Posts filed under ‘Economy’
Inside Job starts off with a cautionary tale about Iceland. Iceland’s economy was, for a time, almost entirely based on finance. Economists from America (who were paid by the Icelandic Chamber of Commerce) penned scholarly articles on the health and stability of Iceland’s economy. Turns out it was a house of cards.
The movie is a documentary film by director Charles Ferguson, narrated by Matt Damon. It explains and tracks the events of the global recession that ushered in the Obama administration. It explains the roots of the problem, tracking all the way back to the Great Depression and the Glass-Steagall Act and its appeal during the Reagan administration and the savings and loan scandals of the ‘80s. It explains it in pretty plain language in a way that ordinary Americans like you and me can understand.
The Glass-Steagall Act was a piece of legislation passed in 1933 in response to the Great Depression. It established the FDIC and made it illegal for conventional banks to offer speculative investments. It also basically banned insurance agencies and investment services firms from merging with traditional banks.
That all changed, beginning in the 1980s, and the Republicans, and later, Bill Clinton, helped to pass laws that removed the regulation and controls that the Glass-Steagall Act had put into place for the protection of ordinary Americans. Not only were the laws changed to accommodated a laissez faire attitude, the laws that remained in place were blatantly disregarded and unenforced. Under the influence of Alan Greenspan, Ayn Rand‘s former lover and protege, free market was good, regulation bad.
The movie explains how the housing bubble, CDOs and derivatives worked together to cause a global catastrophre. Everyone gets in on the blame: Wall Street traders, mortgage lenders, insurance companies, politicians, lobbyists, ratings agencies and insurance companies. The individual greed of these people works in a kind of synergy to provide a perfect storm of collective immorality.
Everyone is out for his own piece of the pie. Everyone thinks he’s entitled to receive something for nothing. One thing in the movie that’s especially shocking is when the increase in the average Wall Street employee’s salary over the last forty years or so is tracked on a line graph. If you weren’t angry about the bailout before you saw this movie you certainly will be afterward.
Why and how did these people escape prosecution? An entire nation has been defrauded of billions of dollars, and not one single person has been jailed for it. Instead, they got bonuses or millions of dollars in severance pay and a McMansion in the Hamptons. It’s a travesty. And if you are an American, and you don’t stand up and let your outrage be heard, well, you should just be ashamed of yourself.
You owe it to yourself to see this movie. If I can read Too Big to Fail and watch Inside Job and understand complex finance geek speak, then you can, too. Do it. And remember next time you vote for a President what was done or not in order to right this situation. You can bet that I will.
The recent political unrest in predominantly Muslim countries in Africa and the Middle East has seemed like a stack of dominoes falling. The dictatorships of Yemen, Tunisia, Egypt, Libya: they all fall down like toy soldiers. Of course, some people in the United States have been terribly alarmed at these turns of events. It is disturbing, but it’s also refreshing, isn’t it?
These people have been under the rule of brutal regimes in some cases. In all cases they have been subject to economic hardship that maybe even the poorest of those of us in the United States would not be able to comprehend. The countries are overpopulated, and their young people cannot find work. In fact, I’ve read recently that the Muslim population of the world is the fastest growing population in the world.
What’s worse is that in many of these countries our government has been complicit in keeping these people under the thumb of tyranny. We’ve supported inept, corrupt leaders who were guilty of countless human rights violations in order to ensure that we had someone in power who supported American interests.
A lot of things I’ve read recently have been coming together for me with a click. I’ve read about our government’s enslaving poor nations into crippling debt. I’ve read about Arab people all over the world having economic difficulties. I’ve read about political unrest in predominantly Muslim nations. How much of the political unrest do you think comes from political and economic oppression?
I’ve read about people in these countries demonstrating for democracy, for the right to be heard and for their concerns to be validated. I’ve read about many of these people being women, and there’s been more than one article written about the feminists in Tahrir square, as well as how the Muslim Brotherhood held hands to form a bond of chains around the women so that they could protest alongside the men safely.
I read an excellent Newsweek article on Hillary Clinton and her tenure as Secretary of State and how she champions women’s rights globally. I saw an interview with Melinda Gates about how empowering women in third world countries provides further opportunities for both women and men alike. I read Half the Sky where women who were the benefactors of microfunding produced profits for their investors and themselves. They became entrepreneurs and created income for others. There’s no reason why the same model, with maybe a few tweaks, can’t work for men as well.
I read an article in The New Yorker about Mo Ibrahim, a multi-billionaire Sudanese Muslim businessman who made his fortune in the cell phone industry. He retired to start his own charitable foundation that now bestows a prize to any leaving African political leader who has made a significantly positive contribution to his society. For the last two years it’s been awarded to no one because no one was deemed worthy of the prize.
Ibrahim’s foundation keeps records on African countries and their rulers. The Ibrahim Index assigns a numerical score based on human rights, gender, sanitation and access to clean water, corruption, and economics among other categories. It then judges Africa’s leaders’ effectiveness based on these criterion.
China, India, and, indeed, all of Asia is undergoing enormous change. Economic opportunity abounds. This is nothing new. It’s been going on for decades. We’re on a cusp now of a real revolution in Africa and the Middle East as well. We can help these people flourish and encourage them in their efforts to define democracy for themselves. Or we can do what we’ve done in the past. We can covertly support their poverty and enslavement.
In the past the Western world has been reluctant to invest in this part of the world because it’s unstable. But is it poor because it’s unstable or is it unstable because it’s poor? Which came first? The chicken or the egg?
Most of these people don’t actually hate Americans, you know. They’re not really fond of our government – with good reason, I might add. But I think we might find, like Greg Mortenson did when he was nearly dying on the descent down from a mountain climbing expedition, that people are people.
We can win the war on terror, and we can win gender equality for women in countries where there is none. But we aren’t going to be able to win the war on terror with weapons. Remember that old saying? Kill them with kindness? We need to change our foreign policy, both as a government and as individuals. We need to invest in these countries and these people.
We need to throw our economic and political support behind the countries that meet a certain standard on the Ibrahim Index and withhold our support from those that don’t. We need to forgive the debt of African countries. We need to work in tandem with these people to create a sustainable environment of prosperity and invite women to participate. When men in these countries see tangible results from the efforts of women, when these results benefit them and result in more economic opportunities for them, then they won’t protest so loudly anymore.
I know this argument has a tendency to sound oversimplified, and no doubt it is greatly oversimplified and idealistic. But there’s something to the old Southern saying that you catch more flies with honey than with vinegar. We can’t just buy the world a Coke and teach them all to sing, but if someone bought you a Coke would you then be inclined to blow him up with an improvised explosive device? I wouldn’t.