Before the British coalition government’s proposed cuts were announced they were greeted by 39 top business people writing to the Daily Telegraph confirming that they would create the necessary jobs so as to make the public sector cuts work. That way tax rises might be avoided and long-term cuts in public sector activity achieved. For them, any reduction in tax and spend would be a Good Thing. Well, business people would say that, wouldn’t they! But were they expressing a seriously thought through strategy, or merely expressing the currently dominant free market fad?
The corporate monster is destroying the world, tearing up its soil to gobble up its precious resources, fouling its air, polluting its water and damaging its climate, while rewarding the few with untold riches, but leaving the masses in poverty. That’s how things work, unless they are prevented. Free-market ideology is having a hard time right now. But maybe not hard enough.
A few weeks ago a happy group photograph was published to accompany the announcement of Bob Diamond’s appointment as the new CEO of Barclays bank. The picture showed outgoing CEO John Varley and Diamond himself, both apparently chortling with delight, while chairman Marcus Agius offered a slightly more discreet smile of approval. What were they laughing about?
Continue reading What are they Laughing About?
Around 80% of publicly quoted shareholdings are now controlled by financial institutions, rather than the end shareholders. The traders acting for these institutions have quite different objectives from those of the ultimate shareholders. Members of a company pension scheme, for example, are likely to have a personal desire for the survival and longevity of their employing company. However, unbeknown to them, the investment decisions made on their behalf for their pension fund, are made on the basis of short term gains, which may well be best served by the acquisition and break up of that same company and the redundancy of most of its employees. But it is worse than that.
The question really is what good did economics ever do that isn’t readily available from common sense? Economics has real world impact (“we are ruled by little else” as Keynes famously said), but where it leads to an impact which is distinctive from one which would result from applied common sense, the impact appears to be invariably bad. Of course, definitions of bad may be subjective. It could have two quite separate meanings: bad in the sense that it is counterproductive in its own terms, most usually this would mean damaging to economic growth; or bad in that it does more harm than good in such dimensions as fairness and justice. Examples of bad impacts might include free market economics resulting in great injustice and inequality as well as the creation of inevitably bursting bubbles.