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The root cause of almost all our problems? Contemptible establishment arrogance

jehangir 2The late great journalist, Jehangir Pocha (right), wrote in an email: “Capitalistic and traditional societies are just not desirous of universal progress. This outright rejection of people by the wider berth of society is the root cause of almost all our problems. In India it is caste, and abroad it is class, isn’t it? !”

Felicity Arbuthnot also refers to this contemptuous rejection of the public interest by the 1% as voiced by Peter Jay, formerly Chief of Staff to Robert Maxwell.

“From today’s performance on BBC Wales, it’s clear that Peter Jay has now become very righteous and correct. He said that only ‘shits’ would want to publish the whole truth on the Bush-Blair correspondence that led to the Iraq War and the deaths of 179 UK soldiers. Is this how diplomats communicate? The loved ones of the fallen had no right to hear the whole truth, Jay explained. Protocol between the UK and USA was a higher priority. His is the authentic voice of yesterday’s contemptible establishment arrogance telling the lower orders ‘ Yours not to reason why. Yours, but to do and die.’”

tony blair foiBlair reneged on the Freedom of Information Act which, he initially said, would ‘signal a new relationship between government and people: a relationship which sees the public as legitimate stakeholders in the running of the country.’ Felicity continues:

“What a long time thirteen years is in politics and after an invasion or two. In his autobiography “A Journey”, published in 2010 he writes: “Freedom of Information Act. Three harmless words. I look at those words as I write them, and feel like shaking my head ’til it drops off. You idiot. You naive, foolish, irresponsible nincompoop. There is really no description of stupidity, no matter how vivid, that is adequate. I quake at the imbecility of it . . . Scandals will happen … The problem with FOI is that it can be used to expose them.”

She comments: “Scandals don’t get much bigger than embarking on an illegal war, destruction of the “Cradle of Civilisation”, manufactured on a pack of lies”.

foi cartoon

This contemptuous rejection of the public interest by the 1% is more widely perceived than ever before – how can these decision-makers be replaced, and by whom?

Revisiting a proposal to deter bankers from assisting oppressive regimes

Jehangir Pocha, CEO and Editor-in-chief of NewsX TV, New Delhi, writes: 

In 2005, Harvard’s Michael Kremer and Seema Jayachandran of Northwestern University came up with a simple and neat solution to one of the world’s greatest economic problems – crushing national debt.  Jayachandran and Kremer call it odious debt. Yes, unnecessarily literate, even archaic. But that’s how academics show their muscle. 

Relevant seven years later: Ask any Greek. Or Italian. Or American . . .

Kremer and Jayachandran, who are also Fellows at the Center for Global Development in Washington, have rightly identified excessive debt as one of the central reasons nations are forced to cut social services and public spending.  Ask any Greek. Or Italian. Or American. 

The larger problem, as Jayachandran and Kremer point out, is that often a nation’s debt is run up under circumstances that are morally cumbersome, if not reprehensible. In such cases, they ask, isn’t it only fair to cancel such debt? 

Is Iraq really liberated if its people are still chained to the debts of their oppressor? 

Consider Iraq. Should Iraqi citizens who suffered and toiled under Saddam now have to suffer and toil to pay off the debts the dictator accumulated to buy his (Western) weapons and build his palaces? Is Iraq really liberated if its people are still chained to the debts of their oppressor? 

Take South Africa. The apartheid regime took $23 billion in loans from Western banks, most of which was spent on the white population, save that which was spent on policing and terrorising the blacks.  How is it acceptable or fair at any level to now ask black South Africans to repay this debt? 

This is now the situation that faces much of the Arab world, as well as several Latin American, Asian and African countries. 

Jayachandran and Kremer say it is time the world formulated a legal response to such “odious debts” brought on by war, dictators and such exceptional circumstances. 

The argument is not new, but until now one had found a way to avoid the moral hazard inherent in such a move. After all, no matter how morally compelling the argument for cancelling odious debt, there is always the danger that some governments will mis-use it. 

Bankers in London, New York, Zurich, and Paris line up to lend oppressive regimes money – at extortionate rates 

This is where Kremer’s and Jayachandran’s genius shows up.  Their proposal is as simple as it is great. They propose that whenever the international community identifies any particular regime or ruler as a pariah or illegitimate, it should also declare that any and all future contracts with that regime/ruler would be non-transferable to the state. 

For example, if President Assad dictatorship in Syria was declared a pariah government, any money lent to Assad’s regime would automatically lapse if the regime was toppled.  Assad’s debt would not pass on to the Syrian state that would succeed his tyranny. 

This is essential to control sleazy bankers. When nations become pariahs, their aid and trade dry up. So bankers with addresses in London, New York, Zurich, and Paris line up to lend them money – at extortionist rates of course. The bankers become the pariah regime’s lifeline, often extending its lifespan – and the misery it speads – by decades. 

Bankers don’t care much for human rights. But they do care for profit. 

So whereas they once felt smug in the knowledge that their loans to dictators would have to be returned by their people, Jayachandran’s and Kremer’s proposal would make them think twice about funding dictators. 

Without this funding, dictators and rogue regimes across the world would be squeezed and probably (or least hopefully) have their end hastened.  Even support to dictators not yet declared rogues simply because they serve Western purposes, like Saddam Hussein in the 1980s, will find it hard to raise money because bankers will never be sure when the tables will turn and an ally become the enemy, like Saddam in the 1990s. 

The work of Professor Jayachandran and Kremer could substantially change the world if their idea is adopted widely. Not only would it make Western bankers wary of bankrolling tyrants, it would allow newly liberated countries and people the freedom to start their new lives with a clean slate.

 Read the paper here.

 Read Jehangir Pocha’s blog here.

Samuel Brittan and James Robertson agree: the obstacle to reform is vested interest

This week’s FT article by Samuel Brittan, The fight against crony capitalism, written just after the Libor rate fixing scandal broke, resonates – in some respects – with James Robertson’s concluding remarks in his latest book

Brittan opens by quoting Adam Smith: “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and justice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies, much less to render them necessary.”  Wealth of Nations 

A passion for secrecy and a hatred of open discussion 

“What then has gone wrong? In general terms it is difficult to go beyond Adam Smith. . . . success has depended more on whom you know than what you know. Hence the catchphrase “crony capitalism”. . . 

“I will risk controversy myself by noting similar, if more subtle, processes in the EU. A group of self-selecting politicians and officials has promoted a bureaucratic and intrusive form of integration, on which they have rarely consulted their electorates. What all forms of cronyism share is a passion for secrecy and a hatred of open discussion . . .” 

Brittan regards measures to limit lobbying as important, warning however, that this will be difficult as insiders can devote time and energy to maintaining their position 

Further insights come from James Robertson in his latest book: Future Money, Breakdown or Breakthrough? 

“Strong worldwide opposition to money system reform may well continue from the still-growing body of more or less reputable professionals and their families, friends and associates around the world who benefit from the status quo.” 

Amongst those who ‘make an unusually comfortable living from the money system, the tentacles of which exert power and influence in many walks of life’ he lists politicians, bankers, government officials, investment managers, accountants, tax consultants, financial advisers, insurance experts, economists, press and broadcasting industries. 

Robertson comments: “Naturally enough, few of those people will be eager to admit that the money system may be in need of radical reform – from its roots up . . .” 

But a growing minority of active money-system practitioners and professionals, some of them among the most able younger men and women, are coming forward to propose and support reform.  Robertson (left) continues: “ They won’t necessarily be inspired only by ethical considerations. Clear-sighted career ambition could also attract them to participate early in the new departure in the history of money they see coming”. 

One such has recently written from India. Former editor of the country’s highest circulating business weekly, now chief editor of India’s NewsX TV station, Jehangir Pocha has ordered copies of Robertson’s ‘important’ book, to send tovarious ministers, politicians, businessmen and bureaucrats, including our central bank governors.” 

Brittan counsels optimism, believing that in time the current race of financiers will be ‘brought down’. Is it too much to hope that their efficient successors will make ethically justifiable decisions?