{"id":127027,"date":"2019-02-04T12:01:12","date_gmt":"2019-02-04T12:01:12","guid":{"rendered":"https:\/\/www.transcend.org\/tms\/?p=127027"},"modified":"2019-01-30T13:14:47","modified_gmt":"2019-01-30T13:14:47","slug":"response-to-the-bank-chairman","status":"publish","type":"post","link":"https:\/\/www.transcend.org\/tms\/2019\/02\/response-to-the-bank-chairman\/","title":{"rendered":"Response to the Bank Chairman"},"content":{"rendered":"

4 Feb 2019 – <\/em>The Chairman of a large global bank recently gave a TV interview about the state of the world economy [1]<\/sup>. Not surprisingly, the Chairman gave what was intended to be a sound and learned justification for a world order characterized by barrier-less trade.<\/p>\n

However, the justification came out as being utterly sophomoric in its quality. That is to say, it was not too different from how a privileged undergraduate might argue in a college debate. Only the mannerisms were different \u2013 the uncle spoke, not the nephew or the niece.<\/p>\n

During the interview, the Chairman championed the cause of \u2018openness\u2019 as applied to trade.<\/p>\n

But \u2018openness\u2019 also applies to minds, to ideas and to debate. Therefore \u2013 in the spirit of this broader definition of \u2018openness\u2019 \u2013 the author is setting down below the points in which he found the Chairman\u2019s justification lacking in clarity or in comprehension.<\/p>\n

Many points were made by the Chairman during the interview. Against these points \u2013 quoted verbatim \u2013 we have set out below the doubts and questions which those very points would generate in the mind of any knowledgeable person of the world.<\/p>\n

During the interview, the main groups of people which appeared in the Chairman\u2019s world-view were the following:<\/p>\n

    \n
  1. Ordinary people<\/strong> \u2013 whose main concern is keeping their personal and family lives going, and who do not, or perhaps cannot, understand the complexities of the globalised world.<\/li>\n
  2. Politicians<\/strong> \u2013 who should ensure the public good, but usually fail to do so.<\/li>\n
  3. The rich<\/strong> \u2013 who would invest their wealth in the society\u2019s future, but only if governments did not raise taxes to a level at which the rich would rather consume than invest.<\/li>\n
  4. The experts<\/strong> \u2013 who understand exactly how the complex world economy works, and can be relied upon to bring about the future wellbeing of the ordinary people.<\/li>\n
  5. Missing from action<\/strong>: Curiously \u2013 given that a bank Chairman was speaking \u2013 bankers did not make any appearance in the world view; presumably, that group is included within 3 and 4.<\/li>\n<\/ol>\n

    With that background, we have set out below the Chairman\u2019s words in italics.<\/em><\/p>\n

    Point-wise, the Chairman\u2019s words are followed by the doubts or questions which they can raise in any intelligent person\u2019s mind. For the reader\u2019s convenience, these points are numbered from 1 to 18, and given short and appropriate sub-headings.<\/p>\n

    ***<\/p>\n

      \n
    1. The \u2018integrated world\u2019<\/strong>: \u2026 (it is) against the nature of the integrated world to have barriers and to create trade tensions \u2026 <\/em><\/li>\n<\/ol>\n

      Response<\/em>: In the family of nations, interests sometimes align and sometime come into conflict. Scarce resources must be shared in a manner which is acceptable to the parties concerned. To believe that barrier-less trade solves all the problems between nations would be na\u00efve in the extreme. What does the good banker think about trade sanctions? Surely they are against the spirit of free trade? Does he advocate for the removal of all trade sanctions? Were the Opium Wars justified in the cause of free trade?<\/p>\n

        \n
      1. The implied world view<\/strong>: So together, the rising debt which is fragility of the financial system and rising trade tension, which is fragility of the trading system can translate itself into fragility of the world international order and that\u2019s something to watch for.<\/em><\/li>\n<\/ol>\n

        Response<\/em>: Do only these two aspects define the current so-called \u2018international order\u2019? Why should hunger, conflict, homelessness, forced migration, dehumanizing poverty, drugs, human trafficking \u2026 et cetera<\/em> \u2026 NOT be considered as aspects of that same order?<\/p>\n

          \n
        1. Perceived risk<\/strong>: If we are not going to change something, this will not end up nicely \u2026 we need to change, because there is too much to lose… <\/em><\/li>\n<\/ol>\n

          Response<\/em>: Large segments of humanity are today left with nothing more to lose! For them, things have ended up badly already! The current world order has failed them.<\/p>\n

            \n
          1. 2008 financial crisis<\/strong>: In a way, what we should always have is the memory of that event so that we don\u2019t repeat the mistakes. It is in the sense that it will stay with us. However, many of the flaws that characterize especially the financial system have been remedied, but the problem is that the crisis of tomorrow will not be the same as the crisis of yesterday, so we need to deal with resilience.<\/em><\/li>\n<\/ol>\n

            Response<\/em>: The good banker says that the enormous debt levels constitute a major part of the current crisis. If \u2018many of the flaws \u2026 (of) the financial system have been remedied\u2019, then why is the world once again facing an even larger debt burden? Is that not caused by mindless speculation? How does mindless speculation bring about the well-being of a society?<\/p>\n

              \n
            1. Dealing with crises<\/strong>: \u2026 there is a crisis prevention phase, there is a crisis management phase and there is a crisis resolution phase. Crisis prevention is the most important one and it\u2019s the most boring one. <\/em><\/li>\n<\/ol>\n

              Response<\/em>: The boring \u2018crisis prevention phase\u2019 is precisely when clever operators and speculators are busy harvesting wealth and thereby building up the crisis \u2013 for the paid politicians to manage and\/ or resolve, always at public expense.<\/p>\n

                \n
              1. Politicians<\/strong>: Politicians wake up normally only when they see danger and if you tell them \u201cjust prevent the danger\u201d, they say \u201cwe don\u2019t see the danger, what is the problem\u201d? So that\u2019s something to watch for.<\/em><\/li>\n<\/ol>\n

                Response<\/em>: This statement is truly mind-boggling in its attempt to deceive. With a totally deregulated financial sector, what can mere \u2018politicians\u2019 do to \u2018prevent a crisis\u2019? We all know that it is the financial sector which lobbies aggressively for deregulation.<\/p>\n

                If the system is so complex that only experts can manage it, as stated elsewhere, how can mere \u2018politicians\u2019 be expected to understand the oncoming crisis and prevent it? A clear case in point is the financial crisis of 2008. Even \u2018experts\u2019 were denying that anything was amiss.<\/p>\n

                  \n
                1. Inequity, exclusion of large parts of population<\/strong>: This is something which is par excellence public policy challenge that needs to be addressed.<\/em><\/li>\n<\/ol>\n

                  Response<\/em>: That sounds like passing the buck \u2013 par excellence<\/em> \u2013 except for the injunction made later that taxes on the rich should not be raised.<\/p>\n

                    \n
                  1. Leadership<\/strong>: \u2026 somehow large parts of the population feel that they are not being led properly, which means there is this kind of aura, which I am not sure is correct, which means there is the aura of our leaders have failed, experts have failed \u2026<\/em><\/li>\n<\/ol>\n

                    Response<\/em>: That is not an \u2018aura\u2019, but a fact. Rest assured that it is correct.<\/p>\n

                      \n
                    1. Suggested solution<\/strong>: \u2026 the world is very complex. You really need to have the experts. You cannot allow amateurs to drive these complex cars or to be pilots of this plane. <\/em><\/li>\n<\/ol>\n

                      Response<\/em>: The so-called \u2018experts\u2019 \u2013 in whose care the good banker would place the society\u2019s wellbeing \u2013 need to understand the real and pressing human needs of the society. Their claims of \u2018dealing with complexity\u2019 should not obstruct that crucial understanding of human needs.<\/p>\n

                      Otherwise, the expertise becomes self-serving, and \u2018amateurs\u2019 soon see through the game.<\/p>\n

                        \n
                      1. Lessons learned<\/strong>: We have one lesson from history: openness helps \u2026 Openness is not just trade, openness is a mindset \u2026 that says \u201clet\u2019s get the best from everywhere, not only from what we produce\u2019\u2026 let\u2019s not allow short-term considerations and short-term satisfaction, which are psychological, to destroy the trade that gives us the fruits.<\/em><\/li>\n<\/ol>\n

                        Response<\/em>: It is not at all clear how \u2018the one lesson from history\u2019 is that \u2018openness helps\u2019.<\/p>\n

                        In terms of material wealth, history teaches us that conquest, loot, slavery, colonization, exploitation et cetera<\/em> increase the material wealth of a society \u2013 at least for a time. Technical prowess and trading skills also help, surely \u2013 until others catch up. But \u2018openness\u2019 helps? Really? How can anyone possibly say that that is the \u2018one lesson\u2019 from history?<\/p>\n

                        The \u2018fruits of trade\u2019 mentioned here refer to material wealth, whereas other forms of satisfaction are denigrated as being merely \u2018psychological\u2019.<\/p>\n

                        Is the satisfaction of \u2018possessing wealth\u2019 also not merely \u2018psychological\u2019? If a person enjoys fine wine, say, or the sight of a gold bar, the enjoyment lies in the person\u2019s psyche, right? Indeed, is it not true that all forms of satisfaction and dissatisfaction are psycho\u00adlogical?<\/p>\n

                        True \u2018openness of mind\u2019 should be defined not in terms of trade, but as the ability to see other human beings as also seeking their rightful share of happiness. Of this \u2018openness\u2019, with implies a generosity of spirit, not a trace appears in the interview.<\/p>\n

                          \n
                        1. More on leadership<\/strong>: And the role of the leader is to come and say, \u201cLet\u2019s make sure that it happens not only today and tomorrow, but also next year and the next century\u201d. \u2026 we need to create the infrastructure and the world order that will bring it about \u2026<\/em><\/li>\n<\/ol>\n

                          Response<\/em>: If, as seems quite possible, things do go wrong tomorrow, then today\u2019s so-called \u2018leaders\u2019 will be busy passing the buck and getting out of harm\u2019s way. After all, they have been doing their benefactors\u2019 bidding much of the time \u2013 not actually \u2018leading\u2019.<\/p>\n

                          And surely the part about \u2018we need to create \u2026 et cetera<\/em>\u2019 is no more than a homily.<\/p>\n

                            \n
                          1. Efficiency and equity<\/strong>: \u2026 a very deep issue, which has been in debate for ages among economists: the trade-off between efficiency and equity. How can you ensure that when you are helping the society to be more equitable through transfers from the rich to the poor etc. that you also maintain efficiency in the economy so that you don\u2019t cut the trade that gives you the fruits. <\/em><\/li>\n<\/ol>\n

                            Comment<\/em>: (1) Greek government accounts were doctored to hide the true levels of debt. (2) Sub-prime mortgages were bundled into ostensibly \u2018highly rated securities\u2019. (3) The Malaysian government fund MDB1 was extended a loan with the bank fee amounting to some fifteen percent; their erstwhile Prime Minster is facing fraud charges. (4) LIBOR rate was rigged for many years. (5) Big banks have been caught laundering money.<\/p>\n

                            Are these the examples of efficiency the good banker has in mind? Are they not in fact examples of fraud and inequity? Is the good banker trying to teach us something?<\/p>\n

                            When a rich person pays tax, it is not a transfer to the poor. It is an obligatory contribution to the running and future well-being of the society. Tax fraud is a crime.<\/p>\n

                            If the economists need to debate about all these basic truths, then evidently the good banker has surrounded himself with paid yes-men, not honest economists.<\/p>\n

                              \n
                            1. False flag<\/strong>: What do I have in mind? I will take it to a paradox. Suppose that you cut half of the GDP, the product of the country, and you take that half and you distribute it equally to everyone. You will win the Nobel prize by saying \u201cI have full equality\u201d, but you have equality of misery. <\/em><\/li>\n<\/ol>\n

                              Response<\/em>: This no more that a classic \u2018false flag\u2019. Nobody has ever made that silly suggestion, and not even the Nobel jury is na\u00efve enough to award a prize for that suggestion. Most Nobel Economics prizes go to people whom the good banker calls \u2018experts\u2019.<\/p>\n

                                \n
                              1. Role of the rich<\/strong>: How can you have a rise in the standard of living? By having people who are richer, saving, investing, broadening, increasing the size of the national pie so that we can distribute more to everyone, so if you are going just to tax the rich mindlessly, the rich, so-called, what will they do? They will say, \u201cWhy should I save? I am going to be taxed anyhow. So I will cut my saving. And I will give a big party. And we will sound happy, we will have more to consume.\u201d \u2026 But for the next generation there will be less because we have not saved. <\/em><\/li>\n<\/ol>\n

                                Response<\/em>: At present, the largest proportion of global wealth is sloshing about from one financial centre to another, or from one tax haven to another, with the aim of avoiding taxation and getting the extra odd percent of return. The fraction of this global wealth being employed for the future betterment of any society is miniscule.<\/p>\n

                                In other words, the rich are behaving in a way which utterly demolishes the good banker\u2019s argument. They do not seem to be committed to any one society. Why would they invest in the future of any one society when they can hop from place to place at a moment\u2019s notice?<\/p>\n

                                  \n
                                1. Government<\/strong>: And why haven\u2019t we saved? Because the government is about to tax us and distribute it. So, there are delicate issues of how to achieve social norms that bring about taking care of the poor and the equality and at the same time not destroying the future.<\/em><\/li>\n<\/ol>\n

                                  Response<\/em>: An incredible amount of wealth is sloshing around the world today, seeking to avoid taxes and gain easy returns. It is not at all likely that this wealth will build any society\u2019s future. Yet the statement has been made to instill fear in the hearts of \u2018amateurs\u2019; it is a psyop.<\/p>\n

                                  There is no mention in the interview of public infrastructure, health, education et cetera<\/em>. These essential parts of a healthy society are NOT \u2018handouts from the rich\u2019. They are fundamental rights of all citizens. Politicians are expected to achieve these goals without raising taxes on the rich. Then the only option left to them is to borrow from the market \u2013 which just happens to be good business for the banks!<\/p>\n

                                  In short, \u2018the rich\u2019 prefer to lend to societies rather than be taxed. That way, future generations of the society will remain indebted to them.<\/p>\n

                                    \n
                                  1. Homily as deflection<\/strong>: \u2026 the key issue is equality of opportunities. We really must make sure that those who are underprivileged parts of the society have the opportunity to elevate themselves so that over time their children will be in a better part of the society \u2026 There will be a win-win because the nature of trade is a win-win project, the nature of trade is \u201cI trade with you \u2013 you trade with me \u2013 both of us are better off.\u201d And therefore, if we upset that equation, both of us are worse off, and the trade negotiations are the skirmishes about \u201cwho gets more of the overall benefits\u201d.<\/em><\/li>\n<\/ol>\n

                                    Response<\/em>: \u2018We really must make sure that \u2026\u2019 \u2013 another avuncular homily. Anyway, who exactly is \u2018we\u2019 here?<\/p>\n

                                    To speak of \u2018win-win\u2019 projects in the presence of utter, dehumanizing deprivation is no more than \u2018pie in the sky\u2019. The audience\u2019s understanding of issues is being seriously under\u00adestimated.<\/p>\n

                                    The good banker needs to take a closer look at the reality on the main street: Talk to a few \u2018excluded amateurs\u2019, share a cup of coffee \u2013 and thereby get to know a few human beings outside of his immediate comfort zone.<\/p>\n

                                      \n
                                    1. Justification of solution<\/strong>: The only way to justify a trajectory that needs to be taken is by recognizing the damage of the alternative trajectory.<\/em><\/li>\n<\/ol>\n

                                      Response<\/em>: So, when all is said and done, the best that \u2018the experts\u2019 can do is to suggest an alternative which is better than a disaster. Indeed, that is quite a letdown. Can the \u2018experts\u2019 not come up with a positive economic strategy which will be beneficial to us all? If they cannot, why should they even be called \u2018experts\u2019?<\/p>\n

                                      It seems that \u2018avoiding an economic disaster\u2019 is all that \u2018the experts\u2019 can achieve \u2013 and even in that they fail from time to time! Perhaps we do need right-thinking amateurs, after all, The whole idea of \u2018expertise\u2019 may be no more than a smoke-screen.<\/p>\n

                                        \n
                                      1. Concern for the world<\/strong>: I really think that the population of the world will benefit much more from openness than from closeness.<\/em><\/li>\n<\/ol>\n

                                        Response<\/em>: The population of the world will also benefit from human dignity, local autonomy and democracy, freedom from exploitation and healthy communities. The idea of \u2018openness\u2019 must extend far beyond \u2018openness of trade and finance\u2019. It should include compassion for all life, and dignity for every human being on the planet.<\/p>\n

                                        Otherwise, we will end up with two worlds<\/u>, not one: the 1% and the 99%.<\/p>\n

                                        ***<\/p>\n

                                        Overall, the Chairman\u2019s world-view appears definitely one-sided \u2013 and it happens to favour the group he represents. That should not surprise us, since almost all human beings espouse world-views which are skewed in their own favour; that is human nature. It is perfectly normal and legal to hold a world-view which is \u2018tilted\u2019 in one\u2019s own favour!<\/p>\n

                                        However, the Chairman is also evaluating and advocating global policies with ostensibly noble and humanitarian objectives: To bring about a better world through greater wealth; to assure a future for the young; to achieve a \u2018win-win\u2019 world order for all \u2026 and so on and on.<\/p>\n

                                        It should go without saying \u2013 but, sadly, it does not! \u2013 that anyone advocating policies for the whole world should take special care to avoid any apparent conflict of interest between policies advocated for the greater good and one\u2019s own self-interest.<\/p>\n

                                        Otherwise, the advocated policies can smack of self-serving rationalization, deflection, camouflage \u2013 or even outright deception. When speaking about \u2018well-being of the world\u2019, a much higher standard can be expected from those who gather at Davos and other such watering holes of the self-proclaimed caretakers of humanity.<\/p>\n

                                        It is hoped that, in the spirit of openness to ideas, this discussion will continue. So-called \u2018Masters of the Universe\u2019 regularly come up with self-serving arguments. But any right-thinking \u2018amateur\u2019 who is not in their pockets can easily demolish their arguments!<\/p>\n

                                        NOTE:<\/strong><\/p>\n

                                        [1] Chairman of JPMorgan Chase International, interviewed on Sophie & Co, RT, link<\/a>. Note that the specific TV channel which arranged and broadcast the interview is irrelevant here; presumably, the Chairman would have expressed the same views on any other media outlet.<\/p>\n

                                        _________________________________________________<\/em><\/p>\n

                                        \"\"<\/a><\/em>Dr. Naresh Jotwani is a semi-retired academic living in India and a member of the TRANSCEND Network for Peace Development Environment<\/a>. Apart from part-time engagements in engineering education and consulting, he engages in an in-depth, personal exploration of how Gautam Buddha\u2019s profound discoveries and teachings can be applied to the acute problems of modern life.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

                                        The Chairman of JPMorgan Chase International was interviewed on Sophie & Co about the state of the world economy. So-called \u2018Masters of the Universe\u2019 regularly come up with self-serving arguments. But any right-thinking \u2018amateur\u2019 who is not in their pockets can easily demolish their arguments!<\/p>\n","protected":false},"author":4,"featured_media":106734,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[40],"tags":[],"class_list":["post-127027","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-transcend-members"],"_links":{"self":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/posts\/127027","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/comments?post=127027"}],"version-history":[{"count":0,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/posts\/127027\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/media\/106734"}],"wp:attachment":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/media?parent=127027"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/categories?post=127027"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/tags?post=127027"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}