The complex nature of reality makes unforeseen consequences inevitable. The manifest excesses associated with the financialization of the economy and transfer of national wealth to financial vested interests is repugnant to all right thinking people. As it sinks in the reality of what has happened and its implications for what will happen will engender rage. The fuel is laid, the right spark will create a raging inferno that will consume all in its path.
In retrospect the spark will seem so clear and there will be an apparent inevitability to the overall thrust of what follows. But in truth the exact spark and path is not predictable:
CERTAIN complex systems, under certain circumstances, have been discovered to behave in mathematically simple, similar ways. In ‘critical states’, there is no reason to look for specific causes of great events. The smallest force can have gigantic effects and sudden upheavals can strike seemingly out of nowhere. The approximate frequency of such upheavals can be predicted, but not when they will happen or what size they will be.
Nassim Taleb correctly points out that much of the news cycle is meaningless noise. Media commentary and analysis often is effectively messing around in the error term of reality. It provides narratives that appeal to the human mind, but are of no true explanatory power. It does not illuminate, but does feed the perception that we understand what is happening now and know what will happen in the future.
But somewhere in today’s noise is tomorrows “explanatory” event. A seemingly trifling matter to all but those directly involved, such as the assassination of Archduke Franz Ferdinand, is noise until it is not. Mighty oaks from little acorns grow. But we know not in advance which seed will germinate or exactly how tall it will grow, how long a life it will have and what seedlings it will in turn give rise to.
We can not predict exactly how the world will react to the rage, but react it will. It is already manifesting itself around the developed world. In the US we have the Tea Party and the Occupy Wall Street (OWS):
- The Tea Party movement manifested itself from the mainstream of American society. The bourgeois middle class who normally work hard, obey the law and form the backbone of America. They were polite, clean, law abiding and tolerant. They even picked up their own litter. They were of course demonised by the mainstream media. I suspect they were also largely co-opted by the Republican Party.
- The Occupy Wall Street (OWS) protest sprang more from the left of society. Normally the dirty unwashed bludgers of the western world. But even a stopped clock is right twice a day. In highlighting that something was wrong, and that Wall Street and finance were at the heart of the rottenness they are right. Crony capitalism is not the answer to the inequities of American society. But neither is anarchy or socialism.
What the Tea Party and OWS reveal is that the tectonic plates of US political life are ripe for realignment. Either the status quo changes or the status quo will be changed.
The beauty of Western democracies is that their revolutions can be both glorious and relatively free of bloodshed. Through the ballot box one can effect change. Not just change you can believe in, but change you can experience. Change is not just a promise, but a reality. Something all Western political parties will need to remember, if they do not want to go the way of the Canadian Progressive Conservatives:
The Progressive Conservatives went from being the majority party to holding only two seats in the House of Commons, which was not enough to maintain official party status
Change through the ballot box can make effecting change through violent revolution unnecessary. No prizes for guessing what initiatives such as this would make more likely:
“You have to have more ability from Congress, I think, to work together and to get over the partisan bickering and focus on fixing things. I think we ought to suspend, perhaps, elections for Congress for two years and just tell them we won’t hold it against them, whatever decisions they make, to just let them help this country recover. I really hope that someone can agree with me on that. The one good thing about Raleigh is that for so many years we worked across party lines. It’s a little bit more contentious now but it’s not impossible to try to do what’s right in this state. You want people who don’t worry about the next election.”
What happens if elections are suspended is unclear. But that it would create a reaction is clear. Already we can see strange bedfellows. Who would have thought that members of a right wing militia keen on securing US borders would make common cause with the OWS?
It might be that they always would have seized the opportunity to demonstrate the importance of the right to bear arms. It is also possible that the initiative was a reaction to the police use of excessive force:
When authorities charged with protecting the people instead assault them it can have unfortunate and unforeseen consequences.
Our forebears had to fight for our freedoms, for our countries, for our government, for our leaders and for one another. The net result of their efforts was our Western way of life. We inherited a socioeconomic system that empowered and enriched the masses. Not just the nobles or other entrenched elites. We owe it to ourselves and all who have gone before us to pass it on intact to our offspring.
Nothing in life is free. Our culture and society exist because of our forebears. Because of the decisions they made. Because of the sacrifices they made. Our children and grandchildren will include us in the pantheon of the past that made their present possible. The calibre of their life depends in part on what we do right here, right now.
Creating a better tomorrow from where we are today requires facing reality. Creating a better tomorrow imposes costs on the here and now. We have to sacrifice present personal consumption for the ability to produce more tomorrow. Positive interest rates are one of the mechanisms capitalism rewards us for this. In undermining this the abomination that is quantative easing strikes at the heart of our hopes for a better future:
Here in Zimbabwe we had our near-bank failures a few years ago and we responded by providing the affected Banks with the Troubled Bank Fund (TBF) for which we were heavily criticized even by some multi-lateral institutions who today are silent when the Central Banks of UK and USA are going the same way and doing the same thing under very similar circumstances thereby continuing the unfortunate hypocrisy that what’s good for goose is not good for the gander….
As Monetary Authorities, we commend those of our peers, the world over, who have now seen the light on the need for the adoption of flexible and practical interventions and support to key sectors of the economy when faced with unusual circumstances.
Facing reality and setting off on the right path will in the short term cost time, money, blood, toil, tears and sweat. All many of us can hope for is the opportunity to go to our graves knowing we did what was right. That we started building a better future for ourselves and our children. Doing so requires that we rise above vested interests and on occasion personal gain. That we restore capitalist incentives to the heart, body and soul of our system.
We must constrain our baser instincts with customs, laws and regulations to make it so that when working for personal gain, we add to the public good.
Bailouts and the socialization of losses play no part in this. Political connections need to be irrelevant to personal success. Our brightest and best need to be engaged in creating value. They should not be focused on expropriating it from entrepreneurs, industrialists, workers and all who actually produce things that satisfy our body and soul.
Good government is not the normal state of affairs. There are always those seeking money and power. Under capitalism they tend to get those through giving people what they want for less than they are willing to pay for it. Under other systems they tend to get it from government concessions or brute force.
The bailouts, the funding for pet politically connected causes and the willingness to ride roughshod over the law and common decency shows we are moving from one system to another.
The path to power or a life of ease is increasingly through the political rather than economic marketplace.
It has ever been such throughout most of the world. Which is why material progress has historically been so slow. Until a few hundred years ago life was short and brutish in all lands. We need to act now to ensure that this does not again become the norm throughout the Western world. We know what we need. We need to restore the workings of our essentially free market capitalist system. Big government and big corporations are too often working against the interests of society as a whole.
Competition is such a hard task master. Life is so much easier when at the top of the pile if you pull the ladder up after yourself. It’s much easier to have a cozy relationship between big business and big government. If the cost of that is an end to progress, then so be it. But the opposite of progress is not a continuation of existing comfort. It is stagnation and death. We go forward or we sink back into squalor.