Shame Capitalism (or the little I know about economics)
Shame Capitalism (or the little I know about economics)
I read a most interesting column recently by Peter Lyons (who teaches economics at Saint Peters College, Epsom) in the Otago Daily Times (Nov. 17, page 11) entitled ?Behind legal niceties and walled mansions.? In it he bemoaned how Bernie Madoff was serving 150 years for his financial crimes against humanity but that his New Zealand counterparts stay safe (the title of his article). He notes that the government response has been little more than caveat emptor or ?let the buyer/investor beware?. This is of course a standard response from both governments and finance companies and is meant to be a conversation stopper, but in reality it is a conversation opener. When you pay for milk, milk is what you expect to get. Getting poison in the form of melamine instead of milk is not acceptable, just ask those two guys convicted in the Sanlu saga . . . oh right, as of last week you can?t.
Of course we have seen government inaction before. Every now and then a na?ve reporter asks why they don?t act to protect the vulnerable? I remember Prime Minister Helen Clark (which year I can?t recall, her reign was long) being quizzed on the subject of South Auckland loan sharks and what might she do about them. Her response was more in her facial expression than her words. Her look was like a cross between a CIA operative having been asked an inappropriate question (?if I told you the answer I?d have to kill you?) and the expression your mother used when as a six year old you inquired the purpose or function of sanitary pads. Clearly no full explanation or action would be forthcoming.
Nothing can or will be forthcoming at a political level. It can?t. In this our politicians are powerless. Why? Standard and Poors, and Moody?s. The American bodies that issues credit ratings that Bill and John were so anxious to be on the right side of earlier in the year (which agency I can?t remember, one or the other, it matters not). Never mind that these bodies have been totally discredited by the triple A ratings they gave to junk bonds and companies that either no longer exist, or do so thanks to government bailouts (such that any sane person would tell them to get stuffed when they came calling), they seem, nonetheless, as powerful as ever.
America trumpets freedom all the time, especially the previous administration?though the freedom to do what is never interrogated very far?but it seems the freedom for the bright and informed to prey on the gullible and uneducated is sacrosanct (there?s a double standard here of course, Bernie preyed on his own people?there are limits). Any government seeking to regulate the activities of the predatory could easily find itself on the receiving end of the long-range cattle prod that is a credit rating downgrade?or worse (we can talk about Zimbabwe some other time). If this were not the case, our politicians, as above, would tell the rating agencies with their bankrupt credibility to get stuffed?though the fearful gnashing of teeth that attended our last review suggests the consequences of doing just that might not be very nice.
I can?t ?prove? any of this and I am not an ?expert? (I exercise nothing more than observation and memory) but it is dead easy to infer. Regulation of predatory activities might actually be a vote winner given the current public anger at failed finance companies, but no party of right or left is going there (hence the shoulder-shrugging caveat emptor default of this and the last administration), probably because they both know they are, or were, powerless to do so (or the punishment would be too horrendous to contemplate). In short we can?t look to our politicians to do anything for us, their hands are tied (sorry if this destroys any illusions the reader might have as to the extent of our sovereignty, but as I see it, it is indeed very limited). The best we can do is talk about it amongst ourselves, and, as Peter Lyons suggests, mete out whatever social sanctions we can. Other than that, our power resides in our consumer choices, whether we invest in a bank (and which bank) or a finance company, or do neither but pay off the mortgages on our houses (and contrary to Alan Bollard?s assertion [reserve bank chairman] that this is wrecking the economy and creating a housing bubble, we as a nation will continue to do so, because the bulk of us aren?t as stupid as the predatory would like us to be?and Mr Lyons, who teaches economics, concurs). Our consumer power extends a long way, even down to the humble decision of which brand of pizza we buy (bear with me).
It seems to me the old six degrees of separation theory hardly applies to personal economic devastation in this country. It is more like one or two, especially if you have a memory (these cataclysms have happened before). I am personally acquainted with two (or there but for the grace of God, as they say, three) victims. It is going to make it very difficult for financiers to regain the public trust in a country this small. And the type of social sanctions Mr Lyons was calling for in his article might just take on and make it even harder. Hell Pizzas are making an effort. Get in behind them I say! We?ve had the coinage "disaster capitalism" (thanks to Naomi Klein)?perhaps the next vogue will be "shame capitalism".
If you didn?t read the Sunday Times this past weekend (December 29, 2009) and are wondering what I am on about with the pizzas, check out the following link. Mr Hotchin claims their pizzas are lousy, but I?m sure there are things in the world that are far lousier.
https://www.stuff.co.nz/business/industries/3090184/Hell-comes-a-calling-for-Hanover-boss
I read a most interesting column recently by Peter Lyons (who teaches economics at Saint Peters College, Epsom) in the Otago Daily Times (Nov. 17, page 11) entitled ?Behind legal niceties and walled mansions.? In it he bemoaned how Bernie Madoff was serving 150 years for his financial crimes against humanity but that his New Zealand counterparts stay safe (the title of his article). He notes that the government response has been little more than caveat emptor or ?let the buyer/investor beware?. This is of course a standard response from both governments and finance companies and is meant to be a conversation stopper, but in reality it is a conversation opener. When you pay for milk, milk is what you expect to get. Getting poison in the form of melamine instead of milk is not acceptable, just ask those two guys convicted in the Sanlu saga . . . oh right, as of last week you can?t.
Of course we have seen government inaction before. Every now and then a na?ve reporter asks why they don?t act to protect the vulnerable? I remember Prime Minister Helen Clark (which year I can?t recall, her reign was long) being quizzed on the subject of South Auckland loan sharks and what might she do about them. Her response was more in her facial expression than her words. Her look was like a cross between a CIA operative having been asked an inappropriate question (?if I told you the answer I?d have to kill you?) and the expression your mother used when as a six year old you inquired the purpose or function of sanitary pads. Clearly no full explanation or action would be forthcoming.
Nothing can or will be forthcoming at a political level. It can?t. In this our politicians are powerless. Why? Standard and Poors, and Moody?s. The American bodies that issues credit ratings that Bill and John were so anxious to be on the right side of earlier in the year (which agency I can?t remember, one or the other, it matters not). Never mind that these bodies have been totally discredited by the triple A ratings they gave to junk bonds and companies that either no longer exist, or do so thanks to government bailouts (such that any sane person would tell them to get stuffed when they came calling), they seem, nonetheless, as powerful as ever.
America trumpets freedom all the time, especially the previous administration?though the freedom to do what is never interrogated very far?but it seems the freedom for the bright and informed to prey on the gullible and uneducated is sacrosanct (there?s a double standard here of course, Bernie preyed on his own people?there are limits). Any government seeking to regulate the activities of the predatory could easily find itself on the receiving end of the long-range cattle prod that is a credit rating downgrade?or worse (we can talk about Zimbabwe some other time). If this were not the case, our politicians, as above, would tell the rating agencies with their bankrupt credibility to get stuffed?though the fearful gnashing of teeth that attended our last review suggests the consequences of doing just that might not be very nice.
I can?t ?prove? any of this and I am not an ?expert? (I exercise nothing more than observation and memory) but it is dead easy to infer. Regulation of predatory activities might actually be a vote winner given the current public anger at failed finance companies, but no party of right or left is going there (hence the shoulder-shrugging caveat emptor default of this and the last administration), probably because they both know they are, or were, powerless to do so (or the punishment would be too horrendous to contemplate). In short we can?t look to our politicians to do anything for us, their hands are tied (sorry if this destroys any illusions the reader might have as to the extent of our sovereignty, but as I see it, it is indeed very limited). The best we can do is talk about it amongst ourselves, and, as Peter Lyons suggests, mete out whatever social sanctions we can. Other than that, our power resides in our consumer choices, whether we invest in a bank (and which bank) or a finance company, or do neither but pay off the mortgages on our houses (and contrary to Alan Bollard?s assertion [reserve bank chairman] that this is wrecking the economy and creating a housing bubble, we as a nation will continue to do so, because the bulk of us aren?t as stupid as the predatory would like us to be?and Mr Lyons, who teaches economics, concurs). Our consumer power extends a long way, even down to the humble decision of which brand of pizza we buy (bear with me).
It seems to me the old six degrees of separation theory hardly applies to personal economic devastation in this country. It is more like one or two, especially if you have a memory (these cataclysms have happened before). I am personally acquainted with two (or there but for the grace of God, as they say, three) victims. It is going to make it very difficult for financiers to regain the public trust in a country this small. And the type of social sanctions Mr Lyons was calling for in his article might just take on and make it even harder. Hell Pizzas are making an effort. Get in behind them I say! We?ve had the coinage "disaster capitalism" (thanks to Naomi Klein)?perhaps the next vogue will be "shame capitalism".
If you didn?t read the Sunday Times this past weekend (December 29, 2009) and are wondering what I am on about with the pizzas, check out the following link. Mr Hotchin claims their pizzas are lousy, but I?m sure there are things in the world that are far lousier.
https://www.stuff.co.nz/business/industries/3090184/Hell-comes-a-calling-for-Hanover-boss
