Economic governance

I am currently writing a sequence of books that together comprise a “future history”, and one of the questions I am trying to address is, how should we be governed? By what right do some take from the majority? Obviously, the issue is extremely complicated, BUT it is an issue we have to face, because in my opinion, the current situation is far from ideal. Before thinking about that, though, perhaps some thoughts on how we got into this mess are worthwhile, and here, you, the reader, should also contribute.

In the deep past, the ruler was determined by might, then, because that was messy, by bloodline. That had the advantage of having a clear nominated ruler, which stopped the inevitable bloodletting, at least most of the time (the War of the Roses is a clear example of what can go wrong), but there was no consideration given to ability, justice, or anything else. The objective was to stop civil war, and lesser battles for lesser power, and, of course, for those with privilege to retain it. Ownership of land or the ability to operate a craft alone gave opportunity, and land ownership gradually accreted to a number of Lords, while craftwork had limited scope for expansion, and again, the skills were inherited. There were no tech colleges to learn to be a smith; your father taught you. This led to an embedded class system where your life was determined by the status of your parents. This system was static for a number of reasons, but the most obvious was that there were no opportunities to get out of it. The industrial revolution changed that; there were opportunities everywhere and fortunes could be made, but to make them workers had to leave the land.

Even before the industrial revolution, there were pressures to change, largely because there were new opportunities. The existence of colonies meant there was an expansion of land, which led to the American Revolution, while in France, the ruling class totally neglected their obligations. What happened then was that people began thinking about how they should be ruled, which is my question.

We have settled for what we call democracy, but in my opinion, it is deeply flawed. So far, the flaws have not mattered that much, because there have been a continual supply of fresh opportunities, at least in some countries. The masses in India, China and Africa might find opportunities there difficult to come by even now. Technology has removed the dependency on land ownership, but opportunities still depend on resources, and particularly on the availability of energy. Like it or not, sooner or later oil will no longer provide the cheap source of energy that we have experienced, and that will contract opportunities. Now what? What should be the basis of future governance? Winner take all? Fairness? Pre-existing wealth rules?

What started this particular post is the news that Cyprus has a deep problem. Cypriot banks have miss-behaved, at least according to the European Central Bank, and although the details are unclear, it seems to be related to the Greek crisis. So what does the European Central Bank do? They will lend Cyprus the money, but will raid the depositors’ savings to cover most of it. This tactic is not entirely original. It is the method once used by one J. Stalin, so with precedent, it is OK, right? Wrong! It is simply theft. The fact that previously only J Stalin tried this should be some indication that the morality of doing this is definitely on the dark side.

The argument seems to be that the depositors knew the risk, so they pay. My question is, did they? How many depositors in any country have the foggiest idea what their bank is doing, and even if they did know, what could they do about it? Then, consider that in 2007, in the US even the Federal Reserve either had no idea what “Investment Banks” were creating, or alternatively they did, but they did nothing. The bank is fundamental to our economy, so much so that banks are considered “too big to fail”. So, bankers seem to have a charmed life. They can pay themselves whatever they like, do whatever they like, and someone else will pick up the pieces. Is this fair? What part should fairness play in future governance? Why should a banker in one country have the right to steal money from another, then effectively ruin that country’s economy, to cover his/her own ineptitude? Then there are the bankers. If I sold you shares in the Golden Gate Bridge, I would go to jail for fraud, but if bankers sell worthless derivatives that nobody has the faintest chance of understanding, they pass go and take millions in bonuses, while all and sundry lose their jobs, their houses, whatever. Can that be allowed to continue? What do you think?

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2 thoughts on “Economic governance

  1. Economics, a non-exact science cannot provide rules when political-corporation nexus organises a financial bailout, where the tax payers are take for a ride

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