Banks, Government Intervention, and Capitalism

 Politics  No Responses »
Sep 202008
 

Lehman Brothers collapse, Northern Rock run, HBOS takeover. All were in theory good stable banks suffering slightly because of bad debt (US subprime) which may be why the financial markets are so twitchy about them. Even though the markets were in large part responsible for the takeover of HBOS (nothing apparently wrong with them – they just suffered an inexplicable share price collapse).

Now the US government is promising to throw hundreds of billions at the problem by buying up bad debt on top of the trillion dollars already used to protect the banking system. Probably a very sensible move.

But it is slightly peculiar that a freemarket government (and a particularly keen one at that) is bailing out private companies. Perhaps banking is a special case; after all we have seen a housing crisis in the US cause financial panic world-wide, even in industry sectors that have very little to do with banking. But if banking is a special case, it needs special treatment.

The traditional view is that intervention to save banks is wrong, because to rescue banks would encourage banks to take risks they would otherwise avoid. There would be some truth in that if in fact only banks with poor practices failed and the people responsible for bad practices did in fact suffer. Well, HBOS only “failed” (actually got taken over at a rock bottom price) because their share price collapsed for no good reason and because other banks may have been reluctant to lend to a bank in that situation. Lehman Brothers? Well their CEO isn’t suffering too much … he was paid a $22 million bonus last year, which is more than enough to last any reasonable person a lifetime.

Going back to the root causes of the current problems, we can see that it was initially caused by a great deal of irresponsible lending done in the expectation that with rising prices, there were huge profits to be made. Indeed the US is investigating numerous cases of fraud committed by the lenders.

Over the last thirty or so years, the trend has been to remove regulation from the banking sector to give it more freedom on the grounds that regulation was stifling the free market in its quest to make ever greater profits. As it has turned out the greed and irresponsibility of some lenders has shown that bankers cannot be trusted to behave responsibly without strong regulation or close supervision.

First of all, because banking is world-wide, any action by governments has to be done on a world-wide basis to avoid distortions in the banking market where a bank in a country with less stringent regulation would have an unfair advantage.

Secondly because bailing out bad banks has been and will always be so costly, banks should pay a higher rate of tax than other companies.

Finally each bank must have a supervising member on its board of directors who would attempt to identify bad practices and stop them.

US Writer’s Strike: Something A Little Odd …

 Politics  No Responses »
Feb 032008
 

There is something a little odd about the Writer’s Guild Of America’s strike for a better deal on “residuals”. In fact there are a couple of odd things about it. Not that I am against what they are trying to accomplish … anyone who wants to fight the big studios for whatever reason has me at least half on their side before I’ve started to think. And what they are trying to get sounds more than a little reasonable.

The first odd thing is that the workers are trying to get a bigger share of the profits. Not a share but a bigger one! Now there are other industries where workers can sometimes get a share of the profits, but it is very rare. Now why is that ? It would seem both sensible and fair to give the workers a cut of the profits … after all profits cannot be made without workers to make a ‘product’. But perhaps the bosses are too greedy to cut their workers in.

I am sure an apologist for the corrupt capitalist system will claim that entrepreneurs deserve to be rewarded for the great risk they are taking when starting an enterprise, and that share-holders also deserve a reward for the risk they take. Maybe so, but workers also deserve some of the reward.

Of course the writers of the WGA are already more successful than many other workers; one suspects this is because they are on the “posh” side of the pool of workers. Can you imagine coal miners getting a similar deal ?

The other odd thing about the whole issue is just how much support the WGA seems to get in their strike action. The US is not the first place one thinks of as places sympathetic to organised labour. In fact you would expect to see large numbers of US citizens frothing at the mouth with outrage at cheek of the workers. Perhaps this is again something to do with how writers are perceived as opposed to coal miners ?

Or perhaps the bosses in this particular case are so widely hated that even their natural supporters in politics (the Republicans) do not want to be seen supporting them.

The Media, Slavery, and Rascism ?

 General, History, Media, Politics  No Responses »
Mar 242007
 

I have written on slavery before in a more general sense, but this time it is more about how media represents slavery at a time when slavery is in the news because Sunday is the 200th anniversary of the British attempting to abolish the slave trade as the first step in abolishing slavery which is something that is still not finished.

Well, actually the campaign for the abolition of slavery in Britain/England is actually quite a bit older than that act in 1807; the first step was allegedly the abolition of serfdom in 1102. There were many steps forward and many shameful steps backwards (such as the start of the transatlantic slave trade). But I’ll stop there before I get carried away and just point you to the Wikipedia article on the history of slavery … [w:History of Slavery]

What this little rant is about, is how the media portray slavery as an institution where only blacks were slaves and only whites were slave owners and traders. Wrong!

Even ignoring the earlier history of slavery, it is clear from various statistics that slaves could be white or black :-

Group Number
Africans in the transatlantic slave trade 11.6 million
Africans in the Eastern slave trade 11-16 million
Europeans in the Eastern slave trade 1-1.5 million

These figures are hardly likely to be accurate … slave traders do not appear to be good record keepers for some reason, but it would appear that from these figures approximately 6% of the slaves in early modern history were European. That seems like a relatively small quantity in comparison to the number of African slaves taken from their homes, but each individual forced into slavery is a crime against humanity, and a tragedy for the individual whether the individual was black, white or any other colour.

These figures probably vastly underestimate the number of slaves throughout history even if we exclude serfs (a serf is a slave owned by the land and not a person … a distinction likely to make a difference to a lawyer but not the serf). The colour of a slave is irrelevant; it is the fact that he is a slave that is important (and important to free him). The colour of a slave owner is irrelevant; it is the fact that she owns slaves and abuses them that is important (no matter how kind a slavemaster is, she is still abusing other humans).

It is easy to overlook the African involvement in the slave trade … we are given the impression that it was solely white Europeans who threw black Africans into chains. There was certainly plenty of that going on, but in the early days at least many black Africans were involved in the slave trade.

The media needs to stop getting carried away with the easy job of portraying the transatlantic slave trade where images are relatively easy to come by, and make it plain that all slavery is wrong and that it was not just black Africans abused in this way. Given how widespread slavery has been in the past, it is almost certain that everyone alive today is descended from someone who was a slave and probable that they are descended from slave owner.

There are those who say we should compensate the descendants of slaves for the crime against their ancestors. If everyone is a descendent of a slave, this could be somewhat expensive to do! However there is some that we must do and that is to do everything we can to stop present day slavery … yes it still goes on. I am sure that many if not all of history’s dead slaves would cry out that any money that could be put into compensation should be first spent on stopping anyone else being subject to slavery in any form … that is the first priority.

Slavery

 History, Politics  No Responses »
Nov 272006
 

The UK prime minister has just released a ‘statement of regret’ for Britain’s participation in the slave trade which is fair enough … after all slavery was and continues to be a crime against humanity. Some are calling for him to go further and issue a full apology and hand out reparations, which is where things get a little tricky.

The history of slavery is a little more complicated than just excessively greedy British merchants sailing to Africa, seizing millions of Africans and dragging them across the Atlantic to live and die in atrocious conditions. For a start, many of those merchants bought their slaves from native slave traders who had been in business for many years already.

In Africa it was common for African tribes or nations to enslave prisoners of war (a common practice in many other parts of the world) and sell those slaves on to slave traders who would them take them East or later West for resale. As many if not more slaves were sold East to Arab slave traders as were sold West to European slave traders.

In addition, the pirates of North Africa had their own slave trade by seizing Europeans from sea or land and selling them into slavery in their own markets. Whilst not of the same scale as the outgoing trade from Africa, it still counts as a crime against humanity for each of the estimated 1.5 million victims. Including a number of US citizens … the Barbary Pirate attacks on US ships was the chief reason why the US Navy was started.

In fact slavery or similar states (serfdom, enforced contractual slavery, etc) has been so widespread that there are very few parts of the world that did not have slavery at some point in the past, and probably very few of us who do not have slaves as ancestors.

So when we talk of reparations for the crime of slavery, who should pay ? And who should be paid ? It is not an easy question to answer. Of course Britain is included amongst the group of debtors, but do we get credit for the amount of efforts Britain made to abolish the slave trade ? And what about the other slave traders … other Europeans, Arabs, and Africans ?

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