Economics of the Madhouse

The European Central Bank (AP)I do not know about you but I am finding myself baffled, irritated and confused by the World Bank, the European Central Bank (ECB), the IMF and a few other acronyms that seem to dominate the news.  I did not vote for any of these organisations, so why do they have such an influence on my life, the lives of the rest of the British public, and the lives of hundreds of millions across the globe.  They seem to be running the world.   How did it come to this?  What sort of a system have we created that gives so much power to these people?  How is it that these people, who are entrusted with the money made by working people, end up gobbling up the money for which people have laboured so hard?  How were they ever allowed to have such a stranglehold on the lives of millions?

Where were the people we elected to look after us when such a distorted, corrupted form of capitalism was being developed?  Were they incompetent, or have they become part of an oligarchy that enriches them as well as the gamblers of the market?  Money exists to make it easier for the real wealth creators to serve society: those who labour by brain and brawn to enhance and improve our existence.   How is it that such a basically simple operation of distributing our money to wealth creators became so complex?  Of course we know why; this complexity is the method through which the public are deliberately hoodwinked for the “moneymen” to siphon off the money for themselves.

The status afforded by astronomical salaries for those on the top of the money business pyramid saw mathematics and science graduate highfliers join this money industry.  They employed their talent to produce ever more complex packages in which were bundled toxic “IOUs”  to trade in the market,  making money every time a transaction was made, until finally the one left holding  these worthless bits of paper got stung.   The government then, using our taxes, came to the rescue by pumping billions of pounds into these financial institutions.  In the meantime, lives were ruined; people were becoming homeless and jobless.  Pensions for which people had saved all their lives were eroded, consigning millions of pensioners to lives of poverty when they were most vulnerable.

What of the politicians; where is the fresh thinking to deal with such a calamitous, unjust and unfair system?   I see very little difference between the political parties; the differences seem to boil down to the extent of the cuts.  How can it be right that the solution to this crisis involves the collective punishment of almost the entire population, apart that is, from the “moneymen” who caused it in the first place?  The lack of imagination to think outside the “straightjacket” placed on politicians by the “moneymen” is staggering.

IMF Chief, Christine Lagarde, when not insulting the Greeks, is urging European governments to bail out the banks once again.  Why can’t governments pump money elsewhere?  Is there some natural law that compels governments to channel money through the banks? The first bailout has failed to get the economy moving, so why should more of the same medicine work?  What about bank reforms?  Even the modest reform of ring fencing normal banking from its gambling arm has been pushed back by intensive lobbying to 2019.  The UK government even opposes the small tax on financial transactions (Robin Hood tax) that France and Germany are advocating.

Something has gone very seriously wrong with this model of capitalism; fresh thinking and serious reforms are urgently needed.  The distribution of wealth has been so unfair and distorted with vast amounts horded by the few at the top of society.  The Daily Mail attributes a substantial part of the widening wealth gap to earnings in the financial sector:

 “Some 60 per cent of the increase in the gap between the richest and poorest between 1998 and 2008 is down to soaring financial services earnings, according to a report from the London School of Economics.”

Those whose job it is to distribute the cash earned by hardworking ordinary people, to fuel society’s engine, have run away with the loot and the system has seized up.  The maddening thing is that politicians are so awestruck and mesmerised by the “moneymen”, that they keep pumping more money into their coffers in the hope that something will trickle down to make the machine work.

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Adnan Al-Daini

Dr Adnan Al-Daini (PhD Birmingham University, UK) is a retired University Engineering lecturer. He is a British citizen born in Iraq. He writes regularly on issues of social justice and the Middle East. Adnan is a contributing writer for the Huffington Post. 

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  • Edward

    “Some 60 per cent of the increase in the gap between the richest and poorest between 1998 and 2008 is down to soaring financial services earnings, according to a report from the London School of Economics.”
    Fifty years ago in the city where I live half the businesses on the main streets sold drink. Now they sell financial products.
    I think we should go back to the pubs. People seemed to get more enjoyment from seeing their money go down the drain.

  • Jon Harrison

    Interesting piece. You might like to read my article,”Terra Instabilis”, in the Nov.-Dec. 2011 issue of The Humanist. Available on their website, or just google the article’s title.

  • Adnan Al-Daini

    Thank you for the link. I enjoyed reading your article, most interesting.

    • Jon Harrison

      Thank you, Dr. Al-Daini. Unfortunately I made a slight error in my piece, misreporting Chinese inflation figures. But it will be reprinted in McGraw-Hill’s 2012 International Business textbook with the error corrected.

      In any case I will now be reading your articles on Iraq, which unfortunately I had not been aware of till now. I have also published several pieces dealing with America’s involvement in Iraq, principally in Liberty (www.libertyunbound) between 2006 to 2009.

  • Martin Green

    Completely in accord with your questions Adnan. It has puzzled, nay angered, me for some years as it appears that all that has occured since the neo-liberal revolution of Reagan-Thatcher is that private debt has been dumped on the public and public assets of our, so-called, ‘democracies’ have been privatised to swell the coffers of the elite! We really are being taken to the cleaners by this un-elected global elite and the politicians have no ability / imagination / stomach to take them on! One would hope that at some point the system is really challenged before it comes crashing down upon the majority of our fellow citizens; of course any crash is unlikley to affect the elite, as ever! Where are the ‘peoples champions’?

    • Adnan Al-Daini

      [Where are the ‘peoples champions’?] Where indeed Martin. The problem, it seems to me,lies in the corruption of democracy itself by the obscene influence of money in politics. Additionally, politicians enhance their chances of lucrative future careers by kowtowing to the “moneymen”. They allow themselves to be persuaded by this self-serving group that their policy recommendations are in the best interests of the country, thus their consciences are assuaged. The mainstream media is owned by powerful corporations and individuals. And with some notable exceptions, will follow their master’s voice by distortion, omission and critical selection of news, thus keeping the masses ignorant of the real reasons and events that are diminishing and blighting their lives. I am sorry to say that until we get truly great politicians who will put the interests of the nation above their own, we are stuck with a system that will from time to time, due to pressure of events, be tweaked to make it appear more acceptable, no more than that. Meanwhile, our liberties and freedoms will be slowly eroded, with life becoming unpleasant for everyone including the super-rich.