Market Happiness

Even though the banks and the markets caused the financial crisis that has been running since 2008, what we hear over and over again in the media is that both must be kept, well, happy. There is no price too high to pay for market and bank happiness. George Osborne, the Chancellor in the UK coalition government, repeatedly justifies the necessity of his austerity programme by telling us he must keep the markets happy, otherwise they will, essentially, punish the government and the rest of us. For market happiness Osborne is willing for unemployment to rise, for 100,000 more children to fall into poverty, for wages to stagnate, for pensions to be cut, for university tuition fees to be raised substantially, for frontline police numbers to be reduced, for one in seven business on our high streets to be boarded up, for libraries to close, for legal aid to be slashed, for the welfare net to be radically reduced, for homelessness to increase, and on and on. Apparently, no price is too high to pay for market and banking happiness.

There are the ocassional voices of protest. Seumas Milne commenting on the strikes held around Britain on November 30, 2011 wrote:

[T]oday's strike and whatever action follows it isn't just about pensions. It's also about resisting a drive to make public service workers pay for a crisis they have no responsibility for – while the bloated incomes of those in the financial and corporate sector who actually caused the havoc scandalously continue to swell.

When real incomes are being forced down for the majority, as directors' pay has risen 49% and bank bonuses have topped £14bn, that's an aim most people have no problem identifying with. Across the entire workforce there's little disagreement about who's been "reckless" and "greedy" – and it isn't public service workers.

It is much the same in the US. Robert Johnson wrote in the New York Review of Books:

Many citizens are so disheartened that they do not believe government has the capacity to be responsive to their needs. Although our transportation systems, schools, and other infrastructure are in a sad state, these citizens have no faith that their tax dollars will be used to repair them. In short, while America is rapidly deteriorating, there is a widespread fear that Washington, D.C., is indifferent to its plight.

Many Americans see government as an insurance agency for rich and powerful people and corporations, who deploy lobbying dollars and campaign contributions to take care of their interests but not those of others. Faced with the choice of having their tax dollars spent for the benefit of elites or demanding that taxes be radically reduced, they see cutting taxes as the only rational course of action. [1]

Given the magnitude of the financial failures beginning in 2008 you would think governments would have to take some action to regulate the financial industry with the hope of preventing a repeat in the future. While politicians of all stripe had to elbow each other out of the way to get air time to declare the unacceptability of the banks’ and the markets’ behaviour, legislation in the US was questionable and in the UK almost nonexistent.

When President Obama signed into law the Financial Regulation Bill it was heralded by Reuters as the “most comprehensive financial regulatory overhaul since the Great Depression...” Others point out, however, that the bill did not go near far enough and will not prevent another similar crisis in the future. Time will tell.

In the UK, Project Merlin which was to reduce bank bonus, reveal bank salaries and increase bank lending to UK business, largely failed. The Telegraph called it a “PR trick” and even Vince Cable, the Business Secretary, said the project had failed in its main aim. And when policies were actually established to respond to the divide between the 99% and the 1%, it is often delayed or kicked into the long grass. Two examples:

Osborne in rhetorical flare promoted the "Learjet tax" saying, “The wealthiest should not escape the tax the ordinary holidaymaker has to pay.” The Learjet Tax would, if enacted, demand those flying in private jets pay the same travel taxes the rest of pay flying on commercial airlines. Unfortunately the government has delayed the tax saying that the jet companies need time to make the transition. But of more importance is the delay of nine years in implementing the Vickers Report on reforming the banking system. While some insisted the report failed Britain, others praised it. However, the government, while accepting the reforms, delayed any implementation for nine years.

Politicians have been called front men and women for the 1%. One article I read referred to them basically as entertainers whose job it is to keep us distracted as the wealthy get on with their lives. Of course, many politicians are part of the 1% themselves and it comes as no surprise they would protect the rich and create and nurture an environment for them to thrive. Twenty-one of the UK’s government cabinet are millionaires or multimillionaires. In the US, however, a real coup by the rich, led by the Koch brothers, has been to convince the middle class and the poor that their responsibility is to protect the wealthy. Thus we have the Tea Party protecting billionaire tax breaks while the middle class dwindles and the poor suffer.

David Cameron made it perfectly clear that his aim in last week’s EU summit in Brussels was to protect the UK financial industry. According to some in that industry he was less than successful, but his priorities were clear. Larry Elliott writing in The Guardian rarely pulls his bunches concerning the Square Mile. He wrote following the summit:

British governments for the past three decades have had an aversion to the idea of picking winners, with the one exception of the City of London. That "winner" proved to be the biggest loser of the lot, yet David Cameron decided that defending the interests of this tarnished special interest group should be Britain's priority at last week's summit.

In an earlier column he even suggested Cameron let “the City fend for itself (something it is perfectly capable of doing) and devoting some tender loving care to Britain's manufacturers.”

Cameron repeatedly said that protecting the City of London was in the national interest. While it is obvious the financial industry is important to the nation, just how important is up for debate. Aditya Chakrabortty, in an article entitled Britain is Ruled by the Banks, for the Banks, points out that in the areas of jobs and taxes, manufacturing contributes more to the British economy than banking. And even when the banks were making money like never before, the amount they paid in taxes was considerably less than that which the state paid to the banks to keep them open. One would think that somewhere someone would have suggested that annual bank bonuses be used to pay off the debt owed to the taxpayers for saving the banking industry. However, that is such a seemingly ridiculous idea, it is unimaginable that any politician would suggest such a programme. Reflecting on the relationship between the financial sector and politicians, Chakrabortty wrote:

In a poorer country, the cosiness of relations between bankers and politicians would be scrutinised by an official from the World Bank and disdainfully pronounced as pure cronyism. In Britain, we need to come up with a new word for this type of dysfunctional capitalism – where banks neither lend nor pay their way in taxes, yet retain a stranglehold on policy-making. We could try bankocracy: ruled by the banks, for the banks.

An iconic symbolic image demonstrating just how confident are the markets and the banks and how protected they are showed up on You Tube. During the first march of demonstrators along Wall Street, members of the 1% came out unto their balconies, poured themselves classes of wine, beer and Champaign,  and laughing at and mocking the marchers, held their glasses high. Remember, these are the people who caused the crisis. These are the people whose jobs were saved by taxpayers money. Their arrogance was breathtaking. At least demonstrators in the US could march along Wall Street, however. In the UK, demonstrators were stopped before they could even enter the London Stock Exchange. Paternoster Square was protected by the police and demonstrators had to settle in front of St. Paul’s Cathedral, thus turning media attention to the Church of England and not the financial industry. Paternoster Square, Broadgate and Canary Warf are all protected by court injunctions, the police and our elected officials. 100,000 more children sliding into poverty isn’t going to change that.

Copyright © 2011 Dale Rominger

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[1] Johnson, Robert. Obama: A New Beginning? The New York Review of Books, Bolume 58, Number 15, October 13, 2011, http://www.nybooks.com/articles/archives/2011/oct/13/obama-new-beginning.

The Dark Morality of Politics

There’s been a bit of stir over two campaign television ads in the United States, one by Mitt Romney and the other by Rick Perry. No nuanced untruths here. Essentially both ads tell blatant lies. I read about the Romney ad in the New York Times. In the ad President Obama is heard saying, “If we keep talking about the economy, we’re going to lose.” The implication is clear. However, the quote is taken out of context. Obama made the statement during the 2008 presidential campaign and was quoting one of John McCain’s strategists. What Obama actually said was this, “Senator McCain’s campaign actually said, and I quote, ‘If we keep talking about the economy, we’re going to lose.’ ” Mr. Romney’s advisers justified this rather obvious distortion of the truth by saying that Obama lies too and that politics is a rough game. 

I came across the Perry ad on the ABC News website. Perry accuses Obama of calling the American people lazy in the ad quoting the President as saying, “We’ve been a little bit lazy over the last couple of decades.” Perry responds, “Can you believe that? That’s what our president thinks is wrong with America? That Americans are lazy? That’s pathetic.” Very dramatic, but again the charge is a lie. Obama was asked about “his thinking on the perception by some countries of ‘impediments to investment’ in the U.S. The President’s response, “We’ve been a little bit lazy over the last couple of decades.  We’ve kind of taken for granted — ‘Well, people would want to come here’ — and we aren’t out there hungry, selling America and trying to attract new businesses into America.” Obama was not accusing the American people of being lazy but the American government. When Perry was confronted with this obvious truth, on Fox News no less, he simply stuck to his guns saying,  "I think he's talking about Americans … I think that's exactly what he's talking about.”

Both ads are still running on American television. I ask myself, which of the falling quotes best reflects the kind of morality that drives politics?

“If you tell a lie long enough, it becomes the truth.” (Joseph Goebbels)
Or
“Repetition does not transform a lie into a truth. (Franklin D. Roosevelt)

When I first read about these campaign ads I had two immediate responses. The first was that Republicans have always been better at this sort of thing than Democrats. I'm not saying Democrats are innocent. Just that Republicans are better at it. I read an article once some years back analysing the language used by Republicans and Democrats when talking about politics and campaigning. The article concluded that Republicans tend to use the language of war and the Democrats the language of sports. When George W. Bush and Al Core essentially tied in the 2000 presidential elections and the contest moved from the ballot boxes to the courts, British friends asked me who was going to win. I said without hesitation, "The Republicans. In a street fight always put your money on the Republicans."

My second response was a bit more philosophical, and perhaps naive. Despite myself I was upset that Romney and Perry were getting away with such obvious distortions of the truth. Realpolitik and all that. Still, if I am naive at least I'm in good company. In his book Summer Meditations on Politics, Morality and Civility in a Time of Transition, Václav Havel says, “Some say I’m a naive dreamer who is always trying to combine the incompatible: politics and morality.”[1]

In his naïveté Havel believed, not only as a playwright and dissident but as president of his country, that politics and power should “live in truth.” Speaking of a unnamed Czech Marxist philosopher he said, “The idea that the world might actually be changed by the force of truth, the power of a truthful word, the strength of a free spirit, conscience, and responsibility...was quite beyond the horizon of his understanding.”[2] Forgive me for suggesting it is also beyond the horizons of Romney and Perry. When considering how he might actually apply a “truthful word” to the business of being president, Havel says a president must at least attempt to create a “high politics...a climate of generosity, tolerance, openness, broadmindedness, and a kind of elementary companionship and mutual trust” He went on to say that he had to “inject into my political ideals, my longing for justice, decency, and civility, my notion of what, for present purposes, I will call ‘the moral state.’”[3]

The United States is so politically polarised, where compromise is viewed as utter defeat, it seems that “high politics” is near impossible. Perhaps hoping for an almost high politics would not be futile, but given the blatant disregard for truth in campaigning I’m not going to hold my breath. 

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[1] Havel, Václav. Summer Meditations on Politics, Morality and Civility in a Time of Transition. London: Faber and Faber, 1992, p 4.

[2] Ibid., p. 5.

[3] Ibid., p. 9.

Goodbye Gopenhagen

On the front page of The Guardian today there is a story that seems like a game changer to me. Fiona Harvey reports that some of the rich nations have decided to put off any climate treaty until 2020. In other words, until it is too late. She writes:

After the Copenhagen climate talks in 2009 ended amid scenes of chaos, governments pledged to try to sign a new treaty in 2012. The date is critical, because next year marks the expiry of the current provisions of the Kyoto protocol, the only legally binding international agreement to limit emissions. UK, European Union, Japan, US and other rich nations are all now united in opting to put off an agreement and the United Nations also appears to accept this.

I’m not sure why this seems so significant to me given that it there has been little indication that the politicians and policy makers would or could come to some meaningful agreement before the door shuts on the hope of keeping the world’s temperature below 2c. I suspect that when everything goes to hell history books may not be a major priority, but if there are such books and people actually read them, I hope they name and blame. It won’t do any good since the damage will have been done somewhere in the middle or end of this decade. But it seems somehow just. The United States is particularly guilty, though it is certainly not the only offender. However, it’s political system is dysfunctional to the point of being frozen. The politicians seem incapable of reaching decisions. And in a two party system where one of the parties considers compromise as giving in, not to a worthy opponent, but to an almost evil adversary, there is little hope that politics will make progress on the great issues we face (See The Republican Days of Wrath). The Republican party has moved so far to the right and is comprised of religious fundamentalists, rightwing ideologues and people who are actually delusional and ill-informed. As Gary Younge, also in today’s Guardian, said speaking of the Republican Party:

Polls last year showed a majority of Republicans believed Obama was a Muslim and a socialist who "wants to turn over the sovereignty of the United States to a one-world government"; two-thirds either believed or were not sure if the president is "a racist who hates white people", and over half believed or were not sure if "he was not born in the US" and "wants the terrorists to win".

Never mind that the Ground Zero mosque was neither a mosque nor situated at Ground Zero, or that the foreign-born Muslim Obama is actually an American-born Christian. Facts didn't matter. So nor did lies.

For the past three years making bizarre, false, inflammatory statements was not regarded as an obstacle to being taken seriously within the party but a prerequisite for it.

The party and its leaders will never allow the United States to take even mild measures to counter climate change, and the Democrats are not able, or perhaps not willing, to make the case for the radical changes that are necessary.

In the United Kingdom when David Cameron campaigned in the last election saying the UK government would be the “greenest every.” Though he and his Tories lost the election, they nonetheless govern (with the help of the third place losers the Liberal Democrats) as if they had won a landslide victory the likes that has never been seen in British history. And, things looked good, look green, at first. A lot of policy talk about green issues. Unfortunately, day after day one initiative after another is being axed. Such is life in the land of the Great Cuts.

All this reminds me I am glad I never had children. If I had, I would now be losing sleep worrying about their children.