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Archive for February 26, 2010

Human Scum: Exhibit A

February 26, 2010 9 comments

Reality shows, which have dominated TV since 2000, often celebrate different types of human scum. While most are merely cringeworthy or slow trainwrecks, there are a few where it is impossible to feel any sympathy for the “stars”.

Operation Repo is one such show. It is not possible to feel any empathy, let alone sympathy, for fat ugly scum who repossess peoples stuff. This is especially true in an era where the “capitalists” who “own the world” are being propped up by taxpayer money. There is something obscene about a society that degrades and screws over average people, while rewarding the well connected.

Here is the show website: Operation Repo

Here is a clip that foreshadows what will happen one day.. hopefully to completion.

Fairness, not Capitalism, is the Issue.

February 26, 2010 10 comments

Even though this article is from The Guardian, I could not have said it better.

Let me highlight a few paragraphs..

Plato first argued the case for proportionality – and it is telling that justice in so many cultures is signified by a pair of scales. Retribution should be proportional to the crime. But so should reward be proportional to our extra effort. It is a fundamental part of human beings’ hard-wiring. The scales symbolically declare that justice is getting our due and proportional deserts.

Functional societies require a high degree of fairness, unless the society is in a period of high growth (USA 1960- 1970). Barely functional violent societies can exist, but they are will either not last long (western roman empire) or not go anywhere (india, china, japan).

The irony is that capitalism if it is run properly is a means for people to get just that. If they are brilliant entrepreneurs or innovators then it is fair that they should get their proper due desert and make considerable if proportional profits. In fact, inventions are never the result of one individual light bulb moment but the consequence of a lot of social and public investment. Thus a proportion of the profit should go to the state as taxation, as its due desert for having collectively invested in the infrastructure and cumulative stock of knowledge from which invention draws – not least so it can repeat the exercise for the next generation. But the big point is that big rewards are justifiable if they are in proportion to big efforts – because big effort grows the economic pie for everyone. Profit is ethical to the extent it is proportionate to effort and not due to good luck or use of brute power. Taxation is ethical to the extent it is proportional to what the state has collectively provided.

Society depends on most people following the rules, without coercion. But people will not follow rules that are highly unfair, and coercion has its limits.

Few capitalists think like this. Instead they like to characterise themselves as individualistic hunter-gatherers, being able to eat what they kill – and if they kill more than the next man or woman, they get to eat more. My property is my own because I and I only have sweated my brow to get it; I have autonomy over it and no claim to share it, especially by the state, is legitimate. This is the cult of the investment banker or financial trader out to cut the next big deal or be a nanosecond faster than his or her competitor to buy or sell some financial instrument. It is only fair, they argue, that half a bank’s revenues should get paid out in bonuses after each year’s trading. The hunter-gatherers have to divide the kill once a year – and the annual bonus-fest is a kind of primitive celebration of their prowess.

Greedy people like to rationalize their greed.

But not even hunter-gatherers hunted alone; they worked in packs and teams. And we also know that they quickly worked out the role of luck in being successful They might not find animals to kill, not because they were not good hunters but because unaccountably there were no animals to kill. But if they returned to the cave empty-handed they would expect to share in some other hunters’ kill. Co-operation and a fair hand out of the spoils was an essential part of the hunter-gathers’ existence – if only for survival’s sake. The primitives knew that if you don’t run an economy and society fairly it quickly becomes dysfunctional, but this is not part of today’s banker worldview or culture.

Capitalist like to say they are clever when they are merely lucky.

Moreover the trading in money is not so much more valuable than any other form of economic activity that it deserves such privileges. This is not God’s work. It is an old-fashioned rigged market by a bunch of smart insiders who have managed to get away with it for decades because hard questions were never asked about fairness or proportionality. And to add insult to injury, when the sky fell in on what was a gigantic Ponzi scheme it was governments, backed by ordinary taxpayers, that launched a bail out to save the economy – but in the process also bankers.

Rigged systems can exist as long they do not overextend themselves.

Of course, intellectual mistakes were made about risk management techniques. Assumptions were made about economic behaviour that proved wholly wrong. But at the heart of the financial crisis – and the criticism of the recovery – lay disregard for fairness. The bankers cast themselves as hunter-gatherers who owed nothing to anybody and could eat what they killed careless of tomorrow. Banks carelessly ran down the capital at the core of their balance sheets, not replenishing and adding to it – but paying it out in dividends and bonuses. If they had paid out just 20% less, calculates the Bank of England, between 2000 and 2007 they would have reserved more than the state paid out in bail-out capital.

The problem is hubris, even more so than greed.

Bankers understood none of this then, and little of it now. They have a tin ear to fairness. But that was the consequence of allowing markets to be as rigged and jerrymandered as the financial markets have been – with no leverage caps, no rules on derivative trading, easily circumvented rules on capital and an anything-goes attitude to financial trading. Capitalism was run abusing all the principles of fairness. When cave dwellers were unfair, they died. When capitalism is unfair, we have financial crashes. Ethics and justice, it turns out, are the indispensable values to underpin successful capitalism.

We are soon going to find out how that story ends.

Any thoughts?