Last year, I commented on Darryl Cunningham‘s book Science Tales: Lies, Hoaxes and Scams, where he uses comic book format to tackle some big abuses of science: the MMR scam, fracking, climate change denial, and so on.
This year, I have read his take on another big target, the 2008 financial crash: Supercrash: How to hijack the global economy.
The book is in three sections. The first is a biography of Ayn Rand, the guru of the libertarian right, the person who made greed and selfishness respectable by turning them into a philosophy misnamed “objectivism”. The second describes the causes of the 2008 crash (I will come to the connection in a minute). The third is something of a mishmash, containing a psychological analysis of the difference between conservatives and liberals and a prognosis and advice on how to get out of this mess.
One of Rand’s close disciples was Alan Greenspan. So completely did he accept her selfish philosophy that, when he was being considered for the position of chairman of the Federal Reserve, he had to publicly disown some of his own earlier statements. But, once in power, he was able to implement Rand’s ideas by rolling back regulation of banks. He believed, following Rand, that the free market would keep bankers honest because a dishonest banker would be unable to attract customers.
The industrial scale of the criminality he unleashed is difficult to comprehend, but it involved a complete change of mindset. After the 1929 crash, some bankers were so ashamed of betraying their customers’ trust that they committed suicide. After 2008, the common response was simply to keep their heads down and carry on with business as usual. (Indeed, better business than usual, since, as well as looting their customers, they were able to hold the government to ransom and loot the taxpayers as well.) A few stood up and publicly cried crocodile tears, and then made off with all they could get their hands on and headed for a comfortable retirement. (Cunningham tells the tale of Christopher Warren, a law officer for Ameriquest, who, after posting a detailed confession online, was caught attempting to enter Canada with a million dollars in Swiss bonds stuffed into his cowboy boots.)
As to the free market regulating itself: It is the job of the credit ratings agencies to point out the weaknesses in some of the financial institutions and instruments. Why didn’t the system work? There are three agencies, and banks can shop around, so an agency which gives low ratings will lose business. [A similar thing can be seen in the British education system. There are several examining boards. But schools are judged by league tables of their pupils’ performance, and these league tables make a huge difference to their income and viability, and even the teachers’ employment prospects. So of course schools shop around to find the board that gives the highest grades.]
Don’t worry if you don’t know exactly what CDOs, shell companies, HOEPA, etc. are; Cunningham explains all these things very clearly. The book does focus on the situation in the USA and the UK, with brief looks at Greece and Spain, but you will have to look elsewhere if you are interested in Iceland, for example.
Why, despite all that has happened, do conservatives become more powerful than ever, and grind the poor and disadvantaged still further into the dirt?
In the start of the third part, Cunningham describes psychological research suggesting that conservatives and liberals differ strongly on two of five basic personality traits: conscientiousness and openness to experience. To simplify greatly: Experimenters gave subjects some statements which sound attractive on the surface, such as “The government shouldn’t be allowed to take money which I have earned by my own efforts”. Conservatives will go with their immediate feeling and agree with this statement; liberals will prefer to think about it, will see the hidden flaws and dangers, and probably end up disagreeing. On this theory, it is not surprising that conservatives regard universities as dangerously liberal places where their children will be brainwashed (aka “will learn to think”).
But there is a twist. If people are given the same test but in a situation where they are under stress, the two groups will be in better agreement. Basically, when we are stressed, it is much harder to think about a statement, and you are much more likely to accept your initial reaction. This may have survival value: in a war, it is important to defeat your enemy, not to try to understand him. But in the present world, where climate change, population pressure, and economic meltdown put us all under stress, the result is a shift to the right in the political debate, which can be observed in many countries.
I am not completely convinced by this analysis, but it is hard to deny that the effect is real enough. After describing some harrowing cases of people dying after being denied benefits by the austerity programme of the British government, Cunningham makes his own view clear: This is wrong. Capitalism, having seen off communism, has now set its sights on the next enemy, democracy. (The Transatlantic Trade and Investment Partnership, now in an advanced stage of negotiation, makes this very clear: it explicitly takes power from democratically elected governments and gives it to multinational corporations.) But democracy has seen off vested interests in the past (e.g. votes for women, abolition of the slave trade). Our best hope is that it can do so again.
A book both depressing and inspiring. Depressing in the scale of the criminality it reports, and the power of the criminals and their political backers; inspiring in the flame of righteous anger in which this is reported and documented. Worth reading.