[Reader-list] Bankers on Benefit

[Pawan Durani]

*Bankers on Benefit : Dr. Nitasha Kaul*

As the headlines scream 'Global Meltdown' non-stop in the news cycle, even
the most uninvested, disinterested observer has been forced to confront the
possible global ramifications of such financial ill-health. Not so long ago,
in Britain, the television was chock-full of programmes that showed people
how to relocate, redecorate, remortgage, do-it-yourself, do-anything-at-all
so as to get on the property ladder. That this ladder was mired in swamp was
not mentioned. There was talk of property owners in London uncorking bottles
of champagne as they saw peak after peak in the prices. Was it so difficult
to imagine then that what goes up must come down? A come down, and how! For
bankers who were said to spend vulgar amounts on a night's entertainment in
the city to now be joked about as creatures more inferior than pigeons who
at least could still put a deposit on a ferrari. The corporate empire is
humbled. We've heard about golden parachutes and witnessed the socialisation
of risk while profit remains privatised, and somewhere between the lines, we
were signed up by governments to the multi billion bailout plans.



What have we missed? Here are a few things we still need to consider.



First, The market is not an organism but a collective functioning. What the
cliche of the 'nervous markets' doesn't emphasise enough is the fact that
the market isn't a psychologically damaged and hurt beast that shrinks in
pain and fear; the market is a network of vested interests, incentives and
calculations, decisions that are constantly taken by individuals who have
the werewithal to make a difference for the better, should they decide to do
so. The tale of the jittery, nervous market that can't cope with the
aftermath of its irrational exuberance, is like the person who had an
excessive night-out and the morning after hits them with a blistering
hangover and leaves them shattered. Nice, but not quite complete. The
individuals and organisations who were devising and deploying clever
instruments to hide risks and enable ever greater lending were acting with
narrow short term self-interest, knowing that the lack of enough regulations
enabled them to do so. When the going got tough, they clammed up and refused
to lend in spite of knowing that they were making the situation worse. This
is not the story of nervous markets but the tale of individuals who acted in
narrow short-term self-interest for maximum gain and will continue to do so.



Second, none of what has happened should surprise us in the extreme. In so
far as irresponsible lending was involved on the part of the banks and
financial institutions, and it brought ruin upon the borrowers, small
businesses and home owners - it isn't new. For decades now, international
financial institutions such as the IMF and World Bank based in the West have
been lending irresponsibly and often unaccountably to corrupt and
unrepresentative governments in Asian and African countries. Lending that
was meant to serve the interests of the lenders, not the borrowers. It has
ruined entire economies and societies that are blighted by the inability to
pay back the debt coupled with the perverse incentives set in motion when
loans are pushed for systematically fabricated needs. What *is *new is that
this perversity has now been let loose on a large scale on one's own home
population. It isn't quite the chickens coming home to roost, but it is a
contagion effect of bad practices.



Third, note how representations of economic issues is a significant part of
how we see economic reality. These representations are dramatically
different when it comes to the troubles of labour as opposed to those of
capital. When the unemployment figures rise and poverty is an issue - this
is how the government reacts: we hear talk of being tough on the idler, we
hear about means-testing, we hear of people who are on benefit, the dole,
the hand-out, the scroungers who live off other people's (good, honest,
upright burghers') taxes. They are seen as a drain on the system and the
responsibility is very individualised. We hear of how it is each individual
unemployed person's fault that they are unemployed, they must not have
worked hard enough to acquire the skills that the employers might want, they
must not have accumulated enough human capital, they must be pushed back
into work, they must be means-tested before giving them any help. We don't
hear about the nervous labour pool - an abstracted organism that has been
damaged and needs cash flow injections and bailouts to be coaxed into
action. We are informed of telephone lines to report each individual benefit
cheat. On the other hand, when it comes to capital, the financial sector,
the talk is of banking sector needing a bailout, the government having to
rescue the ailing financial institutions. How many times during the current
crisis have we heard of the bankers being labelled as benefit-seeking, as
scroungers who will thrive because of state help. We've heard people object
to the bailout, but are the bankers on benefit represented as a drain on the
system by the government itself? Have any telephone helplines been set up to
report bankers who malpractised and require the big government dole? No.
Instead, we're fed a simplified palatable story about the financial sector
needing a rescue to be put back on track. As if it were an inanimate fuse
that had blown off and merely needed the switch to be lifted.



A few hundred years ago, the Smithian fairy tale of the invisible hand
remade the world. The Puritan-moralist authored powerful story of everyone
working in their own self-interest bringing about the greater good of all
appealed to a world that found it consonant with protestant ethics, with the
onset of modernity. Now, in a much more complicated world, we've had another
peek at how people working in their self-interest have the potential to
bring about the collective ruin and demise of all.



Dr Nitasha Kaul is a writer and academic based in London. Her latest book is
*Imagining Economics Otherwise: encounters with
identity/difference*(Routledge, 2007).



http://www.zmag.org/znet/viewArticle/19307