Private Profit and Public Debt; The Continuing Hypocrisy of the ‘Free Market’

By Ian Howarth

Since the autumn of 2008 there has been one issue in politics on which if the surface is scratched a great sense of anger, almost rage can be found.  I am of course talking about the financial crisis and the crushing five year recession that has followed.  In particular I am angered by what I see as a great injustice being committed by our politicians on behalf of the richest people in the country and the world.   fat cat

Why has the British and America taxpayer continued to tolerate billions of pounds of their money being used to support the people and institutions that drove the economy onto the rocks, with out so much as an ounce of real reform to the mad and immoral practices of the institutions responsible.  In Britain today we are told by our leaders that we are living in an ‘Age of Austerity’. An austere age in which banks and market traders reap mighty profits while nurses, builders, and postal workers face redundancy!  An austerity that provides us with the spectacle of multimillion pound bonuses after the timely injection of billions of pounds worth of taxpayer’s money saved the financial system from collapse.   This is a strange and discriminating type of austerity, one that picks its way through society, sparing the hedge fund manager while leaving thousands of young people without work.

In truth most of us have yet to fully awaken to the scale of the crime against public decency that is being perpetrated in the halls of power and high finance today. Most of us are still reeling from the shock of finding that the promises of endless prosperity and an end to ‘boom and bust’ were in truth propped on so shaky a foundation that they were in reality as worthless as Lehman Brothers shares.

I simply find it impossible to fathom the sheer scope of the hypocrisy that our leaders on all sides of the political divide are trying to feed us.  There is an old maxim that cometh the hour, cometh the man.  This is the hour, but I do not see anyone of worth claiming the mandate of the people and providing the answers, or leadership I believe millions of us seek.     Where is our FDR?  We need someone to offer us a New Deal and put an end to the deceitful self-interests of the small and powerful elite who have raided the public purse in the interest of private enterprise.  Are we to simply watch as the financiers and corporate executives run away with our money leaving ordinary people to face cuts to their schools and hospitals in the name of efficiency and living within ‘our’ means?  Must we return to the old dying on trolleys in hospital corridors for a lack of funding and compassion?  We face growing poverty and a widening gap between those that have, and those that have not, all so that the corrupt system that delivered us to this place may survive.

The Banks are in reality broken, and so the state must take its just stake and make clear to those CEO’s and executives that a bank that is too big to fail, is too big to exist.  The retail and casino operations need to be separated and the state must regulate with a ruthless zeal those practices that have led us to this place.  To continue on our current trajectory is only to ensure that we face such crisis again, and to ignore the human suffering that it must inevitably contain.  The disconnect between profit and the real world must be ended and tethered to the wealth of the nation through the guarantee that the practices of these mighty financial institutions will be regulated to ensure that they are not simply printing money for their own executives, but engaged in economic activity that benefits the whole of society.

It is the role of the state to ensure that all sectors of the economy are operating not only to the benefit of shareholders but the nation at large.  However outrageous these suggestions may seem to the apostles of Friedman let us not forget the single biggest lesson of the last five years.  If this crisis had been left to the free market the financial system would have collapsed and many millions of us would have faced losing our pensions, savings and even our current accounts.  It was in the end the guarantee of the state, of the taxpayer, that all debts would be met, and all deposits honoured that allowed these banks to continue.  As long as it is true to say that the largest of our banks cannot be allowed to fail then the shareholders and speculators of these institutions are in fact taking no risks at all with their investments.  This is not a free market.  These banks can in reality do as they will because they now know that the state is their acting as a back stop should they hit choppy waters.  This is why the state has the right, and obligation to crack the whip and end the free ride.  We cannot continue to abide a system that allows for state welfare for banks, and financial institutions while they continue to preach a failed doctrine of free markets and light regulation.   The Banks  have been given an implicit guarantee of state support without any conditions set upon their practices.  This is both immoral and undemocratic. The leaders we rely on have placed their connections and friendships with the high flyers of the City of London over their responsibility to represent and protect the interests of the people and their money.

What we need is a system that rewards and punishes fairly, and recognises the right of democratic forces to exert control over the dangerous excesses that are inherent to capitalism.  It is clear to me that the last 30 years has witnessed a mighty experiment in free market economics, a de-regulation of everything with a simple and accepted mantra; leave it to the market to decide.  This experiment led us to this place and a world in which a few got very rich, but ultimately the taxpayer, not the free market had to carry the can.   This is not a choice between the inefficiencies of a command economy or the disastrous effects of deregulated free markets.  It is an argument for common sense, and the recognition that in a democracy the people have a rightful interest in economic policy, and the right to place certain demands and expectations on the corporations that seem to believe that as private enterprises they need only answer to the Board. The outcome of this crisis and the role of the state in averting an even greater disaster must mean an end to this hypocrisy within the free market.

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