Category Archives: neoliberalism

How Much Will It Cost? (Revisited)

The questions of “how much will it cost?” or “How will you pay for it?” are always posed by the media’s journalists to the planned spending proposals of Labour and all the other parties, bar the Tories. That the Tories have dominated the economic discourse since the 1980s cannot be denied.  Indeed, political journalists have accepted the economic orthodoxy uncritically in the decades that have followed and there are, in my mind, two reasons why they do this. First, they’re not economists and second, they’re lazy. Even the economics editors of the major news organizations tend to be drawn from the Thatcherite School of Household Management Economics, and will base their analyses and their questions on its flawed logic.

Now, I’m not an economist but my instincts regarding national finances are correct: household analogies are nonsense and journalists who repeat them are foolish. The reductivist economic dogma of the Tories and UKIP has dragged this country into recessions (there were three during the Thatcher years) and have forced people into ever greater poverty, while the rich have seen a manifold increase in their incomes.

In an article by Richard Murphy of Tax Research (two days after my piece), he puts to bed the myths that have passed for economic competence and credibility for over 30 years.  He opens by saying:

The most dangerous question in political debate in the UK is the one always rolled out by every journalist, on air or in other media, which is to ask a politician ‘How are you going to pay for it?’ where ‘it’ is whatever the politicians has just proposed to do.

He then provides three reasons why this question is a dangerous one and provides handy replies to the clueless hacks who insist on asking the question.

You can read the rest here.

All governments borrow and spend money. That’s how national finances work. In seven years, the Tories have racked up more debt than the previous Labour government did in 13 years. Moreover, Labour has a better record of paying off debt. In 1976, the Wilson government was forced to take out a loan from the International Monetary Fund to pay for the Sterling Crisis, which was caused by the Heath government’s economic mismanagement. It was paid off by 1979. Thatcher’s Tories continued to use the IMF loan as a stick to beat the Labour Party even though the loan had been repaid. Yet Kinnock refused to counter these lies. Finally, the Corbyn-led party has awakened to the need to counter the Tories’ myths and lies about the national economy and borrowing/spending. And about time too.

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Filed under economic illiteracy, Economics, General Election 2017, neoliberalism

Let’s call it what it is: a depression

Are we about to witness the revival of Hoovervilles?

Are we about to witness the revival of Hoovervilles?

So, place your bets, readers.  How long will it be before some economic guru has the guts to admit that we’re living in the midst of an economic depression? Or is it the case that we’re just hanging around waiting for the next recession to come along, like the London bus of legend: three arrive at the same time and then we can call it a “depression”. So we’ve had two recessions, when’s the next one due [looks at watch]? I’m freezing my arse off!

Recessions, depressions, panics, slumps, credit crunches, call them what you will but they all amount to a failure of the capitalist system. The problem is that no one in authority (and I use that word loosely) wants to stand up and say that “This is a depression”. An economic depression apparently is determined by a sequence and length of recessions but no one wants to agree on the number. That’s because there is no set figure but there was an alleged benchmark to which all future depressions are supposed to aim. We are also told that in order for a recession to be classified as a depression, there needs to be a contraction in economic activity. This is happening now with banks refusing to lend to small businesses.

We are told that the last depression, now referred to as the Great (apparently) Depression of 1929 to 1939 was the longest and deepest depression. But there’s nothing “great” about a depression. This depression was preceded by the Depression of 1920 – 21, which was later downgraded to the status of “recession”. There were also 2 recessions during the 1920s. In Britain, the previous Great Depression of 1873 to 1896 was later called the “Long Depression” and was preceded by the Panic of 1872.

The tale of that period has been told innumerable times: a panic on the stock market and a run on the banks that combined with poor harvests to spawn a series of recessions that resulted in extreme hardship for millions, if not, billions of people around the world.

It was a “contagion” that began in Wall Street and spread around the world like some kind of economic plague. Shirts, jobs and homes were lost in short order. It was a tough time but not for the ruling classes, whose social and economic capital exists in perpetuity… much like the inexhaustible body armour cheat in a console kill game (Medal of Hour, etc). They would survive. They would have to get used to having foie gras only twice a week instead of six until the good times returned (on its high horse).

But could there ever be another depression that matches or exceeds the Great One for sheer, uh, depression? Apparently not. We were supposedly inoculated against further outbreaks of widespread panic… until Callaghan discovered monetarism and the genie was released from his bottle, free to wreak havoc.

The Great Depression has been fixed in the public memory as  a sort of golden age of economic depressions. It has supposedly surpassed previous depressions and panics – each and every one of them devastating in their own right, but ignored for ideological reasons – for its near-total effect on all levels of society. The previous depression has become folklore; its mythology has become the model of perfection against which certain economists and their forecaster allies (sic) judge current and future economic catastrophes.  But why?

Is it because our political leaders (that’s another word I use with caution) lack the intellectual courage to admit the truth of the situation, or is it because they have reached their intellectual limits and lack the honesty to admit that they have no plan for the future of civilization? Could it be because they don’t want to “panic” the public with the admission that the current economic situation is, in truth, a depression?

The issue of mass panic has never stopped them before.

Governments have never been afraid to use fear to coerce the public into accepting their version of the truth in order to prosecute pointless wars, as this clip reminds us.

That’s “good” panic. It’s the kind of panic that protects “freedom” and defends “our way of life”. Today William Hague claimed to have seen “some evidence” that the Assad regime in Syria has chemical weapons. There is a school of thought that believes the only way out of an economic crisis is to start a war. But wars are costly.

Depressions and recessions only ever benefit one kind of person and I don’t need to tell you that person isn’t you or I, dear reader. This is a time when the capitalist sees the opportunity to pit worker against worker. We have already seen how this government uses divide and rule in the way tries to create a false conflict between public and private sector.

This is a depression.

The have been dark murmurings of another recession on the horizon and yet, Osborne continues on his reckless course like a blind ship’s captain, who’s full of Dutch courage after drinking his crew’s rum rations.  But he’s fine. He’s got a wallpaper fortune and an Irish baronetcy to look forward to… not that he isn’t loaded already.

Two and a half years of this government’s bungling has done nothing to give people hope. Instead, prices increase year on year and incomes stay the same for average workers. For many people, there is nothing to look forward to. There is no trust in this government or in Her Majesty’s feckless opposition to put things right either, with disciplinarian Liam Byrne claiming that his party didn’t do enough to clamp down on benefit “cheats”. Trust left town on the same train as hope and it isn’t coming back.

There is a solution to this. It’s just that the ruling class and their lackeys in the media and the think-tanks don’t want to hear it. They have much to gain from economic catastrophes but, potentially, so do we.

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More on the Liberty League

No sooner than I’d published this blog than I found myself dealing with three trolls, all of whom claimed to be dedicated to the cause of freedom. I also had three of them respond to me on Twitter, two of whom abused me (typical) and the other, Anton Howes, the League’s head honcho tried to tell me that they “appealed to left-libertarians”, and asked me if

@buddy_hell spiked +IOI not count as “leftwing” anymore? Besides, orgs not same as ppl who attend our conferences. Many left-anarchists, etc

Spiked? IoI? Left-wing? Same sentence? “Good Lord, no”,  I said but just because they call themselves “left-wing”, it doesn’t necessarily follow that they are. I have already written about the LM network, their origins and their constituent parts in a blog that was cited on Powerbase. Anyone who takes LM’s left-wing credentials at face value is in for a major disappointment.  In fact, the Revolutionary Communist Tendency (the forerunner of the RCP/LM) was expelled from the SWP for being too “right-wing” (sic).

But what is a “left-anarchist”? Is that an anarchist who is not an anarcho-capitalist? Anarcho-capitalism is an oxymoron. Anarchists despise the capitalist system and no anarchist in their right mind would knowingly associate themselves with a network that includes the likes of The Freedom Association or the Institute for Economic Affairs. I told Howes this but I have yet to receive a reply.

Howes also told me that he was a PhD student but it turns out, according to Spiked’s Patrick West (brother of Ed) that he is, in fact, an undergraduate student at Kings College, London. The article was written in March of this year, so it is entirely possible that Howes skipped the Masters degree and went straight for the doctorate. It has been known to happen. He told me,

@buddy_hell and yes, I’d noticed. Although I’m not ‘rightwing’ at all, it won’t stop me using the terms.

He works for the Adam Smith Institute, you can’t get more right-wing than that. But like so many right libertarians, he presumed me to be stupid. They’re an arrogant bunch.

While not being a fan of Spiked, I found some of West’s article interesting because it shed a little more light onto the Liberty League. West opens in strident fashion.

For decades, university students in Britain who wanted to change the world often had little more than a handful of left-wing groups to sign up to. And, as time has gone on, these radical groups have become more and more outdated and divorced from political reality. Left-wing student associations are now more likely to call for state intervention into people’s lives, embrace the welfare state and demand fewer cuts, rather than fundamentally challenging the state’s role.

Ah, yes, the “left” is “outdated”. So presumptuous and so wrong. if Spiked is left-wing, then this West article puts paid to that notion. The left is marginalized. Yes. The left is divided. That’s true. But these libertarians will not change the world in a way that benefits all of society, they want the same world but with bells, whistles and a fringe on the top. Let’s continue,

Howes recognises this phenomenon. ‘People are sick of seeing tonnes and tonnes of Socialist Workers Party or Marxist groups hounding them on tables outside campus all the time, posting fliers and posters everywhere. They think “well, I don’t agree with this”. Students want to see an alternative group on campus that has pro-liberty ideas.’

“People are sick”, he says, “of seeing tonnes and tonnes of Socialist Workers Party or Marxist groups hounding them on tables outside campus all the time”. Does he ever think students may be genuinely interested in left-wing groups? I mean, it isn’t as if the right doesn’t organize on campuses. It does. They just don’t happen to be popular with a good many students and for very good reasons.  The other thing that is evident in the passage is Howes’ insistence that only his network understands the true nature of “liberty”.

The demand for such a group is coming from a mix of students, says Howes, who place themselves all over the traditional political spectrum, from left-wing anarchists to young conservatives. Liberty League now has 30 active student societies on campuses across the UK and it is rising all the time.

I would be interested in seeing exactly how much “demand” there is for “libertarianism” at, say, a post-1992 university like London South Bank for example. These libertarians are top-down, hierarchical types and if you scratch the surface you’ll find an authoritarian underneath. “Left-wing anarchists” that is to say, real anarchists  would have no truck with this kind of “libertarianism”. Further down the article, I found this,

One enthusiastic Liberty League supporter is Gabrielle Shiner, a young American studying at Queen Mary, University of London. Shiner recounts: ‘When I got to the UK I couldn’t really find any student group to join. It was really disheartening for libertarian students. And then Anton, who I’d never heard of, started tweeting asking me if I was looking to get involved in something and I was really excited about that.’

Later we learn that Shiner is involved in Students for Freedom, a US  student libertarian organization that is part of Cato’s “limited government movement”.  We all know what The Cato Institute does but it seems Howes and his buddies don’t or are lying. I think it’s the latter.

So as we can see, part of the League’s job is to undermine what’s left of the rather ineffective Student Unions. There are some universities that have strong SU’s – University of London Union, for example – the rest are little more than providers of student freebies. The process of destroying the SU’s began under Thatcher, who was concerned that the NUS was a hotbed of student radicalism. Instead, we now have a situation where the Right, led by the Liberty League, are attempting to dominate political discourse on campuses around the country.

The Right – the Conservative Party, especially – is against political activity on campus unless it is either right-wing or “libertarian”. This is the reason why the Thatcher government wanted SU’s to disaffiliate; it hated the very idea that students chose left-wing politics over the right. It felt that by eliminating left-wing political discourse on most campuses and confining it only to Oxbridge and other Russell Group universities, it would destroy left-wing politics in Britain for good. It nearly worked.

Pretty disgraceful that @libleague society being discriminated against by Manchester SU in terms of funding, for not backing Demo12

This is pretty typical of the Right. I know how hard it is to set up and run a society but in terms of funding, the SU will only match the membership money and any other monies that the society has raised in its coffers. I get the feeling that the League wanted more than its fair share. But this tells us something else about the Lib League: they support cuts to higher education and regarded Demo12 as something that  only “lefties do”. They are above protest unless it’s to demand more cuts to public services. I wonder how many of them attended the disastrous Rally Against Debt last year?

The one thing that I left out of the original article about the Liberty League was its campus network. If you look at the list, you’ll see one called the LSE Hayek Network. There’s nothing “non-partisan” about Hayek, the great guru of neoliberalism, he is most certainly right-wing and was a supporter of Pinochet’s economic liberalization. You see, economic liberalization can only be forced onto people. If given the choice people would reject it without a second thought.

Right libertarians seek to perpetuate the notion of the importance of the sovereign self over society. Please the self, pamper the self, flatter the self, the self is king. This is the atomized society that Thatcher spoke of; one that is bereft of communities. Our society is in tatters, wrenched apart by the spoilt brat of the sovereign self.

If you inculcate the notion that the individual is more important that the rest of society, before you know it, people will begin to see themselves less members of society but more as consumers at the end of a long supply chain. Individualist anarchists fit in well with Objectivists or Randists, because they place the self at the centre of the universe.

Right libertarians speak movingly about freedom but, as history has shown us, they are more than happy to collaborate with fascists or military strongmen (the  Italian Futurists, for example, described themselves as “anarchists” and joined Mussolini’s fascist government). Anarchists, on the other hand, fight fascism and all forms of authoritarianism. The right libertarian would happily watch as the cops beat the shit out of you for protesting against an authoritarian state.

Cato supported the Pinochet dictatorship. Jose Piñera, the architect of Chile’s private pension system and former Chicago Boy is a “senior fellow” at the Cato Institute. That’s right libertarianism for you.

POSTSCRIPT

Not “right-wing”? The Tories don’t think so.  Last year, Conservative Home heaped praise on the Liberty League.

Here’s a revealing paragraph (I’ve bolded a bit for emphasis),

This work was started by Simon Richards, Director of The Freedom Association, with his vision for ‘Freedom Socs’. There are now five such societies, the first of which launched at York three years ago. In addition to this, there are a large number of libertarian societies, which spontaneously popped up around the country. The Liberty League enables these individual groups to be part of a cohesive network and acts as a gateway for young freedom lovers in the UK.

Bingo!

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Filed under economic illiteracy, Economics, laissez faire capitalism, neoliberalism, Political parties, Spiv capitalism, Think Tanks

Mediating freedom: the role of the libertarian think-tanks

Madsen Pirie: the architect  of Thatcher's privatization programme

Madsen Pirie: the architect of Thatcher’s privatization programme

How does one define the word “freedom”? There is a group of people who believe they know exactly what the word “freedom” means. “Freedom” and its cousin “liberty” are abstract nouns, there is no hard and fast definition for either of them and any attempt to give them some kind of single meaning or, indeed, a list of meanings is utterly futile and is most likely going to be dishonest. Moreover, it could take you a very long time to compile such a list.You can no more easily define “freedom” than you can words like “happiness” or “love”, because these words mean different things to different people at different times.

There are people who believe that they have knowledge of the true nature of freedom. They form themselves into ‘non-partisan’ think-tanks’ and discussion groups and refer to themselves collectively as “libertarians”. It’s as if as libertarians, they and only they have found the true meaning of freedom. It is as though they had heard the word of G*d Himself who spoke unto them and revealed the secret of liberty.  He said unto them, “It is not Communism”.

And lo, it became the everlasting Truth… until the collapse of the Wall of Berlin, when the disciples of The Truth believed unto themselves that freedom had triumphed over the tyranny of Communism, which they declared to be “unfreedom”.

After some soul-searching and not an inconsiderable amount of hand-wringing, they decided among themselves that unfreedom was to be represented by so-called radical Islam. They had found their antithesis! Lazy thinkers are attracted to binaries because they can only define themselves against their opposite. They are not Communists/Socialists/Lefties/Islamists, therefore they love freedom!

Those who call themselves “libertarians” deny that they are of a right-wing disposition and will gather at the feet of some economic guru or high priest, where they receive The Word directly from the master’s mouth. They may also deny that they are ideological and claim that they are “non-partisan” or “neither right nor left” but this is dishonest for when you press them on certain matters, they will produce a reply that contains the usual messages of “responsibility” and a “small state”. They speak in maths. Society is merely an afterthought.

Classical liberalism, as a term, has become both a touchstone for nostalgists and means by which to reorder language. Even neologisms are subjected to this transformation. The term “neoliberalism” is resented by the Right because they did not coin it. In its stead came “classical liberalism”, a term made seemingly older by the prefix “classical”. It is still neoliberalism in form and in substance. We cannot return to the past, no matter how hard the Tories try to recreate the past in the present. Therefore they revive old terminologies and long for the days before they were born.

The economic theories embraced by the Adam Smith Institute (ASI), for example, are most definitely on political right and are therefore ideological. There’s no escaping it. In the 1980s, the ASI was very close to the Thatcher government. To whit, ASI’s president/high priest, Dr Madsen Pirie was  the architect of privatization. His freedom is that which steals food from the mouths of babes and condemns the poor to lives of never-ending serfdom.

Right libertarians believe themselves to be the arbiters of the freedom ideal. Their idea of freedom is a mediated one. That is to say, it comes from someone else or is produced by a body of people like ASI who make a deterministic argument of freedom, based more or less on the notion of economic liberty, which they assert is the fount of all freedoms. Such thinking is absurd when one considers the tyranny exerted on the poor and working poor by states that have operated this model.

For neoliberalism or classical liberalism to work, it must be imposed on the citizenry. These economic ideologies can only benefit the rich and any claim that they will “liberate” the poor is patently absurd and is not supported by the evidence. “Trickle-down” is a lie.

The ASI, like so many other libertarian think-tanks have convinced themselves that they know the True meaning of the words “liberty” and “freedom” but it doesn’t and to claim that it has a form of superior knowledge that leads them to a position where they can provide a definitive meaning for these words is arrogant, mendacious and self-delusional. Have a look at this pamphlet from the ASI, from which I shall quote a portion,

Liberty can be defined as not being interfered with, or not being
imposed on, by others (non-invasive liberty). Not being attacked
or robbed is part of liberty; attacking or robbing people is not part of liberty.

It follows that liberty means being able to do what you like with
your own body (the principle of self-ownership) and your own
property, as long as you are not thereby imposing on the body or
property of others. You are free to harm yourself, for example by
taking dangerous drugs, but if you harm someone else or damage
their property without their consent, you are violating their liberty.

This sense of liberty is what libertarians, or classical liberals,
mean when they advocate liberty. It is also the dominant idea of
liberty within Western history and it applies to any society that is
described as generally ‘liberal’.

This is a mainly Hobbesian formulation of liberty that has been infused with neoliberal discourse (Hobbes was a supporter of absolute monarchy). But to characterize liberty in purely Western terms is misleading and rather vague since it presumes that freedom does not exists outside Western ‘liberal’ discourse. It also suggests that “liberty” was conceived by Westerners, ergo they are the arbiters and owners of the “freedom” concept. Furthermore the essentialistic arguments on the nature of freedom put forward by the ASI is only one set of definitions and can never represent a totality of freedom, because there will always be limits or disagreements.

The Freedom Association (TFA) is a right-wing pressure group, whose idea of freedom is narrow. Indeed, its name is Orwellian. I can think of no group that calls itself The Love Association or UK Happiness League.  No one can tell you what constitutes  love or happiness. If I were to ask you to sum up what the word “love”  in a few words, you would tell me one thing. If I were  to come back to you in a couple of months and asked the same question, you may have a different answer for me. No one can tell you or I what love is; it is dependent upon one’s individual perception of that word at a particular moment in time.  You could say that love is not hate. But then, what is hate?

The idea of freedom put forward by ASI or TFA is a spectacular one, precisely because it has been mediated. These groups have set themselves up not only as arbiters of liberty but have hijacked the discourse on the subject. It stands to reason that those who accept the ASI’s and TFA’s definition of freedom as Truth, do so because it emphasizes their relationship to capital. If you do not accept their kind of freedom, then you are a supporter of unfreedom; a totalitarian. It’s as simple as that.

When the government announced it was going to “measure” the nation’s “happiness”, I was suspicious and rightly so, you cannot measure, let alone define, happiness. It was a government attempt to manipulate people’s emotions. Nothing more. Nothing less.

In George Orwell’s satire, 1984, he created a dystopian world in which ignorance was a virtue and in which the state created ministries with names like the Ministries of Truth and Love. He was onto something.

There was some  Situationist graffiti that once said, “Don’t liberate me, I’ll take care of that”. That is my motto.

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Ethics, morality and the right’s economic arguments

Gordon Gekko: patron saint of greedy bastards everywhere

“Greed is good” was the quote attributed to the character Gordon Gekko in the film Wall Street. But he never said those words, this is what he said,

Greed, for lack of a better word, is good. Greed is right. Greed works. Greed clarifies, cuts through, and captures, the essence of the evolutionary spirit. Greed, in all of its forms; greed for life, for money, for love, knowledge, has marked the upward surge of mankind and greed, you mark my words, will not only save Teldar Paper, but that other malfunctioning corporation called the U.S.A

As you can see, the sentiment that “greed is good” is contained within the speech. Perhaps the most revealing part of that speech is the phrase “evolutionary spirit”. In other words, the form of capitalism that is currently  being practised is a form of social Darwinism.

Greed is a highly-regarded character flaw among the neoliberals who currently dominate economic discourses. They will tell us that those who salt their vast sums of money away into off-shore accounts are “wealth-creators”, not tax-dodgers who pay their employees peanuts and who continue to rake in vast profits while paying no corporation tax.  As we know already, this newly-coined phrase “wealth-creator” is indicative of an ongoing effort on the part of a group of pathological liars to convince us that it is in our best interests to cut our throats for the benefit of these parasites and, indeed, the nation. These wealth-creators create wealth but only for themselves. You and I will see not a penny of it.

It says a great deal about the morality of the right when they tell us that greed is “natural” and that it should be encouraged. Hayek, whose word is holy writ among neoliberals and the mendacious, self-delusional ‘classical liberals’, rationalized greed as something inherent in our make-up, which therefore meant that the small state should do all it can to facilitate it. No planning. No regulations. Just pure unabashed greed would benefit us all, he alluded.

We don’t praise or celebrate murder nor do we sanction murder as a good thing unless it has been given license, as in the case of war for example, where murder is regarded as a good thing, because it is in the “national interest”. People get medals for murder.  The greedy are rewarded with bigger tax cuts and knighthoods for their ‘risk taking’. The aftermath of the Iraq invasion showed us how both murder and the clever justification for greed could be used as a means of social control and a means to cart loot out of the country under the effective guise of the “free market”. “It isn’t greed” they’d tell us. “This is freedom”!

But why should we praise anyone who is permitted to give full expression to their greed? We don’t praise murderers unless, of course, they wear medals. Should we also allow those who burgle their neighbours to carry on because they’re showing ‘entrepreneurial spirit’? That’s another slippery concept: entrepreneurialism.  What is it? Is Grant Shapps an entrepreneur? Some, his fellow Tories, would think so. I say that he’s a crook and a parasite.

The trickle down theory has been thoroughly discredited. Even George Bush Sr had his doubts when he called it “voodoo economics”. Yet this government and its Lib Dem human shield persist with this notion that only greed can save us from our economic woes. Instead of clamping down on the cheats, they are given ever greater license to rip us off.

I find it bizarre that some of these greedy people would describe themselves as Christians but doesn’t the Tenth Commandment advise against greed? I do believe it does.

What Hayek and his acolytes propose is nothing less than a form of economic natural selection. Those that have money will survive and carry on exploiting others, while those without will either die or will otherwise be enslaved by the greedy.

Greed is no more natural to us than spree-killing. We don’t tolerate spree-killers, why should we tolerate greedy capitalists?

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Ye Olde Cittie of London: a swindler’s paradise

The Cittie of London: paradise on earth if you’re a crook

How many times have we heard right-wing economists, supported by our neoliberal  government, claim that if the financial services sector is subjected to tighter regulation, then those institutions will simply move overseas? Too many to mention. It’s a form of emotional blackmail that our politicians love to use, but it also shows how hopelessly dependent the major parties are on the nothingness of the financial sector for the quarterly GDP figures. The Tories and Lib Dems (and Nu Labour types) will tell us that there is no choice, we must remain yoked to the parasites of the Cittie for our own good. This is because the two parties (and Nu Labour/Progress) are busy swapping saliva with bankers and hedge fund managers, who they believe are more deserving of their attention than the voters. In their eyes, there are none so important or so wise as those who have been awarded the title of “wealth-creator”, even though the “wealth” they create is funnelled overseas into secret accounts.

The New York Times has a story about another trader being wanted in connection with fraud charges.

A former Credit Suisse executive wanted in the U.S. on fraud charges linked to distorting the value of mortgage securities during the financial crisis has been arrested in Britain, authorities said Thursday.

It would seem that the temptation to defraud and embezzle is far too great for some money men to resist and the impression that I get is that Britain is particularly prone to this sort of thing, because light touch regulation makes it easy to swindle banks and deceive others. Yet one is also left with the question, “How many more are there”?

U.S. Federal prosecutors have alleged that Kareem Serageldin conspired with two of his employees to hide the deteriorating condition of the U.S. housing market in 2007 in order to keep the value of bonds based on subprime mortgages artificially high, thereby fattening their bonuses.

He was slated to receive more than $7 million in compensation in 2007 before the company learned about the alleged fraud and withheld $5.2 million of his pay. The fraud, which prosecutors described earlier this year as “a tale of greed run amok,” was blamed as responsible for a portion of the $2.65 billion write-down Credit Suisse announced in March 2008.

But it says an awful lot about the nature of light touch regulation in this country, when it is Wall Street, of all places, that’s leading the investigations into London’s rogue traders. You sort of get the feeling that it’s one of those horrible family secrets that everyone knows about but you.

Deborah Hargreaves writing in The Guardian in August said,

But we all know where light-touch regulation has ended up: about £2tn ($3.13tn) sunk into supporting the banks and the return, for the UK, to the depths of a double-dip recession. So you can’t blame New York regulators for spotting an opportunity of their own. Brussels is doing the same.

Our banks have hardly helped themselves. Barclays admitted manipulating a leading benchmark interest rate for years – first, for its own gain, and then, to convince regulators it was healthier than it looked.HSBC turns out to have been accepting truckloads of dollars from money launderers with no questions asked.

Yet I stopped in my tracks this week when the accusations against Standard Chartered were made. The bank is a byword for respectability. It came through the financial crisis largely unscathed. Its former chairman moved on to the House of Lords, where he currently champions getting more women onto company boards. Its current head only recently said the bank’s business was so boring it was unlikely to come to the attention of regulators.

Even the most august of British financial institutions is now in the spotlight. The entire Cittie is rotten and The Cat wonders which bank is going to be next.

There is a powerful argument for the reinstatement of transportation to a remote island for these crooks. Say, North Rona?

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Filed under Cittie of London, Corruption, Economics, neoliberalism, Spiv capitalism

The Mythical Laffer Curve

I’ve mentioned the Laffer Curve a few times on this blog, often in connection with one of its greatest proponents, Señor Daniel Hannan. This excellent blog from Robert Nielson expertly debunks the myth of the Laffer Curve. The curve was allegedly sketched on a napkin in a restaurant by right-wing economist Arthur Laffer to illustrate “taxable income elasticity” and to thereby rationalize the so-called “trickle-down effect” (also known as voodoo economics) and flat taxes, in particular. The Laffer Curve is closely associated with supply side economics and, in particular, Reaganomics. The idea that flat taxes will magically benefit everyone is patently absurd, especially when one considers the example of the Poll Tax and the effect that it had on low-income households.
The Laffer Curve is also known by the name “Laffer-Khaldun” Curve on account of the fact that it was originally devised by the 14th century Muslim philosopher Ibn Khaldun. Laffer simply appropriated it and deployed it as a sort of neoliberal talisman.

Whistling In The Wind

Conservatives everywhere condemn the use of tax increases for fear of the Laffer Curve. This is the idea that if taxes are too high, people will lose the incentive to work and therefore revenue will actually decrease. It is most famous for its counter-intuitive argument that a tax cut could increase revenue. Unfortunately there is little or no evidence to support this claim. History clearly shows that cutting taxes does not increase revenue. The Laffer curve is a political idea used to justify tax cuts for the rich. It is not based on sound economics.

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Filed under economic illiteracy, Economics, neoliberalism