Resisting the Financial Oligarchy and Globalisation

Using data from over 1,800 policy initiatives from 1981 to 2002, researchers, Martin Gilens and Benjamin Page, concluded that the rich on the political scene now steer the direction of the country, regardless of—or even against—the will of most voters. America has transformed from a democracy into an oligarchy—power is wielded by wealthy elites.

It takes big money just to put on the mass media campaigns required to win an election involving 240 million people of voting age. The stages of the capture of democracy by big money are traced in a paper called The Collapse of Democratic Nation States by Dr John Cobb.

He points to the rise of private banks, several centuries back, when they usurped the power to create money from governments. Banks are able to create money and so to lend amounts far in excess of their actual wealth. That tradition goes back to the 17th century, when the privately-owned Bank of England, the mother of all central banks, negotiated the right to print England's money after Parliament stripped that power from the Crown.

Similarly, the US colonies won their revolution but lost the power to create their own money supply when they opted for gold rather than paper money as their official means of exchange. Gold was in limited supply and was controlled by the bankers, who surreptitiously expanded the money supply by issuing multiple banknotes against a limited supply of gold. This was the system euphemistically called “fractional reserve” banking, meaning only a fraction of the gold necessary to back the banks' privately-issued notes was actually held in their vaults.

President Abraham Lincoln revived the colonists' paper money system when he issued the Treasury notes called “Greenbacks” that helped the Union win the Civil War. When Lincoln was assassinated, Greenback issues were discontinued. Presidential elections from 1872 to 1896 always had a third national party running on a platform of financial reform. Organized by labour or farmer organizations, they were parties of the people not bankers like the Populist Party, the Labor Reform Party, and the Union Labor Party. They advocated expanding the national currency to meet the needs of trade, reforming the banking system, and democratically controlling the financial system. Financial historian, Murray Rothbard, says politics after the turn of the century was a struggle between competing banking giants, the Morgans and the Rockefellers. Parties sometimes changed hands, but always pulling the strings was one of these two bankers.

The US Populist movement of the 1890s was the last serious challenge to the bankers' monopoly over the right to create the nation's money. No popular third party candidates have a real chance of prevailing, because they have to compete with two entrenched parties funded by these massively powerful Wall Street banks. Control of the media and financial leverage over elected officials then allowed the other curbs on democracy we know today, including high barriers to ballot placement for third parties and their elimination from presidential debates, vote suppression, registration restrictions, identification laws, voter roll purges, gerrymandering, computer voting, and secrecy in government. Dr Cobb says globalization is the final blow to democracy by overriding national interests:

Today’s global economy is fully transnational. The money power is not much interested in boundaries between states and generally works to reduce their influence on markets and investments… Thus transnational corporations inherently work to undermine nation states, whether they are democratic or not. The money power is not much interested in boundaries between states and generally works to reduce their influence on markets and investments.

The awful TTIP and its accompanying legal structure, the ISDS, show exactly how serious this threat is.

So, if people wish to re-establish their sovereign powers, they should start by reclaiming the power to create money, usurped by private interests while people were gloating over their achievements so far! State and local governments cannot print their own currencies, but they can own banks, and all depository banks create money when they make loans, as the Bank of England has acknowledged.

A people's government could take back the power to create the national money supply by issuing its own treasury notes, as Abraham Lincoln did. Or it could nationalize the central bank and use quantitative easing to fund infrastructure, education, job creation, and social services, responding to the needs of the people rather than the banks.

The left has always known that freedom to vote carries little weight without economic freedom—the freedom to work and to have food, housing, education, medical care and a decent retirement.

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Abbreviated from How America Became an Oligarchy by Ellen Brown in Counterpunch.

Where Did All the Money Go?

The treasuries of the world's capitalist countries have been turned over to the banks by our corrupt political caste of morally deficient opportunists. The banks are keeping the accounts of the rich minority topped up because of their losses through junk bonds. The bankers and bond traders have lost their rich masters' money through their excessive risk taking, believing assets would continuously grow in value. They didn't. Many banks should have been declared bankrupt according to capitalist theory, but were not. Governmental lackeys bailed them out with our taxes, and now governments have to recoup the tax money out of us! Of course it suited the capitalists because they want government to be minimal, merely to serve their own purposes and not the needs of the people, whence the cuts in public benefits and services, and the refusal to tax the rich, whose greed caused it in the first place.

"In 2001 there were 497 dollar billionaires with combined assets totalling $1.5 trillion. In 2010 there were 1,210 of these super-rich with assets totalling $4.5trn—more than the gross domestic product of Germany"

The 30 Year War Against The American Dream: Henry Schoenberger

Henry Schoenberger, the author of How We Got Swindled By Wall Street Godfathers, Greed and Financial Darwinism, subtitled The 30 Year War Against The American Dream, points out that the OWS protests simply display the plethora of anger around in the USA. The level of poverty is now at its highest level ever—the poor are angry. The successful elderly planning on retirement after a lifetime of hard work are being hit—elderly retirers are angry. Young entrepreneurs, the foundation of our future economy, and those in their prime, whose enterprise should be creating new jobs to give a living to ordinary folk and a first step to the young—even many of those are angry.

Capitalism, as an economic philosophy, is only 200 years old, based as it is on the book by Adam Smith (1723-1790), the title of which is always given now as The Wealth of Nations, published in 1776. The United States declared its independence that same year.

Since then, the abuse and misuse of Capitalism has paralleled the use and abuse of Democracy.

Henry Schoenberger

Smith is often presented by right wing libertarians, Republicans, neoliberals, and assorted conservatives as the model entrepreneurial hero. Yet, he first held the chair of logic at Glasgow University, and then in 1752 became its chair of moral philosophy. So he was really one of those timeserving wasters lolling around a university with students and living off someone else's hard earned income! That, at least is how the right wing regard university teachers and research workers.

In 1759, he wrote the Theory of Moral Sentiments about the standards of conduct that hold society together, explaining how benevolent human motives and activities lead to a society beneficial for all, and thereafter a virtuous circle. Adam Smith had a lifelong interest in the value of morality for the public good. In his book, The Wealth of Nations, he expressed a belief that allowing the entrepreneur to pursue his own interest essentially unfettered would lead to the betterment of all because it would lead to the better use of resources, including time. He never imagined that his theories could be so distorted by the ultra rich cornering one particular resource to the detriment of most of the rest of us—money!

Darwin published his book on the Origin of Species 85 years after The Wealth of Nations, and, although most Protestant pastors in the USA and their theologians who run the Republican Party cannot now abide the thought of evolution, for the first century of so they loved it. The survival of the fittest was a perfect expression of capitalism. So Darwin's theory applied even within human society. It was not restricted only to the wild.

This extension of Darwinism into society was dubbed “Social Darwinism”. It even made it respectable for the protestant churches to abandon Christianity—Christ blessed the poor and damned the rich—but now Social Darwinism made it clear, they thought, that God meant the rich were blessed and the poor were damned! It was a creed that was soon attacked by social scientists, and began to fall into disrepute. Reaganomics and deregulation revived it.

We all need to know a little about economic theories to understand the fallacious arguments advanced today for unfettered greed. For thirty years after WWII, the rate of growth of the incomes of rich and poor were broadly the same. John Maynard Keynes, before the War had shown how economies can be controlled by regulation, such as using taxation to slow down growth when the economy was overheating, and feeding back into feeble economies some of the tax take to boost spending during recessions. It worked wonderfully well.

Controlling self interest worked for decades in the aftermath of the Great Depression. The top tax bracket went up to 90% and still the ultra rich survived, but so did our middle class and our society was not demoralized. There was enough concern on both sides of the aisle to pass Civil Rights legislation and CEOs did not earn more than 40 times the average wage in their industry.

Henry Schoenberger

Interestingly, it was a closer match to Adam Smith's teaching than libertarian capitalists like to admit. Smith knew that regulation was sometimes necessary, and did not pretend otherwise. He believed that once the boundaries were suitably set, and the operators accepted them, then they would work to better themselves and society as a whole through the so called “invisible hand”. The trouble is, when things work well, smug, greedy people always want to try their luck at extending the conditions to their advantage.

That is what Reagan in the USA and Thatcher in the UK tried in the 1980s. In what was imagined as an economic “Big Bang”, a bonfire of the regulations was arranged on both sides of the Atlantic, neoliberalism became the watchword, and Social Darwinism was born again. Survival of the fittest became survival of the richest. In the last thirty years, the workers and even some middle class have lost income, the better off middle classes have maintained theirs, and the rich have multiplied their riches several fold!

In 1776, Adam Smith could not have seen that unregulated Wall Street financiers enjoying tariff free transfer of money anywhere in the world could manipulate markets and the rewards they had from them to the advantage of themselves as a new Brahman class in the supposedly classless western societies. Greed became endemic. Like the living dead they sucked the economic life blood—money—from the middle and working classes. The insatiable greed and selfishness of the rich has killed millions and millions of jobs, people's savings, their livelihoods and increasingly their lives, quite contrary to the ideas of the capitalists' holy book, The Wealth of Nations, by their innocent prophet, Adam Smith. Henry Schoenberger sums up:

Wall Street is a problem because for 30 years it has practiced innovative financial investment at the expense of our economy. Wall Street has turned away from real investment based on innovation for capital formation to create jobs to benefit our economy. Wall Street Trojan megabanks are a major part of the problem.

Government ought not to be the problem because it is the role of government to regulate, to ensure that the balance of society and its economy are right. Our governments neither guard the public good nor the public. The politicians lack all morality themselves, themselves infected with the zombie infection endemic among the rich and aspirants to riches, with the taste for more and more blood, salivating at the thought of more victims, us, and more dollars, ours.

Schoenberger points out that Goldman has inveigled the government at the highest level for three decades. The OWS movement should demand the removal of any Wall Street executive from any important government post, and equally that government servants should be banned from transferring their allegiance to Wall Street until 10 years after leaving government. Consulting and “Atlantic Bridge” style “charities” and think tanks should be illegal as soon as they get near to government in any direct way, or even indirectly, if the influence can amount to bribery, or any similar illegal approach. That applies too to lobbying, nothing more than approved bribery.

High Street deposit banks must be severed from the high risk investment banks. Bonuses should be illegal. As compensation they must be treated as pay and seriously taxed. Taxes must reflect the reality that 1 percent has 40 percent, so that taxation is at least fair by percentage, and preferably progressive, so that richer people should pay a higher percentage. If a rich man faced with a 60% tax rate gets a rise of $1 million, are we seriously to believe he would refuse to work rather than receive $400,000 after tax.

Schoenberger concludes it “is the time for a movement to kick out all members of congress who vote against jobs! And stop wall street godfathers from taking advantage of the 99% who do not practice unbridled greed!”

A Systemic Concentration of Power and Wealth

In 1906, an Economist named Vilfredo Pareto discovered that around 20 per cent of the population in his native Italy controlled around 80 per cent of the land. This observation has come to be known as Pareto’s Principle. He also found that, while ratios of wealth and control varied in detail from country to country, the broad distribution is always the same—wealth, regardless of human effort, tends to accumulate. That accumulation is also called wealth condensation, by analogy with the condensation of a gas. The popular expression is “money makes money”.

Now the New Scientist reports on a study of 43,000 transnational corporations and the share ownership which connected them. The Swiss Institute of Technology in Zurich used for the study a 2007 Orbis database of 37 million companies and investors spanning the globe.

A core of companies, mostly banks, has excessive power over the global economy. 1,318 companies with intertwined ownership structures, representing 20 per cent of global operating revenues, were on average connected to 20 other companies. This group of 1,318 controls most of the largest blue chip and manufacturing firms—the real economy—taking in 60 per cent of global revenues from goods and services. This group included a “super entity” of 147 companies that controls 40 per cent of the network’s wealth, several of the top 25 of which have familiar names:

1. Bank of America Corporation
2. Morgan Stanley
3. Goldman Sachs Group Inc
4. Merrill Lynch & Co Inc
5. JP Morgan Chase & Co…

The 147 of the surveyed companies controlling 40 per cent of the network have condensed—concentrated—a vast level of wealth into their coffers, just as Pareto would have predicted.

America Stops Laughing to Correct Apoplectic Republican Comic, Rush Limbaugh

Alternet has a plethora of interesting articles and often more interesting and informative comments. This link is to a comment thread to a short article about the right wing propagandist Rush Limbaugh, who is no repecter of the truth or even of facts. A comment by passnthru2 noted:

1. The richest 1 percent has 43 percent of the nation’s wealth—6 times that of the bottom 80 percent, which has just 7 percent
2. the richest 5 percent has 72 percent of the nation’s wealth—10 times that of the bottom 80 percent
3. the top 20 percent has 93 percent of the nation’s wealth—23 times that of the bottom 80 percent
4. the top 50 percent has 97.5 percent of the nation’s wealth—39 times that of the bottom 50 percent which has 2.5 percent

44 percent of Americans couldn’t get $2000 together if their lives depended on it, while the richest 400 families:

1. have $1.4 trillion, and yet,
2. pay under 14% income tax

These rich people and the big corporations they own are sitting on piles of cash, yet they refuse to pay decent wages, and do everything in their power to lower the workers wages, for example using professional bigots like Rush Limbaugh whose splenetic rants impress a substantial section of the redneck population. It explains why there is a recession, and illustrates the huge fault in capitalism.

The rich always want more, and have to drive up profits to get more. They can do it by charging more and by paying their workers proportionally or absolutely less. They can even move their businesses abroad and pay the domestic worker nothing at all! But when people have less to spend whether it is absolutely less through wage cuts or relatively less by price inflation, they cannot afford to buy as much as they could previously. The retail trade goes into recession, and manufacturing businesses follow.

RustyCannon observed that if they were to pay people better, retail and therefore industry would be stimulated. Poor workers necessarily spend what they receive in earnings. They do not earn enough to save it. So the economy would be stimulated if the rich would just realize that they are starving the economy of liquidity by their greed. If the rich will not do it then the government must. President Carter created jobs, then Reagan came in, cut taxes for the rich, and drove unemployment through the roof.

The theory was “trickle down”. Give the rich more tax breaks and less regulations and they will spend more readily, employing people to expand their businesses. It doesn’t work. Republican President, George W Bush did not create as many jobs in the two terms of his presidency as did Carter in the single term he had. The rich just begin to expect more tax breaks to accumulate more risk free wealth—it is easier than taking the risks of trading. 30 years of this has just lead to manufacturers closing factories and destroying lives at home to move maufacture abroad to low labor cost countries. 50,000 manufacturing companies went in the Bush administration alone.

The large and enterprising middle class that was the economic engine of the USA is being impoverished by the stranglehold the rich have on the nation’s ready money—the top 400 wealthiest own more than the bottom 150 million. The economy is starved of demand. Middle class wages have been flat for 3 decades, yet the cost of living has continued to climb. Two income homes are now needed just to get by. The middle class no longer has as much disposable income, and what it has is falling, leaving its demand for products and services lower, with knock-ons to other small businesses dependent on them.

When people, encouraged by the sleepwalking bankers, began using the equity in their homes, they created a false demand bubble, and a false sense of prosperity. Disastrous greed among bankers who thought our money was theirs, led them to gamble with those unsound derivatives. Trading them backwards and forwards each day yielded immense bionuses for doing nothing in the least bit useful. That bubble burst, leaving us in the mess we are in, yet with no will to regulate the banksters and the rentiers, and sustained “head in the sand” insanity among Republicans determined to tie down Obama, and bring him down, if at all possible.

Further cuts as demanded by the Republicans can only make the situation worse, and that is the fault of the Republicans themselves who ought to have accummulated in the good years to spend in the bleak ones. They spent through the good years and now, when spending is the only way out of depression, they want to cut. Strong financial regulation and a New Deal like FDR’s will be necessary to reinvigorate the economy—measures that Republican bigots like Limbaugh call socialism for the sake of their indoctrinated disciples.

US Credit Worthiness, Tax Hikes and the Balancing of the Federal Budget

Krishna Tummala, director of Kansas State’s public administration program and professor of political science simply explains the reason for the nation’s burgeoning debt:

People demand more services but are not always willing to pay taxes. The politicians promise more services without telling them the cost and that they must be paid for. Instead, they use the so-called painless way to go about this by allowing deficit budgets. This means not only the politicians must educate themselves on the issues, but their constituents as well.

He adds that the argument that the federal government should live like we do, within our means, is hypocritical. The personal debt of Americans is close to $2 trillion, so effectively we all live in debt. The federal government just is behaving like we do. Moreover, it has the responsibility for the common welfare and general defense, as the Constitution requires. Yet state governments, 48 of which require a balanced budget by law, are favorably compared to the federal government. But state governments differ in their budgeting compared to the fed. The federal government has only one budget, but each state has two, a current account and a capital account. Only the state’s current account—effectively its day to day running costs—must be balanced. The capital account is the place for major project expenditures, and they have to be carried forward annually.

The federal government borrows money through Article I of the US Constitution, and had it not been able to, it could not have borrowed $15 million from Britain in 1803 to complete the Louisiana Purchase. It doubled the size of the country, made it possible for it to be united coast to coast, and without it, it perhaps would never have become the world power it is. Now the national debt is $14 trillion, but it is not owed to the British. The Chinese have around $3 trillion of it.

People who want a balanced budget, many of them Republicans, have to realize that it will need taxes to be raised. Cutting expenditures will not be enough, and will shut down the country first. But Republicans will not condone tax hikes because the people with the money are leading Republican donors. So, cooperation between the parties has been lacking, only quarreling, a lot of posturing and little dialogue. The deadline for increasing the debt ceiling is 2 August, with the country’s credit worthiness at stake. If the debt ceiling is not extended, the country will default, hitting the economy of the whole world, everything now being so interconnected.

The country’s credit worthiness underpins the financing of debts. Foreign countries must have confidence in the US economy or they will not be willing to lend. Of course, credit ratings agencies such as Moody’s and Standard & Poor’s can evaluate the soundness of the US economy but the ratings agencies were giving excellent ratings to the financial sector “before it went belly-up”, Tummala wryly concluded!

Shopping Addiction—Thinking it Can Change Your Life!

People who overuse credit have different beliefs about products from those who spend within their means. Professor Marsha Richins says many people buy products thinking that the items will make them happier and transform their lives. Simultaneously such consumer materialism induces in them a disregard for debt. These two forces work together to increase credit abuse and overuse.

Wanting to buy products becomes a problem when people expect unreasonable degrees of change in their lives from their purchases. Some people tend to ascribe almost magical properties to goods—that buying things will make them happier, cause them to have more fun, improve their relationships—in short, transform their lives. These beliefs are fallacious for the most part, but nonetheless can be powerful motivators for people to spend.

Materialistic types hope for four kinds of changes when making purchases, but earlier research shows that these expectations are often not fulfilled. The four kinds of transformations expected are:

1. Transformation of the self—the belief that a purchase will change who you are and how people perceive you. This is commonly held by young people and people in new roles. Example—a woman wanted cosmetic dental surgery to improve her appearance and self-confidence.
2. Transformation of relationships—the expectation that a purchase will give someone more or better relationships with others. Example, a woman wanted to buy a new home because she thought it would enable her to entertain more often and make more friends.
3. Hedonic transformation—a purchase will make life more fun. Example, a man wanted a mountain bike because he thought it would give him more incentive to get out and go on “an adventure”.
4. Efficacy transformation—the expectation that purchases will make people more effective in their lives. Example, some people wanted to buy a vehicle because they thought it would make them more independent and self-reliant.

In proportion, none of these are a problem. They can be for people who have strong and unrealistic transformational beliefs, for then they are more likely than others to overuse credit and take on excessive debt. Other research by Fang and Mowen, 2009, and Netemeyer, et al, 1998 has also shown a relationship between materialism and gambling, and yet more by Mowen and Spears, 1999, and Ridgway, Kukar-Kinney, and Monroe, 2008, between materialism and compulsive consumption.

It is further evidence that our economic system is damaging to us, and professor Ritchins seems to agree. She thinks finance and credit counseling should be revised to help people understand their motivations for purchasing goods better, and recognize that products are not a quick fix for improving their lives:

Many financial literacy programs seek to prevent people from getting into financial problems by presenting the facts about interests rate and loans, but few seek to influence behavior directly, or focus on why people purchase things they cannot afford, and go into debt.

Is the Wagon Rolling Against the Robbing Rich?

Amid the recent fiscal carnage in Washington several studies of the US have been published concerning the situation of the average American. First, IMF economists analyzed the US public deficit and debt levels, and their relation to the demands aging Baby Boomers will place on the government’s Medicare and Medicaid healthcare programs, while the birth rate lags at a record low:

The United States is facing an untenable fiscal situation due to the combination of high fiscal deficits, an aging population and rapid growth in government provided healthcare benefits.

IMF study, An Analysis of US Fiscal and Generational Imbalances:
Who Will Pay and How?

To “go a long way in returning the United States to a fiscally sustainable path”, the US government must cut the entitlement programs and especially healthcare—among the most expensive in the world—that face rapidly rising costs in coming years. Americans will have to pay more taxes and the government will have to cut spending on Baby Boomers—those Americans between about 45 and 65—and their immediate heirs.

To eliminate all current deficits and long term shortfalls on social plans for the current generation “would require all taxes to go up and all transfers to be cut immediately and permanently by 35 percent”, and “delay in the adjustment makes it more costly”.

Unless currently living Americans pay more in net taxes or unless government spending on current generations is curtailed, future Americans will face net tax rates that are about 21.5 percentage points… higher than those facing current newborn Americans.

Of course, the IMF is an arm of US foreign policy, or rather, an arm of the international policies of the US uber rich class who rule the world for the sole purpose of making themselves richer than their already obscene levels of riches. The IMF always makes the people pay whenever the rulers of any country get its finances in a twist by their greedy machinations. The ruling clique in the US are among the main beneficiaries usually. It is time they paid! Normally, they pay least, often nothing!

But the average Yankee seems amazingly placid, or gets worked up over the wrong enemy, all too often supporting the greedy manipulators because they are all too easy to fool. Often, they seem to think that they are themselves among the uber rich, but less than a single percent of the population are. That one percent have gotten three times richer in real terms over the last 30 years, while the average Yankee has got poorer once inflation is accounted for.

Not surprisingly, more Americans say that their financial situation is worse not better in recent years. For the first time since 1972, 31.5 percent of Americans are “not at all” satisfied with their financial situation compared with 23.4 percent who are “pretty well” satisfied (General Social Survey, NORC, University of Chicago).

Americans are also more insecure about employment. A record 16.4 percent thought it “likely” (fairly or very) that they would lose their job or be laid off. As few as 52.2 percent thought it “not at all likely” that they would lose their job or be laid off, easily the lowest confidence ever recorded by the GSS. Those who thought their standard of living was “much better” or “somewhat better” than their parents declined.

The General Social Survey—which NORC has conducted for forty years based on 2,044 interviews—is a biennial survey that gathers data on contemporary American society to monitor and explain trends and constants in attitudes, behaviors, and attributes.

On top of these, American “happiness” has been measured and took some blows, but some American stoicism shone through here. While only 28.8 percent of Americans, the lowest percentage since 1972, were “happy”, another 14.2 percent were “not too happy”. Happiness was hit mainly because of the economy and people’s own finances. Even so, 85.8 percent of Americans were “happy”.

Not all aspects of happiness fell during the downturn. 97 percent of marriages were judged to be “happy” (very or pretty), and 86.0 percent of Americans claim to be “very satisfied” or “moderately satisfied” with their work, a steady average since 1972.

If anything, it suggests that the average American lives in a cocoon. They are concerned for themselves and their immediate family, and are satisfied that they are not being repossessed like the family over the street, and still have a job to hang on to. Despite the hugely vaunted Christianity of the Christian nation, the average American is indifferent to his neighbour, as long as he’s all right.

The motto is not “Do unto others as you would be done by”, it is “I’m all right, Bud, You look after yourself”.

Fortunately, recent proposed cuts in public services have been firmly rebutted by encouraging united strength and purpose. Is the US sleeping Leviathan waking up? Let’s hope so, then you smug financiers, corporate bosses, bankers and bought men will have to watch out! Once enough of the people stop being taken in by the great Washington Repucrat-Demoblican farce, then the wagon of unity may be rolling, and the callous and greedy exploiters of the rest of us will be crushed by its irresistible momentum.

Getting Conned by Bogus Investment Schemes—and Real Ones!

University at Buffalo sociologist, Lionel S Lewis, author of four articles in the journal Society about Madoff investors, explains how the Ponzi scheme works. He says:

To understand how confused thinking is, you need to understand how a con game works and the fact that it requires a “mark” willing to suspend his or her judgment.

First, the “roper”, who could be a brother-in-law, approaches the “mark” and says, “Listen, Bernie can make you a lot of money—a 16 or 20 percent return”. Now this is a far greater return than the standard investment produces, but the “mark” is greedy, like many people, and suspends reason in pursuit of easy cash. Remember, the “mark” is always a willing participant in pursuit of an unlikely outcome.

The con man—Madoff in this case—takes the “mark”’s money and spends it. He doesn’t invest it. He doesn’t realize a “return” on an investment. He just pays millions of dollars in finder’s fees to the “ropers”, gets them to pull in more “marks”, and uses that cash to pay off any of the “marks” who pull out of the scheme early, and spends the rest on estates, cars, vacations and yachts until the money is used up. Eventually the scheme collapses. The “marks” lose their money. In con terms, they’re “trimmed”. At this point, it is the job of the roper and other inside men in the con to “cool the mark out”—calm the waters to protect those perpetrating the con.

They do this, Lewis says, by pointing out to the mark that “he knew he was taking a risk (‘16 percent return? What were you thinking?’) and could have lost more, then sends him off, embarrassed, with his tail between his legs, but with a little cash, glad he’s not living on the street in a refrigerator carton”. The well cooled mark, according to Lewis, recognizes his part in the con. He’s not happy but he doesn’t call the cops, grouse about his losses on TV or blow up Madoff’s house.

Lewis is saying that people are voluntarily conned. They take a silly risk with their own money, knowing it looks fishy, but are so greedy, they do not accept a quick profit themselves from the scam, and get out while they are in the black. Instead, they hang on and on, reaping in the ill-gotten gains, maybe investing some of it anew, until the scheme inevitably falls apart. It is a pyramid selling scheme. It is illegal, and no one is justifying Madoff. He is in jail where he belongs, but the victims are still beefing, though it was a case of caveat emptor. They were buying a share in the scam, and were getting paid as long as new “marks” were being found. Now, they say they are victims of an investment con, that there were proper investments and they did not get their proper share. But there never were any proper investments! Lewis says:

Despite the fact that Madoff never ran an investment fund, no money was “made” on their behalf and there are no profits to return to them.

The scheme got so big and collapsed so swiftly that the “marks” were never cooled out:

So we find them posturing loudly as enraged victims online and off—in the papers, on television and radio—demanding “profits” they apparently think actually exist—they do not—and are owed to them—which is not legally the case.

Lewis focused on 167 people who invested with Madoff. He collected oral and written testimony, including lengthy interviews, from 42 of them and used other written material. Some investors, however angry and ashamed they are, and regardless of how much money they lost, have not sued and made a fuss. A lot of those people won’t talk to anybody. Lewis says:

Some who lost a lot were grateful they hadn’t invested more or glad to get back even a tiny percentage of what they lost, while others who lost less want everything they were “promised”—the 16 or 20 percent profit. They won’t accept that the “promise”, along with their gullibility, was part of the con, that they never could have won at this game, and still can’t, no matter how many attorneys they hire or how often they get on television.

What is sad is that many of those “trimmed” in the scam had worked hard to put together some cash, then greed got the better of them, they thought they could join the ruling class, and make buckets of money, and opted for Bernie Madoff’s shortcut to riches. They were gambling with their life’s savings, and gamblers know that they should only play on their gains, and should cut their losses. Of course, any pyramid scheme ends up with far more losers than winners, but the few winners can make fortunes out of all the little steers who are roped in.

The answer with any gambling—investing, if you prefer to call it that—is not to invest more than you can afford to lose. The trouble these days, is that the ruling caste are forcing the small guy into risky investments because the return at interest has been cut to zero. We can leave our life savings in the banks earning nothing, but eroding away by inflation and bankers’ bonuses, so we have to put the cash into something riskier.

Stockmarket crashes suit banks and financial speculators because it is the small investor who loses by bad timing and their inability to swing markets with sheer volume of investment, or influence, by buying stocks, talking them up with rumours of takeovers and such like, then selling at a profit while the stock is high. Joe and Jane will read the rumours and buy in too late when the stock has started to rise, then find the stock crashing again when the big man sells out. They lose! These are not strictly scams because it is all legal since Reagan had his bonfire of the regulations, a reason for much closer new regulation of the money markets. But Republican propaganda has it that regulation is a bad thing. Yes, it is bad for the crooks at the top, but just fine for the rest of us.

Cash Bailouts Are Frittered as Added Executive Compensation

A business study of corporate bailouts has found that debt relief is more successful than cash injections. It revealed that, in the year after a cash bailout, executives paid themselves and some employees higher compensation!

Executives of firms that receive cash almost immediately give their employees and themselves raises.

Professor Kenneth Kim

The study of the performance of 104 corporate bailouts in 21 countries between 1987 and 2005, was carried out by Kenneth Kim, associate professor, and Zhan Jiang, assistant professor, at the University at Buffalo School of Management, and Hao Zhang, assistant professor, at the Rochester Institute of Technology.

They found also that bailed out firms could recover to a point where their performance was as good as before, depending upon several factors. Recovery was best for firms that had had a sudden decline for reasons outside management control, or because they had problems servicing their debt. Firms that had declined more gradually with no significant external factors, or were unprofitable, were genuinely sick, and could not recover as well despite the bailout, though many did survive. Kim noted:

The former were profitable, they just needed a hand. So, it makes more sense to rescue firms that have been otherwise strong than to keep afloat “prolonged decliner” firms that have been weak or inefficient for some time.

Firms recovered least from governmental bailouts, because governments:

1. don't monitor firms after the bailout as closely as large shareholders and banks
2. may bail out a firm to keep people employed or to keep the economy going, regardless of the firm's performance
3. are more inclined to bail out firms with government connections.

Darwinian Leadership and Human Society

Professor of business, Paul Lawrence, says he has discovered a new idea he calls “Renewed Darwinian” theory. He tells us it addresses questions that have “been amazingly ignored by the academics”, but have “been on the minds of humans since we have had history”. It is a renewed version of Darwin! The common idea is that Darwin is all about the survival of the meanest and the fittest. The most ruthless survive. But Lawrence thinks there is more to it than just being mean fit and ruthless.

It is curious that anyone nowadays should think, like a Christian fundamentalist, that Darwin’s notion expressed as survival of the fittest means that the physically fittest, or the meanest, are the ones who survive the struggle for existence. Evolutionary theory says there are more ways to be fit besides having big muscles, big teeth or claws, and a disregard for anything other than self. And nor have these other methods been ignored by the academics, unless Lawrence is talking about academics like himself, academics in fields other than biology. The academic experts in biology and evolution never doubted that there are many ways of being fit to survive, from being very small to being very big, from being very fast to being very slow, from having unusual senses like echo location to having other peculiar qualities like intelligence, and so on.

Professor Lawrence seems amazed by some of Darwin’s views expressed in his book The Descent of Man:

Any creature, whatsoever, that has the social instincts comparable to those of humans and the intellectual capacities close to those of humans would inevitably develop a moral sense of conscience.

Lawrence explains:

Now, what he’s saying here is that if humans—any creature—had the drive to bond, a social instinct, and a drive to intellectual drives like to comprehend, would have the conscience to help them fulfil those two drives because without conscience you could not fulfil those two drives.

In attempting to explain it further, he tells us a great deal about the mentality of many modern Americans, the people of the “Christian Nation”. He says:

We’ve all heard of the Golden Rule: “Do unto other as you would have them do unto you”, But, we’re not quite sure what it means!

Despite all that Christianity, Americans and, it seems, especially American corporate and political bosses, do not know what the Golden Rule means. That is quite staggering but explains a great deal that has utterly baffled us foreigners, who have admired aspects of American life, but been bemused by American mass selfishness, lack of empathy for others, and readiness to kill everyone they meet in the world to get their own way.

It also confirms a Pew Poll that showed us that, though maybe 90 percent of Americans might claim to be Christians, three quarters of them do not know enough about Christianity or relevant aspects of their own constitution to be able to honestly claim they actually are Christians. Let is not assume that all of them are sociopaths, but simply that the US is not the freedom loving place they like to propagate for the good of the rest of us. Most Americans bend to the pressure of their peers because they are afraid of becoming the butt of their peers’ humor, or worse in a country with more guns than people, put up with their disdain and anger.

People have a natural social need or drive to bond with others, and a desire to be liked and respected. They are indeed aspects of evolution because humanity is a social species. We have evolved to live together, and for that to have happened, we have to have certain instincts or traits like the ones that Lawrence has just discovered, albeit late by over a century. For all that, it is to be hoped that Lawrence will continue to carry forward his ideas into the territories where they are anathema, into the US in general, and management there and in many other countries too.

Four Drives

So has Professor of business studies Lawrence actually understood Darwinism to come up with something novel? Well, he says that humans beings have other drives besides the drive to gain resources. He says we are born with four drives, essential for our basic survival. They are necessary for our species to thrive as a whole species and they are encoded in our DNA and we sense them and feel them mostly by the emotional messages we get from our subconscious as we witness the world around us.

These four drives are:

1. to acquire, to possess, to own things that are necessary for our survival and to enhance our status as individuals
2. to defend our resources from hazards, not only ourselves, our loved ones and our possessions, but our beliefs
3. to bond in long term, mutually caring relationships with other humans
4. to make sense out of the world, to build knowledge that lets us get on with with our everyday lives.

Well, there is not much there that the academics did not know, though it might indeed be new to financiers and business men who always behave as if the whole purpose of life is to grab as much as you can, even though you have no idea how to use it all when you have it.

Lawrence seems to believe that these principles he thinks he has newly discovered go beyond the preservation of particular genes, but he has not so far shown that these traits he describes are not conditioned by genes. But, now perhaps he gets to do his job when he tells us that good leaders take into account all four drives, not just the desire to acquire. He asks us to note that we all have these drives as human beings, and the good leader recognizes it, and ought not put all the emphasis on greed. In practical terms, it means, Lawrence says:

• the drive to bond—treat people honestly, do not lie to them, and keep your promises to them
• the drive to comprehend—tell people the truth not lies, and not spread misinformation
• the drive to defend—be there when the going gets tough, to back up your staff, friends and anyone you have relied on to do work you asked them to do.

These are the ways to have strong long term relationships, and they are natural ways for humans to behave. It is natural too for huimans to look to a leader, but you have to have and keep their respect by helping them understand, acquire and develop basic human drives for themselves. It is having a good conscience, because the Golden Rule in application makes the helper and the receiver feel good, and ready to reciprocate the assistance in future.

Lawrence rightly equates good leadership with good moral leadership. Leaders without any conscience, or one only poorly developed, simply cannot have any fellow feeling:

They do not know what compassion is, they do not know what empathy is, they do not know even what love is. That is something they are never going to experience in their life because they don’t have that feature in their brain when they are born.

If we try to figure out how do we respond to fulfil those drives for ourselves, and are successful in doing so, people will begin to pay attention to us, and maybe think they’ll trust us to leadership. Leadership grows out of one’s own success in leading one’s own life. But, though we mostly have the necessary abilities, we have to refine them, practice them, train our minds to be more effective in ourselves and leading others. So, experience is also needed.

An example is that the world has a lot of organizations loaded with distrust. People do not trust enough in each other to cooperate properly. They think they are going to be undercut some way. The good leader can use the skills inherent in humanity to encourage cooperation, but people have to feel secure enough.

Our Sociopathic Leaders

It is refreshing to hear him say that a disproportionate number of leaders are sociopaths, who lack the drive to bond with others. It is a problem for less than 4 percent of the population, but Lawrence guesses that 10% of people in positions of power may be sociopaths. Like Tony Blair, the former PM of the UK, and in many people’s opinion an archetypal sociopath, they are often charming, and use their charm and lack of scruples about others to climb to positions of power.

A lot of history records the fact that such people have gotten into important positions. The Renaissance was an effort to move away from a sociopathic kind of leadership. The Constitution of the United States was a effort to create a government able to keep free of such leadership. Balancing the power, and not getting power concentrated in any one office are ways of avoiding that kind of leadership.

Some prominent leaders in business are highly suspect of being sociopathic. Lawrence suggests the recent Wall Street crisis, with the crash in the market and the resulting worldwide depression, illustrates sociopaths at work. Some in the big banks saw that by buying subprime mortgages—granted with little regard whether they could be repaid and so subject to foreclosure—they could sell them to Wall Street banks which could dice them up into derivatives and sell them as Triple-A bonds to people who were trustees of pension funds and endowments, and collect 100 percent on the dollar for them. The bonds were phony, worth maybe half of their face value when they bought them.

And that was the con, the absolute fraud that was pulled off. And we still don’t have a clear understanding by the public or even by the Department of Justice that that is what happened, and we should be prosecuting those people and getting the evidence out that will prove that those are criminal actions.

Conclusion: Is “Renewed Darwinian” New?

Profesor Lawrence does not have anything new in scientific terms but he does something new in speaking out about the perilous state we are in through neglecting the traits of our evolved nature. The western economic system, called capitalism, requires us to act as if we were solitary creatures fending only for ourselves, and perhaps our immediate families, in a state of nature—meaning acting like savages. Humans though are not savages, not solitary, and the reason is that we have evolved to be social animals who live amicably together in groups by sacrificing a little personal freedom—the freedom to be savage towards others—so that others will work with us in a community for our mutual advantage.

As soon as someone took more than a fair share of the communal produce, human society traditionally shamed them, and if that did not work, it expelled them from the group, exiled them. They were left to fend for themselves by themselves, unless another group was willing to accept them. As most groups will have realized why some human was wandering alone, they would have been chary at admitting them into their own group.

Now we cannot expel people from society, but bad crimes are seriously punished. The bad crimes that, so far, have not been seriously punished are the banking and financial crimes, like the scam described by Professor Lawrence. It is time these criminals against humanity were properly punished, and it is time that immoral profits by the few at the expense of the many were progressively taxed and redistributed so that there is no underclass of people abandoned on the grounds that they are work shy, when there is not enough work to go round.

A society of chimpanzees will look after the ones among them that are not fully capable, and even the alpha male will show care and compassion to a defective or disabled chimpanzee. Why cannot human leaders be the same? Obviously, they can, and professor Lawrence suggests how, but society has the right and the duty to protect itself against the massively greedy, who move their money to wherever in the world it will continue to accumulate profit, irrespective of what happens to the poor and unemployed in their own country. These are the people without consciences that Lawrence describes. They are indeed criminals. Punish them!

Where is All the Money? Ask Credit Suisse Bank!

Sam Pizzigati, editor of Too Much, an online newsletter on excess and inequality, reports that the Swiss banking giant Credit Suisse has issued for the first time a Global Wealth Report based on financial data from over 200 countries. It shows that total global net worth, despite the 2008 global economic meltdown, has rocketed up 72 percent since 2000. Credit Suisse sums up:

The past decade has been especially conducive to the establishment and preservation of large fortunes.

The world has more than enough wealth to ensure no one on the planet need be potless. The study shows the world has 4.4 billion adults and the total wealth they own is $194.5 trillion. Shared out, every adult in the world could have $43,800. The fact is, though, that three billion people, almost 70 percent, have less than $10,000, and 1.1 billion, a quarter of all adults, have less than $1,000. These figures are net worth, meaning their assets less their liabilities. Half the people on earth who are 20 and older have less than 2 percent of global wealth—each less than $4,000.

The world’s richest 1 percent—adults who have at least $588,000—hold 43 percent of the world’s wealth. They constitute the ruling class, the wealthiest class, and they break down as:

• just over 1,000 billionaires, with over $1000 million each
• 80,000 more super rich people worth between $50 million and $1 billion each
• 24 million more people who are millionaires worth between $1 million and $50 million.

Those wealth differences are exacerbated by the local conditions. In uncivilized societies with poor public health care, poor quality public education, and no state pensions, then the poor are hit by ill health, a miserable old age, and ignorance because they cannot afford to pay for the absent public services. Moreover, epidemics like swine flu, natural disasters, like Katrina, and unemploment are additional shocks for which the poor do not have the reserves to survive easily. In a society with the opposite conditions, a history of civilized caring governments which have provided public services and benefits then poverty does not have the stigma and practical horrors it has in poor societies.

No other nation has as much total wealth as the United States, with only 5.2 percent of the world’s population. It has 23 percent of the world’s adults worth at least $100,000 and an even greater proportion, 41 percent, of the world’s millionaires. Yet, it is a society with inadequate social services, so its people need more personal wealth to survive than people in countries like France, Sweden and Germany which have good social services.

Canada has a national public health insurance. Credit Suisse calculates the wealth of the typical Canadian family is $94,700, double the $47,771 US average. It shows that good public services add to a nation’s wealth. Public services provide jobs, and need private business suppliers, and health and pension security means people are less risk averse, and will be more inclined to start up new businesses.

Why then have we given trillions of dollars to the banks, depleting our treasuries so much that we are told we have been living too extravagantly? It is a big lie, and we ought to be taking direct action to change it. But we can do without Tea Party economics. We do not need tax cuts for the rich, we need services for the poor, paid for by taxing the rich. They can afford it, we cannot!

Gambler’s Psychology among Bankers Demands Tight Regulations

Dr Paul Crosthwaite, an academic at Cardiff University, has found that the bankers who brought the global economy to its knees two years ago may have enjoyed the sensation of losing hundreds of billions of pounds and plunging the world into recession. He argues such catastrophic losses can give some people masochistic pleasure.

He thinks financial crises, such as the “Black Monday” crash of 19 October 1987, the bursting of the dotcom bubble in the spring of 2000, and the credit crunch that entered into its most intense phase in the autumn of 2008 with the nationalization of banks in the UK, US, and Europe, demonstrate the innate urge for self destruction that Sigmund Freud called the “death drive”. A full blown crash is a source of euphoria as much as despair. Dr Crosthwaite said:

Economists and financial policymakers must recognize that investor psychology is far more complex than their models have allowed up to now. They need to take much greater account of psychological factors such as emotion and desire, which affect how market actors behave in profound ways.

His research challenges the conventional economic thinking that investors are wholly rational, and always pursue whatever is most likely to increase their own wealth, a rarely questioned assumption that is the basis of the free, minimally regulated market of standard capitalist thinking. In fact, financial markets are disposed to crisis because participants seek excess for thrills as well as their assumed betterment. Bankers and financiers take risks not only for high returns, but to get a gambler’s high.

Dr Crosthwaite says this research strengthens the case for firm regulation of banks and other financial institutions:

To avoid a repeat of the great recession, it is vital that policy makers and regulators limit the capacity of financial professionals to engage in excessive practices by curbing the disproportionate levels of risk that we’ve seen in the financial sector in recent years.

Sounds Familiar: Aneurin Bevan in 1959

I have enough faith in my fellow creatures in Great Britain to believe that when they have got over the delirium of the television, when they realize that their new homes that they have been put into are mortgaged to the hilt, when they realize that the moneylender has been elevated to the highest position in the land, when they realize that the refinements for which they should look are not there, that it is a vulgar society of which no decent person could be proud, when they realize all those things, when the years go by and they see the challenge of modern society not being met by the Tories who can consolidate their political powers only on the basis of national mediocrity, who are unable to exploit the resources of their scientists because they are prevented by the greed of their capitalism from doing so, when they realize that the flower of our youth goes abroad today because they are not being given opportunities of using their skill and their knowledge properly at home, when they realize that all the tides of history are flowing in our direction, that we are not beaten, that we represent the future: then, when we say it and mean it, then we shall lead our people to where they deserve to be led!

Nothing much changes, or has changed, in the intervening fifty years except that Bevan’s Labour Party was sold out to Blair’s New Labour party, which more appropriately should have been called Not Labour. Blair made the Labour party into a neoconservative party, and brought about the state of affairs Bevan predicted. Now we have five neoconservatives, or at least four and an opportunist, standing for the leadership of the New Labour party. So nothing will change. Labour voters have always mostly been dupes of the Oxbridge middle classes. Maybe, it is time they trusted to a few socialists instead, or even thought about politics instead of watching the “delirium” of reality and “celebrity” TV.

The recent vast bailouts to the world's bankers certainly show that the moneylenders have taken over, and already they are making vast profits and, of course, bonuses. Why should they get bonuses for these profits? The Bank Rate is set in the UK to 0.5 percent, so anyone with money in the bank will get this meagre rate of interest. Yet the bank can lend it to businesses, not usually British ones, at anything up to 10 percent, earning an automatic profit of 9.5 percent, or at least a substantial one for doing nothing to earn it. The bank of England sets the bank rate for the benefit of the banks, and they benefit, but what have they done to merit any bonuses? It is yet another banking scam.

Meanwhile, the new British Tory government, with the help of their chums who own the media, like Rupert Murdoch, propagate the myth that the country is bankrupt, and swinging cuts must be made, notably in unemployment and other benefits for the poor. In this way, the anger of the people at being mugged by bankers is diverted to anger at the unemployed for drawing benefits! How easy it is to manipulate the masses.

No cuts would be needed at all if the government retrieved from the banks what it gave them, if it taxed the billionaire hangers on who come from places like the former Soviet Union with chests of ill-gotten cash—the so-called oligarchs, if it taxed our own British megarich more progressively, and if it legislated against the scams and loop holes that the wealthy use to multiply their wealth at the expense of the lower and middle classes.

There is nothing at all complicated about this. You do not need a degree to understand it, yet the British today claim it is all too complicated. One has to conclude on the contrary that people are too lazy to think for themselves and too ready to accept what they read in their newspapers, and see on the television news.

Bevan saw it all, and sadly, the way the Labour party got taken over by Blair and Brown, there was nothing to stand in the way of it. Resurrecting Labour will be harder than resurrecting Christ, so maybe a new left wing party is needed. The Germans seem to be heading in that direction. It needs to begin with a Clause 4. If anyone does not know what it is, maybe they should Google it!

A Better way of Organising our Politics

Something is profoundly wrong, with the way we live today.

Tony Judt, Ill Fares the Land

We have wasted the two decades since the fall of the Berlin Wall. They have been consumed by the locusts, or more precisely by the shamelessly greedy. It has been the era of all the Dicks, from Cheney to Fuld, politically “an age of the pygmies”. Unregulated markets have crashed. Wars of choice have left bloody destruction in their wake. The snouts have been buried deep in the trough. Beyond the noise of guzzling, we can hear no moral critique of what has happened, no shout of rage that things don’t have to be like this.

Chris Patten on Tony Judt’s Ill Fares the Land

As recently as the 1970s, the idea that the point of life was to get rich and that governments existed to facilitate this would have been ridiculed, not only by capitalism’s traditional critics but also by many of its staunchest defenders.

Tony Judt, Ill Fares the Land

Tony Judt… encourages dissent from conformity, for which there is much to be said. Blessed are the troublemakers.

Chris Patten on Tony Judt’s Ill Fares the Land

[But] social democracy is not something that Americans can talk about, though there is a bit of cognitive dissonance about their attitudes to the public and private realms of social provision… [In the first thirty years after the War] planning, progressive taxation, high public spending and nationalized services brought inclusive economic growth with increasing equity and social harmony. A mostly benign state provided the security for which people yearn, replacing the market’s invisible hand with more visible supportive direction. Maybe all was not for the best, but it was pretty good all the same—and would have gladdened the heart of that scion of egalitarian Eton, John Maynard Keynes… According to Judt, since the 1980s, from Reagan to Bush, from Thatcher to Brown, it has been downhill all the way, with growing inequity, a declining belief in the role of the state and a falling away from civic engagement.

Chris Patten on Tony Judt’s Ill Fares the Land

Tony Judt is proudly a man of the left… He is intellectually brave—witness his well founded criticisms of Israel’s policies in Palestine. Beyond the imaginings of most of us, Judt is personally brave, too; motor neurone disease has left him quadriplegic.

Chris Patten on Tony Judt’s Ill Fares the Land

From The UK Observer

Is this a Scam or Not?

Bankers gambled our money away on dodgy bonds and appealed to governments for money to cover the debts they irresponsibly accumulated. Governments say they cannot let banks go to the wall, as they ought to according to the principles of capitalism, so they agreed to underwrite them. Trillions of dollars were passed over to the banks. Now national treasuries were empty or also in hock, so governments say they have to borrow money from the banks to run the economy, and have to cut public expenditure on education, health and so on, and increase public taxes, to service the borrowing from the banks.

So, government is borrowing money from the banks that it gave them to keep them viable. And we pay. Is this a scam or not?

In Politics, Money Talks Loudest. What Can Be Done?

Ted Honderich made the opening speech in a debate in the Oxford Union on 29 January 2010, the evening of the day when Tony Blair appeared at the Chilcot inquiry into the Iraq war. The motion was that this House believes that in politics, money talks loudest. The motion was carried. Here is a slight synopsis of the full speech online at Ted Honderich’s website.

“The motion before us two parts, one explicit and one implicit. There is the explicit proposition of fact, and there is the implication of it—that it raises a question of rightness, or indeed isn’t right. Talking openly of what is right or wrong is unusual in this time in England, and may seem curious, perhaps moralistic, maybe innocent or immature, anyway not familiar.

Cant, in particular cant by our democratic politicians, is the dismal order of the day, along with the brazen policy that the response to a question is not an answer but an evasion of it. The cant and the evasion have reduced the clarity and hence the intelligence of public discussion, indeed brought it to its lowest state in 50 years. A society in decline since 1979 has declined further.

Instead of speaking of right and wrong, of what ought not to happen, the political class declares or intones the cant that this or that is “unacceptable”. They are saying that is wrong—what we must not do. They prefer to be inexplicit instead. When you say plainly that something is wrong, or right, you are expected to produce a reason, an argument, something clear headed.

So, what are the things that according to the motion money talks louder than in politics? One answer is truth. It is not only the first victim of war. A second thing that money talks louder than is the logic of ordinary intelligence. That consists in clarity, analysis, relevance, consistency, validity, and completeness, not leaving things out. Truth and logic bring along some humanity with them. You can’t be truthful and logical without humanity—humanity being what is right.

Being simple minded, which our political class is, is also to be avoided. One way of being simple minded about the motion in front of us is to think the part that is the factual proposition can be settled just by some figures. It can’t be settled that way, useful as some general figures are.

It is true that the economically best off tenth of population in Britain and America have something like 70% of the wealth, and the worst off tenth has as good as none. As for income, the best off tenth has about 30% or 40%, and the worst off 2% or 3%. That means that the poorest have nothing to spend on politics, indeed no time left to engage in it after getting their 2 or 3%, and the very richest have a lot.

I say, without fear of any economist or student of the dismal science in this house, the dismal science that never gets around to quantifying what is fundamental, that the richest have more than 1000 times the political influence and power of the poorest. Remember that the poorest have as good as no wealth. 70 times zero is infinitely less than 70 times 1. What does the 1000 times more political influence and power do? More than corruption in the House of Commons, and more than the fact of lobbying even on an American scale. More than industries and interests infesting the regulation of themselves.

The 1000 times more political influence and power can make and maintain what can mildly be called a certain convention of thought and feeling in a society, mainly a successful pretense about what is necessary and what is possible. It consists in illusions upon illusions. About war, classes, the economy, public services, private profit and the profitization of things, taxation, banks, competition, co-operation, foreign ownership, utilities, health, education, politics itself, ideologies and religions, terrorism. Today, there is the illusion about the need to reduce public spending rather than reduce private profiting.

Illusions work better than an army and police on motorbikes. Owning newspapers and paying for ordinary advertisements in them is part of the convention. So is a government broadcasting service. A compliant church despite a brave Archbishop is another part. There is no need for conspiracy, although there is some of that, to make the whole thing intentional.

The illusions bring to mind the other part of the political cant about the “unacceptable”. Our dim but not too dim political class, when they intone “unacceptable”, don’t only mean that something is wrong, they also mean it is somehow unthinkable. Its ambiguity saves them from being challenged either about something’s being wrong or its being or its being believed necessary or impossible by all the relevant persons.

Let us think a little, which you’re allowed to do in a university, even in a debate, by asking what can best be said for democracy. What can best be tried in its justification? The hope is that it is a better decision procedure for a society than any other, for a particular reason—in plain English, it is that two heads are better than one, and more better are than two. What is in heads, according to this argument, is different and compensating kinds of knowledge, different experiences of a society, different wants. But it only works if what is in the heads gets equal and free expression.

In our hierarchic democracies, there is nothing of the sort, nothing remotely like equal and free expression. So there can be no reasonable assumption that our democracies are right about anything at all—social goods, or profitization against co-operation, or terrorism, or our own terrorist war. So put aside the fiction, indeed the illusion, of a democratic guarantee of good policies.

How should we go about judging the result of money talking loudest in our democracy—thinking about that outcome? What principle or other method should we use? Our political class never asks how you should go about judging the outcome. Should we do it by the viciousness of the tradition of conservatism, New Labour wholly being within it? Conservatism is no more a political tradition of self interest than any other, but the politics has no principle of right and wrong at all to support its self interest. Liberalism has better impulses than conservatism, but it is without a real principle to give content to its better impulses. It is without a will to act on those impulses, including its decency in opposing a terrorist war.

Should you judge the result of money in politics by the principle of the Utilitarians, that what is right is what produces the greatest total of happiness, well being or satisfaction—no matter how it is shared out, even if the biggest total rests on some people, a class at the bottom, having lives that are really nasty, British and short? Should you throw psychoanalysis and neuroscience into the plan, as they now say at the London School of Economics, to make people happier without changing the world that was making them unhappy?

Maybe you should try instead a principle of judgement heard of in Cambridge sometimes these days? That is the philosopher Immanuel Kant’s Categorical Imperative. It tells you to treat everybody not only as a means but also as an end. It’s all about respect. Its clearest upshot is that you should nod decently to the homeless fellow in the street when you don’t buy a copy of The Big Issue magazine he sells for a crust.

So, how should we go about judging the result of money talking loudest in our politics? What sums up what is right on any subject anywhere, is the Principle of Humanity. It is that what is right is what according to the best judgement and information gets and keeps people out of bad lives. Bad lives are defined in terms of deprivation of the great human goods, denial of the fundamental desires of human nature—six of them—a decent length of life, bodily well being, freedom and power, respect and self respect, goods of relationship, the goods of culture.

“Money talking loudest” is a standing violation of the Principle of Humanity. It denies every great human good, every denial aided by suppression of truth and evasion of logic. If you’re not pushy or a pusher, you live less long for a start, you have less consciousness, and you suffer pain, constraint, weakness, disdain, self disdain. Your children don’t learn. You read Murdoch newspapers that stop you from escaping the stupidity owed to your ignorance.

Earlier today Blair, a man who managed this democracy into a terrorist war, the Iraq war, insulting the decency that remains in this democracy, appeared before a weak committee, a wretched committee of old boys neither capable of questioning him effectively nor willing to. Not a court. Not Nuremberg. Blair sought today, by the audacity of a shyster lawyer unconstrained by a judge, his policy in the House of Commons, to blunt the truth that he is a war criminal, a criminal against humanity. Old Germans around Nuremberg can feel less bad tonight about the German past. They can say that Nuremberg happened.

In Blair’s wholly intentional killing of innocents in and after the war, wholly intentional since wholly foreseeable, and in his wholly intentional causing of fear supposed to be the stuff of only terrorism, and in everything else of his New Labour, Blair has been and is a creature of money talking. He has been a creature who listens to it talking, goes to ask for more, and pays for it.

What should we do? What should be done about all the denials of the great goods, about taking from people what we all desire? What should be done about the monstrous selfishness? Truth and logic is all we have to rely on, some say. But surely it can’t be the only hope. That would be too terrible. A colonel of the British Army, at the time of English civil war, said:

For really I think the poorest he that is in England hath a life to live, as the greatest he…

Thomas Rainsborough”

Honderich wonders whether revolution could be an answer, or mass civil disobedience, much more insistent than the large demonstrations at the outset of the Iraq war, or a boycott of the market. Any such insistent demonstrating, or a colonel driving a tank into Parliament Square is likely to be what a neoconservative government like this New Labour one would love. They could institute martial law, and declare plainly the fascism they have hitherto been hiding but preparing for.

Honderich thinks revolution isn’t a rational means to the end of the Principle of Humanity. Nor is it, it is the breakdown of society for the very reasons he is outlining, and the Principle of Humanity can only work in a functioning society—by civilized people! Mass civil disobedience, funded by the US has worked in a few places in the last couple of decades. “It brought down a wall, ended an empire. It has changed governments.” Revolution is getting more feasible as the western powers weaken, the very reason for their drive towards fascism.

The eastern countries India and China are becoming serious rivals to the US and Europe. The financial system, as Honderich shows, is getting more and more openly corrupt, and politics too. Society is crumbling and revolution, consisting of the components Honderich mentioned looking more likely, but it will have to fight off fascism first, or somehow force some government to scrap the mass of repressive legislation New Labour has introduced. At present the British are sleepwalking. Mostly they are ignorant of what is going on as long as they have Murdoch’s media, reality TV and celebrities, and can still borrow on credit. They have a rude shock ahead.