The International Monetary Fund (IMF) is once again in the news, with its dire warnings about Greece’s debt and the U.S. deficit slowing down global economic growth.
This tedious obsession with “growth” and fiscal management, while all other considerations – such as the nature of that growth, who bears the cost of that growth (e.g., deaths by pollution, climate change or rising food prices), and how the benefits of that growth are distributed – recede from public view, only confirms Joseph Stiglitz’s quip that the IMF is staffed by third-rate economists from first-rate universities.
If, say, Germany’s growth rate drops from 4 percent to 2 percent or China’s from 9 percent to 5 percent, how does that portend global economic disaster?
And why is the fate of banks and creditors of greater concern than the fate of the majority poor of the world?
It is refreshing to turn from these insanities to Susan George’s latest book, “Whose Crisis, Whose Future? Towards a Greener, Fairer, Richer World” (Cambridge: Polity, 2010).
George has been a tireless campaigner on behalf of the world’s poor, and she puts many of us to shame by her life-long perseverance.
In her latest book, she repeats something she said in her first book, “How the Other Half Dies,” way back in 1976, in a chapter called “What Can I Do?”. Let me quote from that:
“Study the rich and powerful, not the poor and powerless … Any good work done on peasants’ organizations, small farmer resistance to oppression or workers in agribusiness can invariably be used against them. One of France’s best anthropologists found his work on Indochina being avidly read by the Green Berets … Meanwhile, not nearly enough work is being done on those who hold the power and pull the strings. As their tactics become more subtle and their public pronouncements more guarded, the need for better spade-work becomes crucial … Let the poor study themselves. They already know what is wrong with their lives and if you truly want to help them, the best you can do is to give them a clearer idea of how their oppressors are working now and can be expected to work in the future.”
She continues: “We still lack sufficient knowledge of those who make the decisions that affect countless lives and are in a position to manipulate the rules to suit themselves – that is, transnational corporations and banks, international financial institutions, global and regional trade bodies, right-wing think tanks and cultural institutions, major state bureaucracies, the media, and so on.”
For instance, over the decade 1998-2008, the financial services industry in the U.S., which includes banking, securities, insurance and accounting firms, spent $5,000 million – yes, $5 billion – on lobbying politicians to do away with inconvenient bits of legislation (such as the Glass-Steagall Act of 1933, which Franklin Roosevelt instigated to separate commercial banks from investment houses like Merrill Lynch).
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By 2007, the financial industry employed 2,996 people to do nothing but lobby politicians.
A report titled “Sold Out: How Wall Street and Washington Betrayed America” describes in detail 12 deregulatory measures that financial industry lobbyists were able to push through Congress with the enthusiastic cooperation of the legislators.
And the regulating agencies were being paid handsomely by the banks whose products they were asked to assess. It’s hard not to call this corruption. In any other country, it would.
But in the U.S., since it’s all legal, we don’t equate the U.S. with, say, Mugabe’s Zimbabwe.
What did the financial services wrecking crew get in exchange for their $5 billion in lobbying and political contributions?
They were allowed to create and trade financial derivative products, subject to no regulation whatsoever. Trillions of dollars were subsequently bet on these exotic products.
The commodities markets were also stripped of regulation through the Commodities Markets Modernization Act, allowing unbridled speculation and contributing heavily to food riots in more than 30 countries.
Whenever the lobbyists or legislators set out to eliminate a useful law, they called it “modernization” or “reform.”
We have been intimidated for far too long by the pseudo-scientific pronouncements of economists and the lies of politicians. Banking is not so complex that we cannot understand how we are being conned.
Where are the Christians in economics and finance who dare to think “outside the box” and write the kind of books that Susan George writes, explaining to “ordinary” folk how not to be hoodwinked by the games the rich play?
Here is George’s apt summing up of the reigning economic orthodoxy that is playing havoc with God’s earth and human lives:
“Every cultivated field must produce a maximum without fallow or rest; every worker must be infinitely flexible; every factory must produce at lowest cost or perish; every bank must out-risk its rivals. Hundreds of millions are excluded because they are ‘not productive enough’ or ‘cost too much.’ Hundreds of millions more produce and consume so little that they serve little or no purpose in a capitalist marketplace. They are dispensable or worse; their perceived uselessness is nothing but another drag on the system. As far as the rich are concerned, so long as they accept to do so quietly, they can rot. If they protest, they will be dealt with. The rich can do without them. Our societies are stretched financially, economically, socially, ecologically to the breaking point and we have no shock absorbers.”