The Principle Of Plausible Public Utility

 

AN APPLICATION: REMOVING BANKERS’ DEMENTED PRIVILEGES.

In 1902, Lenin published "What is to be done?", a book in which he set up his blueprint towards his sort of revolution. He was later on able to make it work, with the indispensable help (I claim) of imperial Germany (this assertion with make howl old style "Marxist-Leninists").

At the times most of the intellectuals in Europe agreed that some revolution needed to be done. Even presidents of the USA such as the Roosevelts not only agreed, but implemented a lot of the elements of the proposed revolution.

Teddy Roosevelt acted against Rockefeller and other monopolists, simply because they controlled too much of the economy. Franklin Delano acted against who he denounced as "banksters"; he separated "Wall Street" and banking, because an obvious conflict of interest: one could not be in trust with the public’s money, supposedly, and then lose it all in Wall Street’s casino.

Europe sometimes preceding (German health care, French paid vacations), and sometimes following (governmental work programs) the USA, pushed further the revolutionary program (mostly as part of the renaissance of Europe after WWII). The European welfare state realized a lot of the most revolutionary ideas of the intellectuals of the past, and even of the most extreme of them. So it was in the USA, until Nixon started the counter-attack of privilege (he is the one who started the state financing of private health profiteers, creating HMOs; the fractional reserve banking system is also a similar state financing of private banking profiteers).

Interestingly, nowadays intellectuals to not seem to agree about what is going on. The indignation of the People in general seems ahead of the indignation, if not the imagination, of intellectuals.

So let me enounce once again what is wrong in a few words: some non elected individuals, the big bankers, were endowed, by the state and the supine nature of the People, with powers only sovereign states were endowed with in the last few millennia of civilization.

Those private, unelected individuals, the “bankers”, direct most of the existing capital towards not only the casino of Wall Street, as they did in the 1920s, but they direct most of capital a version of it on steroids, the casino of "derivatives", a casino in the sky that produces, and does nothing, except, at most, and very inefficiently, profits and bonuses, for the bankers and their accomplices.

For millennia, the STATE controlled the currency. Now, though, most of the currency is controlled by a few private individuals, the bankers. The fractional reserve system is set up that way. This is actually a devolution of civilization.

A comparable financial devolution of civilization in a sophisticated society has happened before: the French Ancient Regime let private individuals be in charge of taxation. The idea was simple: private individuals, motivated strongly by the profit motive, would raise taxes. They would extract bonuses, at their discretion, as the money passed by. Thus motivated by the profit motive, they would perform better. Those "tax farmers" were called the Fermiers Generaux ("General Farmers").

After the immensely ruinous French war for making America an entity independent of Great Britain, plus a bad eruption in Iceland, of the mighty volcano Laki (which caused crop failures), France’s financial situation became precarious, saddled with crushing debt. The hatred against Fermiers Generaux knew no bound, and led directly to the French revolution of 1789.

Now, again, a similar set-up has been pushed on people, on a world basis (it’s not just France). Private, non elected individuals, supposedly better motivated, because motivated by profit, have been put in charge, not just of grabbing people’s money (taxation) as the Fermiers Generaux were, but, better, to outright create People’s money, leveraged from the money deposited in banks (some deposited by common people, some from central banks, themselves supposedly expressions of People’s power).

The Roman emperors would have been mesmerized by this, and would have insisted that this could not possibly work, so much power in a few unelected individuals… besides being antagonistic to the basic principles of the republic.

But nevertheless, here we are. As is the case now, bankers create the currency, and lend it to their friends and themselves, with the connivance of the government, artificially boosting GDP, joining insult to injury.

In particular, all get starved of capital: employees, employers and industry, and also the People in general, and even vital equipment such as public goods and commons (hospitals, communications means, energy production, roads, railways, etc.).

Lenin and other revolutionaries complained about the exploitations of workers by employers. How quaint. At this point, what we have is exploitation of everybody, even employers, by a small number of individuals who ought to have only one right, that of disappearing. Also exploitation of the entire biosphere, to death, soon.

To make the outrageous, unwarranted, anti-democratic power of bankers disappear, in first order, one has to look at the global theory of derivatives. In truth, there is no such a thing. Why? Because it would easily show that the derivatives’ market ought to be mostly OUTLAWED.

Derivatives can be useful, but mostly only in the way they were initially set-up, to insure commercial operators (initially Middle Western farmers, hence the connection with Chicago). On a crowded planet, any state or private activity ought to satisfy a Principle of Plausible Public Utility. Anything else should be outlawed, according to the Principle of Precaution.

An example of this is Iranian nuclear power of enrichment of uranium: it does not satisfy the Principle of Plausible Public Utility (because it could lead to a local enrichment, hence nuclear bomb race, with its attending nuclear strikes, which would not be in the best interest of the region).

Left unregulated, the concept of derivatives would end up, and has ended up, sucking up most of the world’s imaginable capital, and even much more than that: the global derivative market is about twenty times world’s GDP. It’s sheer insanity.

A first obvious reform would be to outlaw the leveraged usage of derivatives for non commercial operators. That would force bankers to leverage themselves only in industrially and commercially profitable ventures.

Enough is enough.

Now, of course, derivatives is not all what is wrong with the financial sectors. Bankers are actually, just as the Fermiers Generaux were, AGENTS OF THE GOVERNMENT. Just as the Fermiers Generaux, they are in connivance with that exploitative government, and they finance it, just as the Fermiers Generaux did.

The way out of this, just as was done with the Fermiers generaux, is to recognize that bakers are actually, and ought to be formally, agents of the government.

That would allow to direct capital towards the economy, instead of the casino in the sky. That is exactly what the US Federal Reserve had to do on an emergency basis (other countries’ central banks also did the same; Paul Krugman calls this "Bernanke banking").

The financial crisis is not the only dimension of the world economic crisis. By itself, it would be enough to cause a catastrophe (as it did in 1929-1933). But there are other dimensions to the economic catastrophe that is slowly taking shape.

There is a global economic crisis due to globalization (a form of re-colonization; not that colonization is bad intrinsically, but, misused, it is indeed terrible). There is also an economic crisis caused by increasing energy and ecological problems (carbon is the only cheap energy readily available, if one neglects its biosphere killing effects). Related to the preceding crisis is one caused by insufficient technological and scientific progress, considering the piling up of problems, and one caused by the related dissemination of Weapons of Mass Destruction. Now the fact that world capital is controlled by only a few unelected individuals devoured by the profit motive, the root of the financial crisis, spills into the other dimensions of the economic crisis.

For example problems with batteries could be solved with massive investments in nanotechnology, but, if most of the capital is up in the sky, in the imaginary casino, it is not on the benches of primary, secondary and tertiary schools, and, without super minds, there will be no super technologies.

As it is all the super minds there are, go to Wall Street, where they become even more moronic than inferior schools had made them to start with.

After all, what is the main force behind the financial profit motive? Not common good, but nastiness personified. Philosophers (such as the famous Dr. Bernard de Mandeville), starting in the 17C, argued that nastiness could be made to operate for the common good (Adam Smith abstracted this two generation later with his theory of the "invisible hand"). Sure. But nothing beats direct common good, and the nobility and honor of the human spirit. Nowadays, what the future elites are taught is that GREED IS ALL THE GOOD THERE IS, and that good, if any, assuredly came from greed. Besides, there is no higher motive than to have property that the others do not have.

So not only did the big bankers steal the financial capital to set-up their infernal machine in the sky, but they have stolen humankind standard moral capital, decapitated our will to be better than greed, and made smarts into farts.

Wall Street society is what we have. We can do better, and we will, lest we disappear.

Patrice Ayme

***

P/S 1: The political process in the French republic already uses massively and explicitly the Principle of Precaution. Why? Because technology, the risks it can present evolves so fast nowadays that it is more prudent than ever to be extremely cautious. For example, although I am fanatically for the development and deployment of nanotechnology, studies to look into the safety of the various nanotechnologies ought to be financed massively in parallel.

The Principle of Plausible Utility ought to be added to the Principle of Precaution. It presents with its own hierarchy. For example DERIVATIVES HAVE PLAUSIBLE UTILITY IF AND ONLY IF THEY REDUCE THE VOLATILITY OF MARKETS. So, whenever a derivative is introduced, or a new usage of a derivative is contemplated, the primordial question ought to be: ‘Does it reduces overall markets’ volatility, especially in extreme situations?’ If not, the Principle of Precaution says that it ought not to be allowed.

***

P/S 2: The infection by private, unelected banksters is worldwide. Their headquarters are in Wall Street. In the 1920s, that happy crew financed and leveraged itself with the installation in Germany of a revenge machinery (by financing, for example the monster monopoly of I G Farben).

So it was only natural that Wall Street would make American lives into a profit center. On the face of it, this officialization of "Your money, or your health, or you life!" in the USA was only natural for those whose parents, or grand parents, spiritual or physical, financed those who killed people for money (as the Nazis did, by the millions). Not only that system of thought prospered at the time, but when Nazism was defeated, it was not condemned. (It’s only recently that research has established that a lot of the Nazis’ extermination program was motivated by PROFIT.) Thus this infernal system of thought kept on going, and came to thrive under Nixon (who created HMOs, and used the monopoly of the US Dollar as an economic weapon, although it had been forced, supposedly in trust, by the USA at Bretton Woods at the end of WWII).

The profiteering and grabbing of outrageous privileges by unelected individuals happen in private health "maintenance" and "insurance" in the USA. Just as in banking. President Barack Obama is now subscribing to this courageous thesis.

President Obama:

"This is the unsustainable path we’re on, and it’s the path the insurers want to keep us on. In fact, the insurance industry is rolling out the big guns and breaking open their massive war chest – to marshal their forces for one last fight to save the status quo. They’re filling the airwaves with deceptive and dishonest ads. They’re flooding Capitol Hill with lobbyists and campaign contributions. And they’re funding studies designed to mislead the American people. […]

It’s smoke and mirrors. It’s bogus. And it’s all too familiar. Every time we get close to passing reform, the insurance companies produce these phony studies as a prescription and say, “Take one of these, and call us in a decade.” Well, not this time. The fact is, the insurance industry is making this last-ditch effort to stop reform even as costs continue to rise and our health care dollars continue to be poured into their profits, bonuses, and administrative costs that do nothing to make us healthy – that often actually go toward figuring out how to avoid covering people. And they’re earning these profits and bonuses while enjoying a privileged exception from our anti-trust laws, a matter that Congress is rightfully reviewing."

President Obama has finally mobilized against the health care profiteers. Similar arguments hold against the banking profiteers. But to battle on all fronts requires concentrating all of one’s forces in turn. The beauty of it, though, is that the democratic machine deployed against the health vampires could be used nearly word for word, weapon for weapon, concept for concept, against the financial vampires.

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