What happens when political leaders fumble and dither, as they are doing now in face of the world financial crisis?
Check the empty mumbo-jumbo about “recovery” that spills across the business pages while stock markets continue their decline. Ordinary people arguably must look beyond the orthodox money-gurus for smarter advice.
Economist Heinner Flassbeck sounds believable. He says nations must co-operate to shut down the “casino economy” that ran out of control and landed us in this mess.
Flassbeck, the chief economist of United Nations Conference on Trade and Development, said “The real economy is producing goods … that people need. But on top of that … a huge casino was built, where gambling was the most important activity. And people really expected (to) get a … net gain, a net income, out of this casino, but every reasonable person knows that is not possible, casinos are what economists call ‘zero sum’ (games) — what one guy loses the other one wins.
“The fact that they played with commodities and currencies and houses gave them the illusion, for a time, that they really could get a net gain out of this casino game. But it is impossible and that has been shown now. After all the speculative pyramids collapsed, we see there is no net gain left.”
Against the background of flimsy debts wrapped together as trustworthy securities, Flassbeck said: “We have a ‘shadow banking system’ of hedge funds and investment bankers … ‘off-balance-sheet vehicles,’ where banks engaged in gambling. Regulators were overwhelmed by the huge amount of new and sophisticated complex structured products on these markets, which were created … to disguise the character of gambling behind it.”
Flassbeck was talking to the Pambazuka News, an African social-justice site. A clear conclusion emerges from his findings: We need public financial management in the public interest. The “free market” failed us.
And it isn’t just honest gambling that critical thinkers have in mind. It’s gambling with loaded dice that favour a wealthy, privileged elite.
Rev. Peter Millar, former warden of Iona Abbey in Scotland, drew attention to the stunning hypocrisy displayed by Britain’s Conservative government and by an even more arrogant government in Argentina.
“In 2001, when the Argentinian economy was in free-fall, thousands of people living in poor neighbourhoods stormed foreign-owned superstores. They came out pushing shopping carts overflowing with the goods they could no longer afford — clothes, electronics, meat. The government called a ‘state of siege’ to restore order; the people didn’t like that and overthrew the government.”
Journalist Naomi Klein’s remembered Argentinian phrase, el saquero, the sacking, was “the same word used to describe what Argentina’s elites had done by selling off the country’s national assets in flagrantly corrupt privatization deals, hiding money offshore, then passing the bill to the people with a brutal austerity package.”
Tory politicians call the recent U.K. riots merely criminal, not political. But who were the worse criminals — the looters or the CEOs who pocketed enormous bonuses after their banks had received bailout money from taxpayers?
Rev. Millar goes on to say: “The U.K. government continues to force sacrifices on the most vulnerable, while the elites continue to pursue their insane lifestyles. In the U.K. we are witnessing daily the firing of public servants, the scapegoating of teachers, the closing of libraries, the rolling back of union contracts, the botched-up rush to privatize public assets.
“The list is never-ending, and once again we are being lectured by the very people who sacked the economy in the first place.”
U.K. Prime Minister David Cameron, the target of Millar’s tough words, recently showed up as Prime Minister Stephen Harper’s political pal and kindred spirit.
—G.E. Mortimore is a Langford-based writer. Think About It runs every second week in the Gazette.