The Early Days of a Better Nation

Thursday, March 19, 2009

The Voice of Moderation

So we should try to establish exactly what caused the crisis, who is responsible, and how. And that does require a certain amount of finger-pointing. Not because it is fun, although it is, but because we can’t afford to be magnanimous to the policy‐makers and opinion‐formers who steered us into this. If we do we’ll leave them in place to manage the crisis as confidently and ineptly as its prelude. They will seek to reconstruct a system on the same disastrous lines, they will fail, and they will, with every appearance of regret, resort to ever more desperate measures. You probably found this article online, so I shall say no more.
Dan Hind presents (PDF) the most comprehensive and readable account of the origins of the current crisis, and of a feasible and potentially popular response from the left, that I've seen anywhere. (Via).

Instant update: the man also blogs.


This, and other analysis that have made sense to me, have all had one thing in common: they have pointed to the economy's lack of contact with any fundament. The problem list is long, including

* abandoning any standard of value for the money (like a gold standard) ...
o ... and the Phase II of this abandonment via the Bretton-Woods agreement.

* the divorce between ownership and responsibility inherent in the «limited liability» of the corporate model.

* the removal of control from owners and workers over the workplaces.

* fractional reserve banking (with steadily increasing multipliers)

* savings totally out of control for those saving. Say collective pension funds and the like.

* financial «leverage» in general, where «risk-taker» and «risk» have no knowing relation to one another whatsoever.

These problems are of course connected, and Dan Hind makes a good job of suggesting a socialist alternative. I don't share his vision, but I share parts.

As for particulars, I think Hind is a bit too fond of Keynes. Keynes may have identified a problem, but that does not mean he has found the medicine. Keynes schemes are also, imho, part of the problem chain in that he divorces money from any fundament and instead insists they have fiat value. Solutions to the crisis --socialist, libertarian or otherwise-- will do well to depart from Keynes.

Best comment so far:

Tony, I received an interesting mail today, pointing out that the AIG bonuses is the small scandal covering up the big scandal. The big scandal is where the bulk of the money AIG received went. Here:

A related, comprehensive list concerning the Bailout can be found here: .

Here's one example of AIG's international corporate involvements that are worth tracing and following up. In 2001 AIG (perhaps through its division AIG EUROPE) entered into a relation with EUREKO, an internationally active insurance organization registered in the Netherlands (as a "B.V."). EUREKO is related to the Dutch insurance giant ACHMEA, which has a daughter insurance firm called AGIS. Last year AGIS tried to sell me (and many poor residents of Amsterdam) a policy that I calculated would save me 2 euros each month but would be disadvantageous as to provisions compared to the one I had then. A medical specialist later confirmed this ploy to me verbally, without my having mentioned the subject at all. This person was agitated by some evil practices of Dutch insurers, and used this trick of AGIS as an example. One can SPECULATE that the ADVICE, perhaps the ORDERS, to engage in such shabby, cost-cutting practices comes from the top of this chain---from AIG. Given the well-known, horrifying practices of American insurers, this would not surprise me at all. My several attempts to publicise such things in Holland have so far failed.

My several attempts to publicise such things in Holland have so far failed.

I wonder why?

Thanks for the interest, Alex. First of all, let me be up front by saying that my views might be so wrong that no medium would ever accept them. Second, and more generally, Dutch organizations, including the rags, political parties, and public interest groups (aka lobbies), get yearly subventions (they are called 'subsidies') from the govt. Their actions sometimes seem to be more directed towards securing their next subsidie than in protecting the interests of their membership (I wrote a REQUESTED piece about healthcare problems for one of them last December. As of last week it was lying on their pile of unanswered and possibly unread emails.) They rock no boats. Thirdly, there's open self-censorship and article castration by the newspapers and other media. My spirited attempt to defend SF against a writer who proclaimed its rapidly approaching death was a victim of this. I believe that the stuff about AIG, first suggested to me by a source in the world of international insurance, was self-censored by the rag I sent it to. So---More power to the Bloggers!

I have no problem with those who say we should not be bailing out banhers. However the problem with saying that it is all the fault of or extreme capitalist economy is that this is bollocks. 50%, now slightly over, of the economy is overwhelmingly non-productive government spending. Half of the rest is expenses of satisfying government regulations (eg windmillery & the rules that have made housebuilding cost 4 times more under the RPI than they used to.

Whatecer we have now 25% non-government isn't extreme capitalism.

Those who want a more "socialist" solution are in the position of somebody driving a 4 cylinder car with 3 non-working cylinders complaining that it only does 20mph & if somebody would hand them a sledgehammer they would take care of that noisy 4th cylinder & it would go at full speed.

We can visibly see that as Gordon repairs with his sledgehammer the more the economy slows down.

Meanwhuile China & India's economies are still growing about 8% putting the lie on the claim of global recession. It is a European, North American & Japanese recession because they are the areas which are expanding Luddism & big government bureaucracy.

In my post right above Neil's I quite unintentionally weakened my statements. My source TOLD me stuff about the connections I described earlier.

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Dan Hind has it essentially right.
This is about the turn since the '70s in general, and especially the vicious cycle of wage-productivity gaps, overfinancialization, short-termism and debt since prevailing.

But so far it looks like we're just getting corporate welfare and band-aids.

Incidentally,the protest in the picture didn't get nearly as much coverage in the U.S. press as it probably should have. I didn't know about it until I came to the site.

I saw that picture within one day after the demonstration and have been spreading it around ever since. Holland's most important columnist used the text today (25 March) in his column, but got the text wrong. I'm a bit upset, since he first saw that great photo when I sent it to him.

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