there’s the semi-legal type of corruption known as lobbying.

Interestingly, Senator Ted Cruz, who sought nomination for the republican presidential candidacy, was noted as saying, “…career politicians’ ears and wallets are open to the highest bidder”. In Texas 2015 www.theintercept.com/2015/07/30

Let me give you a handful of views on lobbying.

“…it defies belief that the banking industry’s legions of lobbyists did not have a major impact,”…on government policy. Francis Fukuyama (p481)

“In other cases, interest groups have been able to block legislation harmful to their interests”. Ibid (p486)

These groups, instead of pursuing wealth-creating economic activities, made use of the political system to extract benefits or rents for themselves”.  Mancur Olson – The Rise and Decline of Nations quoted ibid (p481)

Or it may be due to exploitative elites, typically in cahoots with the government, who block any improvement in economic condition that would threaten their power” Dani Rodrik – The Globalization Paradox  (p137) Rodrik was looking at reasons for poverty in poorer nations.

All told more than $3.2 billion was spent on lobbying in 2011 alone. The main distortion is to our political system; the main loser, our democracy” Joseph E Stiglitz (p119)

The pattern is clear, the political outcome of lobbying seldom works for the majority; as decisions are heavily influenced by interest groups. E.E.Schattschneider – The Semisovereign People   ibid (p483)

There are several other damning opinions I could add to those given but hopefully the point is made. Unfortunately, the material from which I got the quotes is not on the daily reading diet of the poor and poorly educated.

Ordinary Joe tends to rely on gut and experience, the latter a method favoured by Aristotle, to reach a conclusion. The poor may be marginalized but their brain has not ceased to work.

Dissatisfaction with the political class has grown over the decades to such an extent that, “…trust in Congress has fallen to historically low levels barely above double digits”. Ibid (p481) A similar point is made by Stiglitz (p117) that the rich have, “…become more distant from ordinary people”.

While these instances concern the American system they are readily transferable throughout the world. Perhaps, in understanding this ‘distance’ those who cannot grasp the seismic political upheaval called Brexit and the Trump victory can begin to comprehend that the ‘sleeper has awoken’!!

The Double Deal:

Backhander

Backhander

A good outline of the direct and moral corruption that is bought on a daily bases of lobbying can be read in Francis Fukuyama (p478) when he deals with ‘reciprocal altruism’. Basically, I give you a big contribution to your election fund and somewhere down the line, you do me a favour. It’s a fancy name for you scratch my back I’ll scratch yours.

We are all aware of cronyism and nepotism and as distasteful as they are, we also know that they are an apron string around our lives. Who wouldn’t help a friend or look after one of our family when times are hard? However, when a similar thing happens at the top end of business its use is to maintain status and power, and to advance wealth.

That brings us back to the catch phrase noted by Suzanne McGee (p354) “…me first, me foremost, and only me”. The actions and statements of the rich are catalogued beside all the other pieces of exhibitionism that symbolizes their contempt for the poor. These are duly noted until a jigsaw has been completed and then contempt is fired back at those in power.

The notion that the poor lap up the display of wealth and the misnomer that their anger is only a form of jealousy is so out of place. The trite use of ‘jealousy’ was a smokescreen floated by the wealthy to browbeat the poor.

I refer back to the wisdom of Aristotle that experience is a solid learning tool; and experience is what the poor collect in abundance. The machine operator knows that they are producing wealth and have become aware that their share of the proceeds is hardly enough to survive on. Hence the ostentatious flirting of the rich does not engage their jealousy but their anger.

A Learning Curve?

Unfortunately, the harsh reality is as stated by Ralph Schosstein, a banker on Wall Street, “Memories fade faster on Wall Street than on Main Street”. (McGee p383) The lure of the big buck is so enticing it’s almost irresistible. For the big boys it’s their raison d’etre. It appears that nothing much has been learned since the build up to the 2008 crash that we are still suffering from.

“A few years ago various cunning bankers were sitting around on their fat arses scratching their sweaty balls wondering how they could make themselves even more disgustingly rich….so they started looking around and they spied a vast amount of poor Americans who hadn’t been allowed loans before…” Geraint Anderson, Cityboy (p307)

Soon the world economy collapsed and we had to bail them out!

Control of the financial sector should have been exercised by the government. However, government must be free of corruption. Hm! I’m reminded of a child’s nursery rhyme – the wheels on the bus go round and round…. Lobbying all day long!

In today’s society we need the money men but they also need us. We are both sides of the coin. What they need to understand is that wealth distribution is a key element in keeping the fabric of society on a harmonious path.

Many countries throughout the world are experiencing an upsurge in people power. In the UK and the USA the people have exercised their democratic rights to let the elite know that they too want to participate in the nation’s wealth. Let’s keep it democratic!

 

Europe: Moving Politically Right?

  • Our politicians

There are fears that Europe is moving inextricably to the right in politics. The numbers voting for the parties of the right has grown. Nationalism and an increase in xenophobic

If only it was about food waste.

attacks have prompted scaremongering.  The parties of the left in politics are equally loud in protest and actions. The increase of extremism can be laid squarely at the door of politicians; they will not admit it but their poor management has brought us to this juncture.

America is also witnessing a political phenomenon. And this is where our story begins. The decision of the American administrations of Reagan, Bush and Clinton to deregulate the financial system led us directly to the banking crisis of 2008. The repeal of the 1933 Glass – Steagall Act which brought regulation to the banking sector after the great crash of 1929, lead the way. Suzanne McGee (p269). The crisis of 2008 still has us in the doldrums. Thank-you cowboy Ron!

In Europe the crisis was handled badly, made worse by our political leaders. Joseph Stiglitz (pxxv) Greece had been allowed to spend aided by Goldman Sachs bank until the bubble burst. The EU refused to bail Greece out and instead insisted that the country go cap in hand to the IMF. A political farce ensued, Dani Rodrik (p218). Panic engulfed the EU caused by political ineptitude particularly on the part of Germany.

Greece was forced to pass laws on cutting its health service, on trade union rights including collective bargaining and to cut the minimum wage to secure a bail out. Austerity, austerity the catchphrase of the neo-liberal economists had taken hold. Prune back, was the rallying call, in order to pay your debts. Believing in the ‘confidence fairy’, Paul Krugman (p200) e.g. make the markets believe that you are not being profligate and they will continue to invest. Mm, the very people who caused the crash!

Prune, hack, slice; wages, jobs, the welfare state. Prune, hack, slice, the debt man’s at the gate. That was the basic spin from our politicians. Somehow the economic mire we found ourselves in was the fault of the workers and the poor. A telling analysis of the absurdity of such a political logic is given by Krugman (p200)

“The trouble with the current situation, [2012] insisting on perpetuating suffering [austerity] isn’t the grown-up, mature thing to do. It’s both childish (…) and destructive”.

We can add the voice of Stiglitz (p76) to that analysis:

“The irony is that in the crisis that finance brings about, workers and small businesses bear the brunt of the costs”.

Income inequality has been rising since the 1980s. Ha-Joon Chang (p333). The trend is acknowledged by many economists. The trend was marked in the USA and UK who have followed the neo-liberal economic school of thinking — austerity. Thus over a sustained period ordinary people have witnessed a decline in their living standards and the failure of politicians to protect their well-being.

Dissatisfaction has been brewing, the kettle is not yet boiled, but. Wages depressed, jobs scarce at the lower end of the market, the economic crisis not yet resolved, forced cultural change with growing concerns over migration / immigration. A very large section of society is concerned by the onslaught of politically correct doctrine and worry about their culture and way of life. The negative response of politicians has many feeling that their voice is irrelevant.

In the midst of this cacophony the politicians in the UK gave themselves a pay rise. The gulf has just got wider!

The sustained barrage of political correct idioms to be learned coupled by the demeaning labels: racist, bigot, NIMBY, old and backward etc. etc. etc. leaves many feeling they are being brainwashed by New Stalinists. Having to mind your P’s and Q’s every time you speak, support their interpretation of events. Perception is everything!

A note of caution from Howard Gardner the eminent Harvard psychologist (p51);

“…emotion is often a more powerful factor in influencing our behaviour than logic”. He suggests that there are: “…more neural connections going from the limbic emotional centre to the intellectual cortex”.

With the establishment of Sharia courts in the UK and the seemingly endless mention of the rights of minorities tends to suggest that the needs of the majority have already been met. This does nothing to broker acceptance or respect. Frustration and anger builds!

On and on the assault comes with an absence of someone to turn too. No political outlet because all the recognised parties are seen to be in cahoots. There is tiredness with interest groups hogging the limelight and achieving their demands. Politicians have forgotten the wisdom of Edmund Burke: cited in Charles Handy (p103)

“ Because half a dozen grasshoppers under a fern make the field ring with their importunate clink, while thousands of cattle, repose beneath the shadow of the British oak, chew the cud and are silent, pray do not imagine that those who make the noise are the only inhabitants of the field,…”

The real danger of the present situation is that the dissatisfaction with the establishment becomes ingrained. It could make a good Shakespearian play:         Macbeth Act 1V sc.1

“Double, double toil and trouble,

Fire, burn; and, cauldron, bubble.

No surprise that the electorate, middle-left and middle-right scour the horizon for an escape route. The far-right too has quickly recognised an avenue to explore and found many alienated folk standing on the roadside.

 Germany            –              NPD (neo-Nazi???)

France                  –              National Front

Austria                  –              Freedom Party

Netherlands       –              Dutch People’s Party

Sweden              –              Sweden Democrats

Finland                 –              Finns

The list could go on but the point is made.

Much of the anger at this time is generated by the migrant crisis and once again political ineptitude rears its ugly head. However, many of the parties of the far-right are also opposed to the EU – the mammoth without ears. Some of these hard-line groups have secured up to 30% of the popular vote and together hold an approximately 33% of the seats in the European Parliament. Amazing!

www.huffingtonpost.co.uk/2014/05/26/

The crucial point here is that they don’t want to reform the EU. They want to kill it off.

In the UK voters floundered in various directions, some finding solace with Ukip, but the electoral system (first past the post) dented their enthusiasm; 4 million votes but no parliamentary seats. Others took revenge on the Liberal and Labour parties leaving the Tories with a strong hand.

In the USA the republican right are being trounced by Trump, whilst the democrats have found an alternative voice in Bernie Sanders. Why?

The story unfolds with a Sky news correspondent Tuesday March 1 2016. A question of why a woman was voting for Bernie Sanders brought an illuminating response: she said it was not about Bernie but the doors his campaign opened to a wider discussion of many important topics.

Here an articulate, grey hair, voice of reason is seeking an explanation for her feeling of alienation from political life. Her voice is echoed in multiplies of millions around the globe. For decades the political class has ambled on impervious to ordinary folk and disparaging of their concerns. They had been emboldened by the lack of an opposition.

Floundering in the political mire, ordinary Joe felt powerless. Their only source of power they believed was their vote, but all the recognised parties were proving to be equally crap. Along came the extremes and sat down beside them and brushed their powerlessness away.

I can hear echoes of Caliban:      The Tempest   scene 2 187 – 195

No more dams I’ll make for fish,

Nor fetch in firing

At requiring,

Nor scrape trenchering, nor wash a dish.

‘Ban, ‘Ban, Ca—Caliban

Has a new master. Get a new man!

Freedom, high day! High day, freedom! Freedom, high day, freedom!

 

It seems that the political class are akin to an oil tanker, nice and steady when crossing the Atlantic Ocean but slow and in need of a lot of space when it has to turn. It has to turn.

Are we adrift?

Not quite but we are getting there. There is a growing feeling of unfairness out there in the world. Fairness is a powerful psychological trait. It is so strong that it can dictate people’s thinking, tied, perhaps rigidly, to a person’s emotion.

There is a sense of tiredness with the grab society; the, me, me, me philosophy of some. And with the flashy, look at my wealth occultists.

Charles Handy (p198) puts it well, “…it is ultimately not tolerable for the many poor to live beside the fewer rich”. Jealousy? No, disgust! During the so called ‘Golden Age’ of the 50s, 60s, 70s, everyone seemed to share in the prosperity created. Since the 80s times have changed.

The trickle-down effect

Many of the working class accepted the ‘spin’ of government that by cutting taxes for the rich this money would be used to create more employment hence the new wealth would ‘trickle down’. A similar ‘spin’ is given to corporate tax reductions. This view was entrenched until, “…in the face of considerable evidence that it is untrue”. Fukuyama (p465) Further evidence can be found in: Chang (p451), Stiglitz (pp 8, 78), Rodrik (p165) and Krugman (p84).

Quid pro quo

The rich and our politicians appear more focussed on feathering their own nests than being responsible leaders. The concept of clientelism: you scratch my back and I’ll scratch yours, is very much alive in the corridors of power.

In the UK members of parliament (MPs) were able to employ their wife and offspring at the expense of the tax payer. The expenses scandal of recent years is still haunting some of them. Others have been caught doing dodgy deals.

In America clientelism is all but a business whereby interest groups give generously to a politician’s campaign for election and in return gain influence in the corridors of power. Fukuyama (p87) suggests it undermines democracy because it “…strengthens existing elites and blocks democratic accountability”.

Therefore we can see why the people feel alienated from the political system. The feeling of powerlessness is not a fleeting will-o-the-wisp experience. As Ha-Joon Chang (p106) points out, austerity governments in the Netherlands, France, and Greece were voted out in 2012 followed by Italy in 2013. It made no difference; the austerity package of the EU was nonetheless imposed.

Meanwhile, in the UK the conservative government is busy cutting away at areas of the state in the name of efficiency. Slice by slice it is cutting into the National Health Service (NHS).

Perhaps politicians should take note of the wisdom of Fukuyama (p532)

“When governments cease being accountable, they invite passive noncompliance, protest, violence, and in extreme cases, revolution”.

Abuse of power

A further hard hitting policy is the raising of the retirement age in the UK. Women had their retirement age raised from 60 to 65 in line with men. Now everyone has to put in several more years before they can escape the workhouse. The ‘spin’ by the government is that as a result of people living longer the pension bill will be much higher and needs to be offset by people working for longer.

Some women will have had their work life extended by up to 10 years. How much is the government saving by that little manoeuver??

The true implication is that successive governments have sanctimoniously mismanaged the economy. For 50 years many have paid income tax and national insurance tax and god knows how many other taxes and now when retirement looms they are a burden. Shame!!

This is an abuse of power as it leaves large numbers of people feeling anxiety and guilt. It only affects the workers as the better off have the means and can decide when they want to retire. No such luxury for the less well off.

Thus we have the rise of the Tea Party in America and Donald Trump viewed as a saviour. In Europe the rise of the far-right and extreme left. In the UK we have Ukip on the centre right whilst the far-left are still sucking their dummies and waiting for the resurrection of Trotsky.

A few more words of wisdom for our shamelessly needy politicians – from the 17th century

“…government should benefit the people, not those in power”. Wang Fuzhi       www.en.wikipedia.org/wiki/Wang_Fuzhi

Karl Popper adds his voice: we need an open society; “…in which the political institutions can be changed by the governed”.

Do some good join Robin Hood!

 

Suzanne McGee                               Chasing Goldman Sachs

Joseph Stiglitz                    The Price of Inequality

Dani Rodrik                         The Globalization Paradox

Paul Krugman                    End This Depression Now

Howard Gardener           Multiple Intelligences: The Theory in Practice

Ha-Joon Chang                  Economics: The User’s Guide

Charles Handy                   The Hungry Spirit

Francis Fukuyama            Political Order and Political Decay

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Europe: No Highs.

 

Unity???

Unity???

As we spiral towards a referendum in June 2016 watch out for the spin of verbosity. It’s butter-up time at the polls. You will be near deafened by the bald tales from either side. Who has the correct answer about Europe, the stay- put brigade or the opt- out gang?

It should be obvious that big business, multinationals will favour the UK remaining in the embrace of the EU. It serves their business purpose. If Europe did not meet their needs they would be seen leading the charge to leave.

We are bound to hear stories of dire consequences, for jobs, livelihoods and a whole

Talking EU

Talking EU

gambit of other ghouls that awaits us if we depart. There will be ghosts in every unlocked cupboard which will become increasingly terrifying as we get closer to election day.

Nationalism will be bandied around like a worn tennis ball. Only Putin will be happy if we leave! However, an exit will not affect the sanctions that the EU has imposed on Russia over the Ukraine crisis. It will not affect policy on Syria. It’s all a smokescreen to remind the older voter of the Cold War.

Cameron’s position is weak because he gained only crumbs from the EU table. Did he expect anything else? Time will show that the ‘gains’ are meaningless. His cause has only brought about a poorly constructed but definite political grave.

There was no mention of structural change because it would not have reached the table for discussion. No matter that the time frame was too tight, with insufficient space for major issues to be studied and debated. Why the rush? He locked himself in a cupboard by advocating a referendum and, viewing public opinion knew he had to put his skates on.

Being kind I would say that the rush to the polls was bad advice from his advisors. If real change had been on Cameron’s agenda he would have taken his time; we have until 2020 to get a response. So why didn’t we ask for more? The answer is sky- blue; he knew it would not be negotiable.

Look closely at what the Prime Minister brought home and this tells us that the EU has no intention to change. We can have a few crumbs if we close the door behind us and shut up. The electorate has been played, duped and now we need to be herded quickly before we understand.

The EU can only survive with fundamental structural reform. It has been floundering since conception. The euro was another massive mistake. Europe is still recovering from the 2008 banking crisis; it will take several more years to swim clear.

thGUA278IXA lack of an audit and the continual escalation of spend is a sky-blue indication that the whole bureaucratic system has no direction and no leadership. It is a growing giant of an octopus. It will fail and the cost of life support will be huge.

Many leading economists had grave reservations about the introduction of the euro and misgivings about its future. Paul Krugman describes it as Europe’s big delusion (pp177-187) and a mistake from the beginning (p168) Krugman argues that it lacked a central focus such as the US Federal Reserve or the Bank of England. The European Central Bank (ECB) basically followed German thinking.

He illustrates how the euro and the ECB directly affected the countries of: Spain, Ireland, Portugal and Greece driving them deeper into recession. The policy of austerity was foisted on them. It would take seven (7) years before the ECB accepted quantitative easing (printing money to buy debt) and poured 3.2bn euros to support them.

Joseph Stiglitz another Nobel Prize winning economist lays austerity bare when he states,”…there has been almost no instances of countries that have recovered from a crisis through austerity”. (pxxv) Dani Rodrik yet another top economist has much to say on the experience of Argentina and its austerity programme. (Chapter 9 pp184-206) It was a disaster!

In essence the EU has caused many of its own problems rushing forward politically without thought of consequence. It is plagued by indecision and a thought process which operates on the basis of – what’s in it for me- (WIIFM)

The EU apparatus is divorced from the citizenry. The people don’t matter. The WIIFM syndrome is illustrative of its political absurdity. There is no unity of purpose, only agendas. Rodrik (p215) is scathing, “European Parliament operates mostly as a talking shop rather than as a source of legislative initiative or oversight”.

Such being the case gives lobbyists an open door. Francis Fukuyama (pp501-502) points to a quirk, he terms ‘jurisdiction-shop’. It works on the basis that if unsuccessful at their national level lobbyists simply pack their briefcase and head for Brussels. He cites the work of political scientist Christine Mahoney who suggests that ‘outside groups’ those seeking social change have ‘significantly less access to European Institutions’.

To further illustrate the lack of unity Rodrik (p218) is unequivocal when he says that when the EU comes under stress ‘the responses are overwhelmingly national’. The migrant crisis we are presently experiencing is a sky-blue example of such a scenario.

Europe is not for turning!! Unless it is prepared to, we must jump ship!!

 

  • Paul Krugman    End This Depression Now!
  • Joseph Stiglitz    The Price of Inequality.
  • Dani Rodrik         The Globalization Paradox
  • Francis Fukuyama            Political Order and Political Decay

Taming the Beast (4)

On the Road to Human Progress

Can it be achieved? Yes! However, there has to be a clear recognition and understanding of the forces opposed to any proposed change. They will not go gently into that goodnight, to paraphrase Dylan Thomas. The road to human progress takes strong legs and a stout heart. There has to be a clear-sighted commitment to an agreed agenda.

One challenge will be to overcome the persistent onslaught of propaganda, marketed by specialist teams whose role it is to manipulate our thinking. An inundation from sections of the media will stir the emotions of many and leave others perplexed. This can only be overcome by a consistent voice hammering the same points in innovative ways. Think Banksy!

History supports the idea of a successful economy for the majority. The period 1945 – 1973 is considered the Golden Age of capitalism as economist Ha-Joon Chang points out,

“The Golden Age shows that capitalism’s potential can be maximized when it is properly regulated and stimulated by appropriate government actions”. Economics: The User’s Guide (p87)

A supportive view is expounded by the economist Dani Rodrik, The Globalization Paradox (p22)

“Every well-functioning market economy blends state and market, laissez-faire and intervention”.

And in an earlier point:

“Markets are most developed and most effective in generating wealth when they are backed by solid governmental institutions”. (p16)

Government therefore plays a crucial role in the economic well-being of a nation but have to be aware, as Ha-Joon Chang maintains:

“The economy is much bigger than the market. We will not be able to build a good economy – or a good society – unless we look at the vast expanse beyond the market”. (p456)

It is unfortunate but at present we are tied to the austerity programme of the neo-classical economists. To them the market is the great breadwinner and should be allowed to bluster its way ahead. Of course, the market keeps stumbling and falling over and it’s the ordinary Joe that has to pay the cost of getting it back on its feet.

The neo-classical economist do not allow for the ‘cartel’ or the monopolies that develop. They cannot add to their equation the underhandedness of some players who corrupt the market in the name of profit. Nor can they equate the ruthlessness or heartlessness that the system throws up. Their only response is that the market will right itself eventually.

Millions are still waiting for the market to improve since its man-made catastrophe in 2008. The lifting and the shoring up of the market have come from government using the taxes of the people. And still we find further illegal double-dealing such as Libor in the banking sector and the Volkswagen emissions scandal.

Banksy

Banksy

The market could not have righted itself without the direct intervention of government. Government saved the day! The ordinary Joe paid with their taxes. They paid with their livelihoods; many losing their jobs. The great crash came like a tsunami through the everyday lives of millions of ordinary people. Their wages slashed, their working conditions trashed in an effort to save the market!

Lives ruined and small businesses destroyed. Then they have the audacity to expect all hands to the pump!

Henry Scott Tuke

Henry Scott Tuke

Unregulated the market fed the greed of the few. The thoughtless scramble for the quick buck, the maximization of the bottom-line, the end of year bonus, and the ultimate ME factor. The market has had its day, government must take control and regulate.

However, no government can withstand the buccaneer capitalists on its own. That is why the idea of the EU is a good one, pity it has become a burden. The EU needs to be remodelled. The bureaucracy has become a self-serving yoke dragging the whole of Europe into the deep. The bureaucracy needs to be democratized with a flag that reads transparency.

thUZ27UX9OThe people have to have trust in the leadership of the EU. The peoples trust may have been shattered by the failure to tackle Volkswagen over the car emissions. When money talks – democracy walks. Politicians should resign over their failure! Transparency, accountability generates trust; politicians must earn it!

In writing about the crash of 2008, Susanne McGee Chasing Goldman Sachs warns in a tagline:

HOW THE MASTERS OF THE UNIVERSE MELTED WALL STREET DOWN … AND WHY THEY’LL TAKE US TO THE BRINK AGAIN.

 

 

Capitalism: Taming the Beast.

Capitalism is not the best fit for a decent society. This is becoming increasingly clear as the world becomes more accessible to all. Nonetheless, it is an essential tool in building and developing the science and technology required to house a good society. At present there is no alternative and little sign of one on the horizon. Therefore, to enhance human progress all we can do is rein-in, to prevent the worst excesses of the beast.

Left unbridled, capitalism has no conscience, no heart, no sense of justice. Recent history tells the story.

 

  • DDT used between 1945 – 1972 when it was banned from use as an agricultural insecticide having been linked to ecological degradation and testicular cancer. www.en.m.wikipedia.org
  • Thalidomide – released in 1957 in Germany as a sedative or hypnotic. Soon it was used to alleviate morning sickness in pregnant women. The result was over 10,000 births worldwide with a 50% death rate. The survivors had severe disabilities.

“The thalidomide disaster is one of the darkest episodes in pharmaceutical research history”. www.sciencemuseum.org.uk

www.en.wikipedia.org/wiki/Thalidomide

And now we are under threat from genetically modified organisms. No! – GMO! www.theguardian.com/environment/2015/apr/16/eu-new-gm-genetically-modified-foods

The shenanigans of the business world are similarly dark. Enron was the biggest thST67FT30bankruptcy in US history until WorldCom.  Enron hid $$billions in debt before their bubble burst. WorldCom used loose accountancy methods to maintain their share price. Profit the main motivation!

These events led to the Sarbanes-Oxley Act of 2002. The law was passed by Congress to prevent fraudulent accounting activities by corporations and, “…the wilful destruction of evidence to impede a Federal investigation”.  Five companies in all were cited.

www.en.m.wikipedia.org/wiki/Sarbanes-Oxley_Act

It would be good to think that the law was changed because the politicians were looking after the best interests of the ordinary people. Unfortunately, these companies went OTT and cost shareholders a lot of money. It shows just how untrustworthy business truly is.

In the UK in 2014 Tesco the large supermarket also used loose accountancy to suggest they had £300 million more in their coffers than they actually had.  Now we have the Volkswagen debacle and the fixing of diesel car emissions. It appears that the EU politicians knew the details in 2013 but kept quiet about it. Who can Ordinary Joe trust?

thIQB7HPADHow many people are dying annually from poor air quality in our major cities? We need a new Clean Air Act!

The Harvard economist Dani Rodrik, The Globalization Paradox sums up the market quite succinctly,

“In short, markets are not self-creating, self-regulating, self-stabilizing, or self-legitimizing”. P22

Honest government is the only way to control the excesses of the market place. There are so many known examples of poor business practice. But how many remain hidden? It would seem that governments will only act in times of crisis.

Every economic crash has had at its base the obsessive pursuit of profit. The most recent major crash of 2008 left a sound of anguish the world over, and we are still experiencing the reverberations today. “This period also ranks among the most horrific in US financial history.”  Paul Kosakowski, www.investopedia.com

The main cause lies with the government of America and their decision to repeal the 1933 Glass – Steagall Act in 1999. The act had regulated the banking sector. Once removed, at the behest of the big boys, the saliva drooled and the wolves howled their hunger for some ripe pickings. Deregulation was the key element in the great crash but had its foundation in American Republicanism.

In the wake of the crash many other devious scams have been unearthed.

  • Libor – the fixing of the bank lending rate.
  • Foreign exchange – forex – fixing of the rate.
  • PPI – false insurance policies

How many other double deals have yet to be uncovered?

American Republicanism arrests our development by its insistence on the political stance of individualism and the free market economy. This belief system is supported by the neo-classical economists who promulgate the notion that we are all individual self-interest motivated consumers. However, such a premise negates the power of marketing and dismisses the colossal amounts spent on advertisement. It also promotes the view that the market is the benefactor of society.

As consumers we are often tricked by marketing ploys into making a purchase by the placement of goods on supermarket shelves. By the need to belong, this has many of us following trends: fashion, phones and food etc. Note also the spending of $£ billions on building a ‘brand’ name with the subliminal message that nothing else is quite as good. Marketing is the markets sheep dog!