How a Western cultural revolution handed power to the inhuman core of humanity

The Slog: In the mid 1980s, when everyone believed a new paradigm of eternal richesse, sagesse and largesse had arrived, the Conservative Government deregulated the City of London – a model followed to a greater or lesser extent by bourses around the globe in short order. Before this, Ronald Reagan had slashed top-rate taxes and cut Government budgets during his two terms, leaving Americans with a booming economy, an unfading affection for him…and an enormous public debt. Margaret Thatcher’s Government was still halfway through a cultural Putsch whereby almost every public weal service was privatised – followed by market flotations that bribed electors with shares. She was also selling off council houses – to their residents – at an astonishing rate and a knockdown price.
Within ten years, the ideas of public duty and mutual savings institutions were considered archaic: soon the State would whither away entirely, responsibility would be handed back to citizens, and everything would be a decisive market. Even the NHS was getting its own internal market. And, naturally, all but three of the major building societies demutualised, floated as banks….and bribed electors with discounted (or free) share deals.

Credit, over this period, had gone electronic at an electrifying pace, while most credit-scoring techniques carried out by clerks had been given to computers, relaxed, or ignored completely as the deregulated, dumb-assed bourses demanded 25% gross growth every fiscal. There is no getting away from the underlying and obvious factor here: greed. Man as the target-setting hunter, and the neurotic gatherer.

Education over this period had its spending cut by Thatcherite Chancellors, and in turn declined in standard in a manner that (hopefully) will never again be equalled. To maintain the myth that standards were being maintained, examination bars were lowered. Targets were then set to show everything was as good as ever; and when even they were missed, scores were upgraded. Liking this idea, the privatised rail sector simply took its slowest ever journeys and used this as a guaranteed arrival time. Cheating at everything became the norm….and a whole generation of kids were robotically taught to stick to the syllabus come what may. Thinking for oneself no longer counted as an educational imperative. Thinking only of oneself became the new macho thing to do: communities were for wimps.
In preparation for the five years leading up to 2001 was an idea based on the principle that all cultural difference was unimportant in business – the Ted Levitt nonsense that led to Globalism: the euro. The theory with this ‘common currency’ was that nations as different as Greece and Germany, France and Holland, Italy and Ireland, could all happily co-exist using one currency which could not be devalued to take account of different growth rates or fiscal circumstances by country. Even worse, the French rejected German demands for central control of fiscal management.
As countries came into eurozone membership, the central bank (ECB) under Jean-Claude Trichet offered generous Sovereign loans to help “in the process of adjustment”. Once these became addictive, American lenders moved in to sell the Sovereigns still more debt; and when they got underwater, Goldman Sachs obliged by teaching the Greeks how to hide the black holes from the EU bureaucrats in Brussels and Frankfurt.
By 2003 on both sides of the Atlantic, the biggest credit and property bubble in history was being stored up…..as well as the biggest ‘deficit spending’ debts as leveraging became the new Alchemy that Worked. Two key people at this point failed to do anything about it: US Fed Chairman Alan Greenspan, and Gordon Brown. The latter boasted to the House of Commons that he had “abolished boom and bust”. But for the three years until the start of his mercifully brief term as Prime Minister, Brown spent (and wasted) more than any Chancellor in UK history.
But the US economy was booming, so what was not to like? Mainly, the emergence of Asian tigers (especially China) and the South American new boys. China, Japan and Korea were flooding the US, UK and Europe with cheap goods – from underwear and fashion to phones, MP3 players and cars. European and American consumers bought these in gigantic volumes; so all the Western deficits got bigger, and the debts became astronomical.
The main holders of that debt were Asian….and overwhelmingly Chinese.
Banking firms on Wall Street and in the City of London were convinced that, despite the astonishing growth in interbank lending, everything from straightforward bonds to derivative contracts were totally ‘netted’ – ie, either insured or set against lending/selling in the other direction. But they didn’t really know that; some of them assumed that others would be as careful as them, but others knew they weren’t being careful…because they weren’t either.
Once again, targets ruled the roost: sod the quality, get the volume, make the numbers for the bourses, get the bonus. Retail banks redoubled their efforts to sell yet more credit to downmarket consumers, unsophisticated borrowers who assumed that – if a bank was offering them more money – they must be good for it. But of course, they weren’t: and the sub-prime crisis was born.
The ‘sub-prime’ crisis is now five years old, although it long ago stopped being called that. This is because first, it rapidly became obvious that the mess derived from far more dimensions of insanity than just that one; and second, ever since 2009, people have been telling us there is nothing more to worry about, because the crisis is over.
The eurocrats have been saying this on a monthly basis since June 2010, when George Papandreou pitched up in Brussels to tell Sarkozy and Merkel that he was €220 billion short of an ongoing solvency situation. The sub-prime crisis long ago morphed into the banking crisis, the Sovereign deficit crisis, the fiscal debt crisis, the derivatives crisis, the eurozone crisis and then – as money and confidence dried up – the economic crisis….all rolled into one. And, as with all things in 2013, global in nature.

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In reality, what has been developing over the last thirty years is a cultural species crisis. To be certain of this, all you have to do is read through the foregoing potted history again, and pick out the key words. Although in some ways this list is a simplification (none of the factors below are mutually exclusive) I have highlighted in red those I think are mainly species in nature:

Deregulation

Top-end tax cuts

Cultural Revolution

Bribery

Decisive markets

Demutualisation

Privatisation

Electronic Unscored credit

Greed

Cheating

Thinking only of oneself

Reckless Sovereign borrowing

Globalism over anthropology

Deception

Interbank product marketing

Unproven assumptions

Unreality

If you like, what I’m hypothesising here is that the things in red are largely about Homo sapiens, and the widespread flaws among members of this allegedly thinking, behaviourally rational species. And those in grey are the ‘technicals’ allowed to happen when the culture is changed by the triumph of that thinking. However, I further believe that once the behavioural opportunities are created, the crisis becomes accelerated and self-perpetuating because the ‘new rules’ are perceived to be entirely acceptable by everyone else living in the culture.

Overall, my feeling is that it is in the nature of a few in our species – the core obsessive hunter gatherers – to be greedy, ruthless and selfish, always pushing on too hard without thinking of the consequences. But then, when the chickens come home to roost, to bribe, cheat, deceive – and eventually deny the reality of their stupidity.

The socio-commercial symptoms of those tendencies have been: deregulating bourses with already questionable moral standards; focusing on top-end tax cuts; installing an extreme cultural revolution; treating markets as some kind of holy sect; demutualising vital philanthropic institutions; privatisation of the community weal; focusing solely on credit targets rather than quality; reckless Sovereign borrowing; a preference for theoretical fancy over social anthropology; and investment bankers inventing themselves a new career as Interbank product designers and marketeers….which allowed them to become racketeers.

A new generation is now coming through – via a dumbed-down educational system – willing and ready in some cases to see these symptoms as “what happens” in a normal society: not all of them realise we are a sick culture. They assume politicians are corrupt, bankers are sociopathic, policemen are bent, media owners have to be megalomaniacs, total insecurity of employment tenure is now forever, tabloids are just a bit of fun, globalism is the only way, neoliberalism the only thing that works, and dog-eat-dog international competition the only survival route left open to us.

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This symptomatic construct is doomed to implode. Draghi, Bernanke, Carney, the key Western Sovereigns and the banks will very shortly run out of road. But this isn’t the real problem we face today.
The problem we face is that – in a totally inclusive sweep from Los Angeles via London to Madrid and Athens – we have an abject failure of political opposition alongside apathetic citizenry.
This isn’t just bad news, it’s going to be catastrophic for liberal democracy. For just as assertive people choose the right moment and then say “no”, passive/aggressive people wait until it is far too late, and then take out a gun.
Be it the Democrats in the US, the Labour Party in Britain, or the Social Democrats across Europe, they haven’t got a clue about the New Way required to leave the past behind and move on in a radically changing world. Sometimes, radicalism is the only solution: we are in that position today…but hopelessly unorganised, and eternally tribal.
The Democrats, the Labour Party, the SPD and Pasok are sewn into the system so tight, they cannot move limbs or engage brains. While the Tea Party, UKip, AfD and Syriza are wedded to archaic/arcane narrow solutions – and far too easy to shut out of the system. Worse still, the more traditional elements in their ranks still refuse to engage in any meaningful degree with others who want radical cultural change.
I’ve said this before, but it bears repetition: our politics in the West are based almost exclusively on Capital v Labour – on Left v Right. This model is so long dead, the body has suppurated into the sofa. Nobody today wants the unpleasant task of removing it prior to a decent burial.
The new movements we need now (and I’m increasingly drifting away from anything ‘political’) should be underpinned by these five very simple ideas:
1. Small, creative and vulnerable must triumph against big, monied and powerful
2. The co-operative side of our species nature must be given a larger role in the shape of mutuality
3. The centralised, bureaucratic State must have its influence reduced in favour of communitarian entrepreneurial ideas
4. Globalist mercantilism must be abandoned in favour of self-sufficiency and limited trade
5. Education must teach more civics, offer more personal challenge, and give an equal role to socio-cultural subjects
Socialism and neoliberalism simply do not fit that raison d’etre. No civil service I’ve ever come across fits in there – nor any donor-supported Party system. That’s how radical this solution has to be. But for the life of me at the moment, I can see only new extremists and old dinosaurs. At times, all I can see are live scoundrels and dead ideas. One thinks Boris Johnson, Ed Balls, Grant Shapps, Harriet Harman, Nigel Farage, Ed Miliband, George Osborne….plus over 350 MP expenses fiddlers, and 74,000 bureaucrats with illegally funded pensions.
Something or somebody will arise, claiming to kill the beast and offering a magical kingdom of eternal justice. Trouble is, I have very little faith at the moment that they’ll be telling the truth.

Edited by WD


Source

WB7